V. Key Issues in Managing Stakeholder Processes of AIHC Stakeholder Rpt

The E4E experience, and those of a number of other stakeholder processes in recent years, have yielded a number of insights for matching the design and management of stakeholder processes to the problems they are attempting to solve. This report attempts to capture some of these insights by identifying a series of issues, presented in Figure 4, that convenors and stakeholders should explicitly ask and answer before proceeding in their deliberations.

Once a decision has been made to gauge the feasibility of a stakeholder process in environmental decisionmaking, there are a number of issues that can help measure the likelihood of success. Gail Bingham, in her 1986 study, identified a number of factors to consider before and during the implementation of a stakeholder process.¹⁹ More recent literature and interviews with key participants in environmental stakeholder processes have provided additional information. Together, consideration of these issues provides a barometer to measure whether a basis exists (including sufficient trust among the parties) or can be created to generate a successful outcome.

The attitude in which managers approach a stakeholder process is fundamentally important to whether it succeeds. Creighton has defined at least two conditions for success related to this issue. First is "a willingness to include the public in the decisions of greatest interest to the public." Second, there must be "a management commitment to consensus-seeking public participation." In other words, Creighton’s conditions force managers to determine if they are prepared to allow some degree of stakeholder influence in their decisionmaking. If these conditions are not met, the chances for a successful outcome are significantly diminished.²⁰

Bingham, Susskind, and others include the parties’ willingness or incentive to negotiate as a precondition for the likelihood of success. According to Susskind and Cruikshank, "Solutions are better—and will be accepted—only if all stakeholding parties are confident they will get more from a negotiated agreement than they would from a unilateral action, or from conventional means."²¹ In other words, if stakeholders believe they have a chance at a better outcome using the courts or the regulatory process, stakeholder processes are unlikely to generate a successful outcome.²² Excessive cost can also play a factor in making a stakeholder process unacceptable.

Interview respondents noted a number of disincentives to participate in stakeholder processes, including the tremendous amount of time needed for negotiations, excessive polarization among interests, the likelihood that an agreement will not be implementable, and the possibility that negotiations may slow decisionmaking. Finally, "stakeholder burnout" must be considered. Altogether, a thorough assessment can determine if various parties have a chance at a better outcome with or without a stakeholder process.²³

Stakeholders asked to contribute their knowledge and perspectives on environmental issues generally assume that a decision has not already been made. Convenors that establish a stakeholder process to generate some form of external validation for decisions they have internally resolved risk a serious erosion of their credibility and their ability to implement the decision. "Don’t say you’ll involve people more than you really intend to be the case," noted Dr. Baruch Fischhoff in a remark typical of many others expressed on this issue. Dr. Carol Henry, when asked about the kinds of issues not suitable for stakeholder processes, remarked that, "If decisionmaking has already occurred and won’t be reversed, don’t use stakeholders to validate decisions already made."²⁴

Managers should systematically identify the relevant stakeholders. Whatever kind of process is chosen, it is critical to define who is a stakeholder. While the term is widely used in environmental decisionmaking, there is no consistently utilized definition.

Even while the universe of potential stakeholders on some issues is practically limitless, from a practical standpoint everybody cannot always have a seat at the table.

"The challenge is to balance the need to
consider all stakeholder viewpoints with
the practical considerations of convening a
group of individuals who have a role in
making or directly influencing decisions."

Stakeholders represent diverse groups, and not all of them will be engaged in a particular project or activity. Some may purposefully reject participation. In addition, much of the literature and many experienced practitioners have observed that the size of a stakeholder group should be related to its purpose. The challenge, then, is to balance the need to consider all stakeholder viewpoints with the practical considerations of convening a group of individuals who have a role in making or directly influencing decisions.²⁵

One approach to reconciling the widespread need for participation with the practical characteristics of decisionmaking lies in the categorization of direct and indirect stakeholders and what a number of respondents have labeled as "tiering" stakeholder involvement. "Some stakeholders have a seat at the table and are decisionmakers – others should have input into the process," noted one individual interviewed for this study.

