How the best CEOs build lasting stakeholder relationships

Courtesy of McKinsey & Company

by Blair Epstein, Julia McClatchy, and Kurt Strovink with Eric Sherman

To cultivate, maintain, and manage their ecosystem of relationships, leaders need to start with a deep understanding of their organizations’ unique purpose as well as the motivations and goals of their stakeholders. These insights will shape the core narrative the CEO shares through public platforms, with adaptations to make it meaningful to different audiences. Through continuous learning, the best leaders perfect and renew these messages over time, strengthening engagement and enriching their relationships.

Based on our experience working with private- and public-sector leaders, we believe successful stakeholder engagement has four characteristics, summarized in an approach we call EDGE: an Expanded view of the CEO’s role as the company’s bridge to the external world; a Distinctive narrative with the CEO as storyteller in chief; a Growth-oriented mindset that empowers a team of internal and external ambassadors to articulate the company’s vision, and an Engaged posture that systematically strengthens stakeholder connections and prepares the organization to handle inevitable crises. This approach can enable CEOs to create meaningful interactions with positive outcomes and enduring impact.

Expanded: Embrace your role as the bridge to the outside

First, CEOs should embrace their role as the bridge to the outside world. This involves actively shaping a consistent narrative and recognizing the interconnectedness of internal and external communications. Thorough preparation, self-reflection, and understanding the organization's unique place in the world are key. Leaders should also look for successful communications strategies outside their own industries that could inform their own approach. Acquiring this expanded worldview makes CEOs more adept at embracing a critical facet of stakeholder relationships: the need to listen more than to speak.

Distinctive: Become the storyteller in chief of a singular, proprietary narrative

This involves integrating perspectives into a distinctive story that excites stakeholders about the organization's strategy and vision. Effective storytelling encapsulates the four Ws: Who, Why, What, and When. It is important to start with the Who and Why first before establishing the What and When. This approach gives insights into Who the CEO is, and the Why then refers to the organization’s reason for existence (purpose and goals). The What and When can be established only after answering the Who and Why. The goal is to share the organization’s aspirations in simple but compelling ways before formulating the agenda. The When then comes in to identify the right timing to communicate and roll out the plans. By communicating in context and managing these polarities, CEOs reinforce their organizations’ enduring themes and progressively deepen the level of engagement—from informing stakeholders to inspiring them.

Growth oriented: Empower a team of ambassadors to articulate the company’s story

This involves creating a deep bench of leaders who can carry and cascade the core narrative. Communication skills must be cultivated, and organizations should invest in training executives to engage with external stakeholders. CEOs can leverage their teams to convey key messages and amplify their reach. In helping develop the narrative, those leaders take ownership of the story and cascade the messages across the organization.

Engaged: Maintain a consistent communication drumbeat, even during crises

This involves prioritizing stakeholder engagements based on strategic considerations and the desired outcomes. A yearlong view of stakeholder management tasks helps allocate time and energy effectively. Strong relationships are critical during crises, and CEOs should be prepared to back their words with commitments of financial and human capital. Effective CEOs know that galvanizing stakeholders around the organization’s mission is critical, and they approach communications with the same rigor as they do financial performance. Leaders who treat the “soft stuff” as the “hard stuff” can more than double the odds of a strategy being successful, and the impact of its execution is nearly double that.

An effective, dynamic communication platform shifts the CEO’s posture from being reactive to anticipating and shaping stakeholder perspectives. It evolves their approach from ad hoc messaging to a systematically developed and deployed communication agenda. It is through this kind of engagement and these meaningful connections that CEOs will cocreate a more impactful future with their stakeholders.

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About the author(s)

Blair Epstein is a partner in McKinsey’s Bay Area office; Julia McClatchy is a partner in the Philadelphia office; Kurt Strovink leads McKinsey’s global CEO services and is a senior partner in the New York office, where Eric Sherman is a knowledge expert.