In the wake of a violent inter-ethnic crisis in 2003, Chevron Nigeria Limited (CNL) — the third largest oil producer in Nigeria — dramatically reshaped its community engagement strategy. The new process, known as the ‘GMOU’ model, was named for the formal agreements called General Memoranda of Understanding signed between the company and clusters of communities impacted by the company’s onshore operations and government.
In one of the most challenging contexts in the world — where relationships between communities and companies have long been characterized by substantial mistrust and antagonism — the GMOU model is now succeeding where other approaches have fallen short. While still far from perfect, at its core, the GMOU model has helped transform relationships between the company and surrounding stakeholder communities, leading to better outcomes for residents and the company.
Through our involvement as process designers, facilitators, and capacity builders in this effort, the Consensus Building Institute (CBI) has identified 10 components of effective corporate stakeholder engagement that can be applied to a variety of scales and particular problem-sets. Listed below in brief, these elements collectively speak to the importance of viewing stakeholder engagement as negotiated partnership built around the premise of shared gains, a commitment to fairness, and equitable participation in decision-making. Read the full case text here.
1) Creating a Greater Sense of Fairness in the Process: There are always substantive issues to be addressed between companies and communities. However, equally important is the way in which both parties engage and negotiate with each other to address them. The creation and implementation of the GMOUs and regional development councils – responsible for guiding collective engagement and negotiation of community benefit agreements — gave community stakeholders a larger role in setting the terms of the conversation, and the process for interacting. This shift created a greater sense of fairness in the process. It was also a key step towards overcoming the long-standing perception of a power imbalance between the company and communities, and helped create some of the key conditions for productive interaction and problem solving.
2) Enabling the Community to Choose its Representatives: Often, companies choose individuals that hold more favorable views of the company, or exclude community leaders that they find difficult or confrontational. Such approaches fail to address the full range of interests and views held by a community, and often interfere with underlying social and community dynamics, of which companies can be painfully unaware. This can lead to unsustainable agreements, and in the worst case, contribute to underlying social conflict in a society.
3) Jointly Setting the Agenda: Companies should not be the only ones defining the issues for engagement and negotiation, as they often exclude issues that are of primary importance to community stakeholders. The GMOU model created a single platform for dialogue between the company and each group of communities for the vast majority of issues. This enabled both the communities and the company to put issues on the table for dialogue and negotiation. One party may not always be able to address all issues to the satisfaction of the other party, but the issue can be raised and addressed within the limits of each party’s authority.
4) Pursuing Meaningful Partnership and Shared Ownership: Often, communities are treated as the beneficiaries of the company’s good will. Companies, often without realizing it, continue to dictate the terms of dialogue, drive the relationships, and impose their viewpoint and interests on communities. Under the GMOU model, CNL took significant steps to pursue meaningful partnership and shared ownership with communities. The model invested substantial responsibility and authority for social investment decision-making in the communities themselves, while maintaining an oversight role for the company through multi-stakeholder governance structures.
5) Utilizing Participatory Approaches and ‘Joint Fact Finding’: In contexts of mistrust, participatory approaches to reviewing past performance, current options and constraints become critical, in order to build shared, credible information as a basis for joint decision-making. When the first generation of GMOU agreements approached expiration, CNL proposed an evaluation of the GMOU mechanism before negotiating the next generation of GMOU agreements. Rather than hiring substantive experts to conduct the evaluation, neutral facilitators were brought in to help develop and run a completely transparent process in which the parties to the GMOU designed the evaluation methodology and then jointly analyzed the data that emerged from interviews and focus groups. As a result, the parties jointly arrived at conclusions about the strengths and weaknesses of the GMOU model, laying a credible foundation for the renegotiation process. In addition, these kinds of participatory approaches create opportunities for companies and communities to strengthen their relationships by working ‘side-by-side’.
6) Using Jointly Selected Professional Facilitators to Build Trust: At the time the GMOU model was first proposed, community mistrust was so high, they rejected the model simply because CNL was proposing it, and they presumed bad faith on the part of the company. CNL has engaged professional facilitators (both local and international) to broker relationships between the company and community throughout the process.
7) Building a Flexible, Adaptable Model: The GMOU was an experiment, and there were (and still are) imperfections in the design and implementation of the model. However, the parties moved forward with the process, despite some reluctance from all sides, and created both the platform for dialogue and the processes to enable community development projects to proceed. The model also included the ability to adapt and improve as it performed. Adaptation took place through joint stakeholder evaluation of the model, at the end of each of the first 3-year cycles. As weaknesses were identified through the evaluations, improving upon them became a key objective of the renegotiation processes. This investment has enabled the GMOU to learn from its performance and adapt accordingly.
8) Recognizing and Addressing Capacity Gaps: On the community development side, the GMOU placed substantial responsibility on the newly created Regional Development Councils (RDCs) to be able to manage a portfolio of community development projects. However, at their establishment, the RDCs lacked both the basic operational functionality and the development expertise required. One of the roles of the NGOs in the GMOU structure was to provide training and assistance to the RDCs. When it later became clear that inadequate communication with constituents threatened to undermine the GMOU model, strengthening the capacity of the RDCs became a shared objective for both CNL and the RDCs, and CNL ultimately established an additional fund to enable an NGO consortium to provide ongoing training and support to RDC leadership.
9) Incremental Approaches to Building Trust: Trust cannot be built overnight. The GMOU provided opportunities for both company and communities to begin to make commitments and deliver on those commitments, to demonstrate that they could each be credible counterparts, and to build trust incrementally through that process. This is best done through confidence-building measures in lower-stakes contexts first, rather than immediately rushing into high-stakes negotiations. The expiration of the GMOUs after 3 years was one way in which the stakes were lowered for both sides. A time-bound agreement enabled both parties to move ahead, knowing that they would have an opportunity to re-evaluate performance of the model.
10) Relying on Internal Champions: Having internal champions who understand the drivers that make the model work remains essential, particularly as those with direct experience rotate to other positions within the company.Support from individuals within CNL was key to be able to address staff concerns and gain sufficient buy-in for the project to move forward. Several of the individuals supporting the GMOU process had experience with similar processes that had worked in other regions where Chevron operated. Key to maintaining support for the GMOU was the personal interest and participation of a hand-full of CNL operations managers who recognized the GMOUs’ importance in enabling the company to operate.