Interview respondents defined "stakeholder" in three categories. These included: 1) those who want to be involved in the process; 2) affected parties; and 3) anyone with an interest in the project or activity.²⁶ One respondent claimed that stakeholder was a term used primarily by Washington "inside-the-beltway" policy officials and analysts. Others recognize the value of a more inclusive definition. The World Bank, for example, defines stakeholders as those who are "directly" or "indirectly" affected by a process or activity and who "could affect the outcome of a proposed Bank intervention or [are] affected by it."²⁷ The Bank’s indirect stakeholders include non-governmental organizations, governments, and shareholders. Other indirect audiences that are often not considered are internal audiences, such as employees.²⁸

EPA, in its Project XL Stakeholder Principles, concluded that, "the most valuable stakeholders to us are the people most directly impacted by the XL project." But the Principles went on to note that "inclusivity and accessibility are key features of a good stakeholder process" and "anybody that wants to learn about and provide input ... should be able to." This same notion is reiterated in Project XL draft stakeholder guidelines. Here, stakeholders are grouped into three categories: direct, indirect, and the general public. In other words, a committed but limited group of stakeholders may have shared decisionmaking authority, while an alternate group of stakeholders receives an opportunity for input. The greater the stakeholder interest in a project or activity, or the greater the potential impact of that project or activity on the stakeholders, the more involvement they should have.²⁹

Identifying potential stakeholders is challenging and can require considerable resources. Some issues may not evoke sufficient public interest or concern to merit a stakeholder process, while others may stimulate a latent public reaction (e.g., after a release of a hazardous chemical in the community). Many stakeholders are not able to effectively participate in deliberations on issues that affect them. This is especially true of people with lower incomes or poor English speaking skills because their communications networks can differ from those traditionally used in stakeholder processes. For example, Spanish-speaking residents in south Texas often receive information through their church network, a communication avenue typically not used in a stakeholder process.

The implications of the various definitions of stakeholders are significant because they shape the attitude in which a convening organization perceives, approaches, and designs the process. Environmental impacts cannot always be confined within traditional boundaries and often have consequences that are not immediately apparent. Solutions to these issues often require multiple jurisdictions and resources. If stakeholders are narrowly defined as those individuals or parties who want to be involved or who have an interest, then the process potentially excludes parties who may be outside of traditional boundaries or who are not currently aware of the activity. Similarly, including only affected interests could exclude those that could conversely impact or affect the project. One respondent cautioned that "you may get only 10 people to show up for a townhall meeting but, if there is a crisis, thousands may show up." From a management perspective, a more comprehensive stakeholder definition helps to address the realities of public participation in environmental decisionmaking by incorporating those audiences that, if excluded for any reason, could later influence the outcome of a project or decision.

Identifying stakeholders and their concerns helps to ensure that interests are not overlooked. For example, at its Chandler, Arizona facility, Intel Corporation conducted extensive stakeholder identification and assessment activities, including extensive interviews with people and obtaining a demographic profile of the community. But identifying stakeholders is a nascent practice, and methods vary considerably. Instead, a number of procedures have been suggested, including observation, interviews, information dissemination, and historical analysis of traditional stakeholders and issues of concern.

In Fernald, Ohio, an independent convenor selected fourteen citizens, representing various interests and perspectives, to the Fernald Citizens Task Force (FCTF). This group was charged with making specific recommendations about the siting of the low-level hazardous waste facility. At the same time, the FCTF attempted to validate its decisionmaking by soliciting and obtaining community input.³⁰

Different methods for identifying stakeholders are applicable to different circumstances. The World Bank, for example, poses a list of questions to the "voiceless" representatives of those who may be affected, and those who may mobilize in opposition to Bank decisions.³¹ The United States Department of Energy (DOE) recommends the creation of a community profile to "identify components of the public that are likely to be involved."³² For example, in Fernald, Ohio, DOE conducted a comprehensive community assessment by conducting more than 350 interviews to evaluate community concerns, needs, and interests as part of its effort to site a low-level hazardous waste storage facility. The survey also was used as a benchmark to evaluate ongoing communication and message effectiveness.

A more inclusive definition of stakeholders does not mean the process will be conducted without recognition of practical constraints. Instead, it encourages a planning approach that facilitates identification, prioritization, and the involvement of direct and indirect stakeholders in the decisionmaking process, and better defines stakeholder roles and responsibilities in the deliberations. It also ensures that all interests are considered, thereby reducing the chance of disgruntled stakeholders who could later negatively impact a decision.

Priorities ’95, a community-based comparative risk assessment effort in Columbus, Ohio, represented an application of the inclusive definition. Early in the process, participation was opened up to all interested parties and more than 200 volunteers participated in some part of the process. In the end, the steering committee reached unanimous agreement both in its risk rankings and strategic recommendations. (See Appendix 5 for a case study of the Columbus experience.)

Stakeholders have varying roles and capabilities in a decisionmaking process. Citizens bring to the table different interests, expertise, concerns, and values. Government officials contribute necessary policy authority and perspectives from various professions and institutions. According to the World Bank, "Experts of all types—engineers, social scientists, economists, sector specialists, institutional specialists, and more—need to contribute what they know."³³

Those interviewed in the study were asked to evaluate the role of citizens, government officials, and scientists in environmental stakeholder processes. In general, they viewed citizens (defined as individuals whose input is not designed to represent the view of a specific party or institution with a stake in the proceedings) as providing necessary input on values, recommending general or specific policy options and providing social and political risk information. Respondents did not see citizens having a large role or capability in providing science-based risk information. Government officials’ primary role was seen as recommending and choosing policy options. And scientists were viewed as providers of technical information, but many also strongly believed that scientists should not have a role in choosing policy options or offering input on values. (See Appendix 3 for a fuller presentation of interview results.) Before choosing a specific stakeholder process the needs and capabilities of each major stakeholder group should be assessed and clarified. For example, options for involving scientists—as individual experts or through formation of a technical committee advising other stakeholders—should be considered when the questions under review include scientific issues.

There are at least three kinds of stakeholder processes: 1) decisional (e.g., stakeholders directly participate in making final choices and subsequently help implement them); 2) consultative (e.g., stakeholders are asked to comment or provide input on policy choices that others will decide); and 3) informational (e.g., stakeholders are requested to provide data, general perspectives, or specific input on an issue or problem). Deciding on any of these options brings a host of additional issues—such as choosing the specific type of process (e.g., negotiated rulemaking, alternative dispute resolution, town hall meetings), whether to use a facilitator, selecting ground rules to guide the deliberations, and gaining access to information—that are well described in the literature.³⁴

Many of those interviewed identified the establishment of ground rules as one of the most

important tools that can be used in a stakeholder decisionmaking process. In their view, the overall benefit of such rules is to increase the probability of a successful outcome by setting goals and expectations early in the process and periodically revisiting them. Important ground rules to consider include the following (some of which will be discussed in further detail below):

There are a number of basic ground rules for stakeholder participation, but it’s also important to remember that the participants and issues in each process should be considered as distinctive in their own right. Who creates the ground rules for the particular decisionmaking process? In many situations, the rules of operation have been defined by sponsoring entities and not by the stakeholders. Many respondents in this study and others argued that, consistent with the principles of participatory decisionmaking, stakeholders should have a role in defining the ground rules of the process.

"Stakeholders should have a role
in defining the ground rules of the
process."

The Aspen Institute has concluded that each stakeholder process "is governed by a set of operating rules developed and agreed upon by the participants."³⁵ This principle has been applied in real-world situations. For example, the National Environmental Justice Advisory Council (NEJAC) established a stakeholder committee to create recommendations for methods by which EPA can institutionalize public participation in its environmental programs. NEJAC recommended that defining ground rules was a major priority.³⁶ In Columbus, Ohio, the Mayor and the city government charged stakeholders with risk identification and prioritization and gave them total freedom to establish their own process, which resulted in a successful outcome.³⁷

Both interview respondents and literature sources cite early involvement of stakeholders in decisionmaking as an element that will increase the chance of success. Stakeholder processes are most likely to succeed when the project sponsors are open to "significant changes" and stakeholder input.³⁸ "When all stakeholders collaborate in designing their collective future, it increases the chances of former differences being resolved and a new consensus emerging around issues everyone can agree on," according to the World Bank.³⁹ Conversely, projects that are presented to stakeholder groups without their previous participation are largely perceived as traditional "decide, announce, and defend" tactics that have generated a great deal of opposition. In addition, early involvement has other benefits, including added time to study issues and develop the process, enhanced credibility of the decisionmaking process, early identification of issues of concern, and the generation of solution options.

Goals are critical in any management process. Several types of goals exist for many stakeholder processes. These include programmatic or outcome goals (e.g., improving transportation control plans, the use of comparative risk assessment as a priority setting mechanism, or solving a community or facility problem).

Many interview respondents identified specific outcomes or agreements as the goal of the process in which they participated or studied. For example, Columbus, Ohio’s, Priorities ’95 effort focused on creating a community-based strategic plan to address environmental risks. The process had two distinct phases. Phase One (Risk Assessment) included identifying, selecting, researching, and ranking environmental risks in order of severity. Phase Two (Risk Management) identified strategies to reduce the negative impacts from each of the ranked risks or issues.⁴⁰ At Intel’s Chandler facility, the stated goal of the Project XL negotiations was to obtain a final agreement that would lead to expanded production flexibility in exchange for increased accountability.⁴¹

Stakeholder decisionmaking and public participation have a number of equally important process goals. These goals include the sharing of information, identification of issues and concerns, creation of new alternatives, and the empowerment of participants over decisions that affect their lives. In addition, most interview respondents identified certain goals that should be established early in the process, including enhanced trust and credibility, relationship building, agreeing on the design of a stakeholder process, procedures for information gathering, and others.⁴²

The importance of both process and outcome goals was reinforced when respondents were asked to define success or failure. While about one-half identified specific decisions or outcomes as a goal, many more only noted process-oriented attributes. Success to these respondents was the sharing of information, relationship building, enhanced trust, and other benefits that resulted from the stakeholder process. Failure meant the lack of these attributes. Success or failure, then, is perceived by many as independent of a specific outcome or product. The various definitions for success or failure only reinforce the need for participants to define and agree upon the goals of a process.

In addition, collaborative goals (e.g., building relationships and alliances, partnerships devoted to brownfield restoration) can play an important role in stakeholder processes.

For some stakeholder processes all of these goals may be appropriate; for others, more selective goals need to be developed. Stakeholders and process managers should clarify the exact nature of their goals as early as possible in their deliberations. This not only provides focus to subsequent discussions but also, as the majority of people interviewed for this study observed, goals adopted early in the process generally remain stable throughout the length of the process, and help to improve the accountability of stakeholders to each other.⁴³

In general, there are four categories of decisions that can involve stakeholders. These include: 1) rights-based decisions (e.g., legal and civil rights); 2) values-based decisions (e.g., the debate over abortion, school choice); 3) interest-based decisions (e.g., land use issues, economic development); and 4) power-based decisions (e.g., voting, declarations of war). While stakeholder processes can potentially be used for each of these categories, they typically apply to resolving conflicts over interests where there are frequently more opportunities to negotiate and obtain agreement on mutually satisfactory outcomes. The distinctions among rights, values, interests, and power relationships are important—people are generally more willing to negotiate their interests rather than their values.⁴⁴

Stakeholder processes vary in the kinds of issues and decisions that will be addressed. For example, public hearings provide a structured mechanism to present information and solicit comments with little or no accountability on the part of the entity conducting the hearing on how the information will be used. In contrast, a citizen review panel can allow the public to participate in actual decisionmaking. As stakeholders’ participation and decisionmaking authority increase so, too, does the complexity of the process, the number of options to resolve, the risk of unpredictable decisions, and the potential benefits.⁴⁵

Among the thirty-seven interview respondents, there were several closely connected viewpoints on the issues appropriate for stakeholder consideration. About one-third of the respondents concluded that decisionmaking authority was the optimal role for stakeholders (although a few admitted that this situation is atypical). One respondent noted that "there is no distinction between stakeholders and decisionmakers when the process works properly." On the other hand, more than half of the respondents claimed that the relative degree of stakeholder involvement depends on the situation. "Sometimes we need advice. Other times we need a citizen driven blueprint or implementation plan," noted one individual. This interpretation is consistent with other recent stakeholder guidance from The Aspen Institute. Many of these same respondents offered a tiering mechanism that defined various levels of involvement. That is, different stakeholders have varying degrees of influence. Only a few respondents mentioned that stakeholders should be advisors.

Determining the relative involvement of stakeholders early in the process will serve two purposes. First, it will force the sponsoring entity to define clear goals for the process and evaluate the role of stakeholders’ decisionmaking authority. Stakeholder processes are considered less useful in situations where an institution has already made a decision and is looking for validation. In this case, decisionmaking influence would be minimal, thus challenging the spirit of public participation "core values," which state that the "public’s contribution will influence the decision." Without a clear understanding of how a stakeholder process can interact with or influence decisionmaking, one should question the value of such a process. Second, assessing the stakeholders’ role will help them define expectations on the nature of their involvement and may create an incentive for active participation.⁴⁶

Although stakeholder processes are growing in popularity and use, the value and cost of many of these processes are unclear. To determine the value and cost, both the interviews and literature review examined the need for evaluative criteria. Such criteria also have a number of benefits, including benchmarking the approach and progress of key issues noted above, keeping the process on track, understanding the public’s perception of the process and its outcomes, informing needed adjustments, and evaluating the overall results. The process of using evaluative criteria on a more regular basis has generated a body of information through which to improve the management of stakeholder processes as a whole.⁴⁷

"Although stakeholder processes are
growing in popularity and use, the value
and cost of many of these processes are
unclear."

A number of specific evaluative criteria have been used or suggested. DOE, for example, identified process criteria such as "range of public participation opportunities" and the "incorporation of public concerns and input into a decisionmaking process." Outcome criteria include "resolution of conflict" and the ability of the outcome to "fulfill legal and regulatory requirements." DOE also requires its public participation plans to be evaluated using specific criteria including the clarity of goals, process, planning, coordination with other related projects and programs, and identification of stakeholders.⁴⁸

Others also have categorized evaluative mechanisms in this manner. Lach and Hixson, for example, identified "prototype" process, outcome and direct/indirect cost indicators Process indicators include accessibility to the decisionmaking process, diversity of views represented, opportunities to participate, and integration of concerns and information exchange. Outcome indicators include project efficiency, cost avoidance, decision/project acceptability, mutual learning, and mutual respect.⁴⁹

Additional tools to evaluate the process and outcomes include establishing milestones to assess progress, conducting surveys of direct and indirect participants, and communicating the results of the evaluation.

Many of those interviewed for this study noted the need for both process and outcome evaluative measures, but there appeared to be little consensus as to the nature or weighting of the measures. They observed that process measures helped participants "digest one bit at a time" and enabled the observation of progress. On the other hand, another respondent mentioned that the only thing that matters is the way the results of the process were used. As an indicator of the lack of consistent measures, a number of respondents were split between the application of formal or informal measures.

According to many of the individuals interviewed in the study, it is important to keep the number of indicators relatively small in number. A fuller discussion of these issues is presented in Section VII.

Operating a stakeholder process can be an expensive, time-consuming activity involving many different kinds of resource needs. One of the nation’s leading supporters of stakeholder processes at the state level has cautioned interested parties to "expect that two-way, beneficial communication with the public will take longer and cost more than expected. Plan realistically for the resources needed to get the job done well."⁵⁰

A failure to fully anticipate resource needs has halted some stakeholder processes. In addition, stakeholders participate with very different resource needs. Some individuals, representing large national governmental agencies or companies, are able to gain easier access to information and staff than many state or local organizations or citizens. Their needs can range from grant support to organize and manage meetings, to technical support to improve understanding of the issues among all participants, or financial assistance for travel, computer, or child care services.

The increased use of stakeholder processes has elevated the importance of integrating budgetary, time, information, and other resource issues into the planning process. The inability to resolve resource issues at the very beginning constitutes a sufficiently important reason to: 1) reconsider the viability of a stakeholder process for the issue under review; or 2) re-evaluate the type of stakeholder process to be utilized and its resource requirements.

A process hammer is a factor that can halt the process or externally impose a decision, thereby encouraging stakeholders to reach consensus. Such hammers include statutory or court-imposed deadlines that can transfer the issue away from stakeholders if they fail to achieve agreement within a specified time period. The existence of higher level decision bodies that can substitute for the stakeholder process is another form of hammer. The Michigan Environmental Review Board, established in the 1970’s, was charged with the responsibility to review "significant" state actions relating to ecologically sensitive areas, major project funding by the state, and major environmental controversies. The Board’s role was to serve as an environmental science court, reach settlements on these issues, and try to avoid litigation. MERB members knew that, in the event of their inability to reach a decision, the governor would step in and make the decision for them—an event the governor would perceive as a failure by the Board. According to its former chairman, MERB succeeded approximately 80% of the time.⁵¹

An impending decision by a government agency, corporation, or multi-lateral organization constitutes another form of stakeholder process hammer, although if the time frame is too short a stakeholder process may not be advisable. Finally, stakeholders can adopt a hammer at the outset of the process by setting deadlines for achieving progress, establishing a sunset timeline, or committing to binding arbitration. Both the majority of study interviewees and frequent literature citations testify to the utility of some form of process hammer, although it alone provides no guarantee that an agreement will be reached.

Information and communication are necessary tools and drivers in stakeholder decisionmaking that present managers with both opportunities and challenges. Providing information is critical during the assessment process for identifying stakeholders and community issues, as well as during negotiations to inform the public and ensure accountability and credibility of the process. EPA’s Project XL Stakeholder Principles state that "information about projects should be disseminated widely in a transparent, continuous and accessible manner." The World Bank has concluded that sponsoring organizations have an obligation to "ensure that stakeholders are provided with adequate and relevant information" and that the information is "provided in a meaningful" and "readily understood" manner. And interviewees also identified "adequate information and resources" as a principal condition for success.⁵²

Sustained communication is critical to the credibility of the process, while the lack of information impedes participation and reduces the likelihood of a successful outcome. One of The Aspen Institute’s principles states that "each stakeholder process is illuminated by full transparency of information and full transparency of process to ensure openness and accountability of all participants."⁵³ The EPA also sees transparency as a "safety net" and a critical component in its Project XL process.⁵⁴For example, transparency played an important role in securing the Intel Chandler facility’s Project XL agreement. Intel used the Internet to keep indirect stakeholders appraised of the negotiations and is currently using Internet technology to disclose detailed environmental performance data each quarter. Other forms of transparency in stakeholder processes include disclosure of biases, interests, and policy objectives.

Access and availability of information has other benefits. Regular communication, for example, helps bolster accountability among participants during the process by ensuring that they are accurately representing the interests they claim to represent. It also is a necessary component in the involvement of indirect stakeholders in a decisionmaking process. Finally, it is a critical component when dealing with risk-based policymaking. Juanillo and Scherer, for example, have concluded that, "Entrusting policy to panels of experts working behind closed doors has been proven a failure, both because the resulting policy may ignore important social considerations and because it may prove impossible to implement in the face of grassroots resistance." Two-way risk communication, by contrast, "presumes a free flow of information among stakeholders about the problems, policies, evidence, and potential solutions."⁵⁵

"Entrusting policy to panels of experts working behind closed doors has been
proven a failure, both because the resulting polity may ignore important social
considerations and because it may prove impossible to implement in the face of
grassroots resistance."

Napoleon Juanillo and Clifford Scherer

Expanding information and communication may stimulate more stakeholder-based decisionmaking. Increasingly, environmental performance data, as well as environmental, health, safety and risk information are becoming readily available, thereby empowering the public’s ability to influence environmental performance and policy. For example, EPA and other organizations have made available corporate environmental performance data such as SARA Title III information. Right-to-know organizations have announced their intention to load on the Internet risk management planning (RMP) data submitted by more than 64,000 facilities after the compliance deadline in June 1999. EPA’s stated objective is to share this type of information to allow industry, government, and the community to work together to reduce chemical hazards and their risk to the public and the environment.⁵⁶

56U.S. Environmental Protection Agency, Chemical Emergency Preparedness and Prevention Office, Risk Management Program: RMP* Submit™, RMP* Info™ Factsheet," United States Environmental Protection Agency, Office of Solid Waste and Emergency Response (January 1998), p. 1.

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