Working with Stakeholders: The Buck Stops at the CEO’s Office

From shippers to state agencies, carriers to the community, many groups have an interest in decisions made by the port.

By Lori Musser

Running a port in the 21^st century is not a pursuit for the meek.

Port business is important business, especially from an economic perspective. It is complex – spanning functions, modes, assets, geography, time and jurisdictions. Perhaps the most challenging of all port management tasks is engaging and working with stakeholders. CEOs must ensure these relationships are managed wisely; their jobs hang in the balance.

The Rise of Stakeholder Rights

The variety and sheer volume of stakeholders with a claim on ports is mind-boggling – and it is growing. In the good old days, some ports ran much like private entities, working with customers to expand business, reporting to a board and quietly taking earnings to the bank. Those days are long gone.

Nowadays, information is at everyone’s fingertips, and its availability has entitled and allowed individuals and groups to make their opinions known, pursue their expectations and anticipate timely responses. To some extent, private businesses can still pick and choose their stakeholders. Not so for ports. In the same hour, a port might receive a call from a global carrier on crane availability, a minister on scattering ashes, a neighborhood association on noise and a commercial fishery on security.

Stan Payne, an experienced port CEO and now principal for transportation management consultant Summit Strategic Partners, said that before a port can hope to optimize interactions with and delineate entitlements for stakeholders, it must clearly determine the division of responsibility between its board of directors and its CEO and staff. Who sets stakeholder policy? Who implements it? That will affect the answer to the next questions: Who are the stakeholders? What is the stakeholder policy? What are the boundaries of the port’s relationship with its various stakeholders?

Payne said that there are pros and cons to greater stakeholder interaction. “When you make a decision with stakeholder input, there is a greater chance of success. However, a stakeholder can have a vested interest that may not be in the best interests of the port going forward.”

He said that there are a number of useful tools to help develop positive relationships with stakeholders, but they come at a cost, and resources must be managed. “Ports must understand that there will be times when the port and stakeholder have to agree to disagree. At that point, how you approach the conflict is important,” Payne said. He added that good relationships take time to develop, and given the relatively short tenure of CEOs and commissioners, staff may be the only candidates available with sufficient longevity to nurture the relationships that can make the conflict resolution process more palatable for stakeholders.

It is increasingly important to regularly align port strategic plans with those of the cities, counties and states within which they operate. “It is all about the greater good of the community,” Payne said.

A New Beginning at the Port of Long Beach

Delivering on all stakeholder expectations is neither reasonable nor doable. A port can, however, make great inroads on engendering respect for its decisions through understanding. The Port of Long Beach learned that lesson the hard way.

“We were dragged to the party,” according to Managing Director of Environmental Affairs and Planning Rick Cameron.

In the early ‘90s, Long Beach’s naval station, a long-serving base for the Pacific Fleet, was up for closure. “Once the writing was on the wall that we would lose the Navy complex, we geared up to see … how we could benefit from the BRAC process. We were in major need of expansion land,” Cameron said. The port’s reuse plan was accepted, but management hadn’t anticipated the strong bond so many in the local community had with the property. Interested groups included naval aficionados and historic preservationists. A portion of the property, called the Roosevelt Base, was considered historically and architecturally significant for its style, site planning, landscaping and prominent Roosevelt-era African-American architect.

“There were a lot of people affected and interested,” Cameron said. This was the first time the port was challenged by stakeholders and special interest groups outside the port community, he added. “We weren’t doing a good job of listening. That was our culture at the time. We mostly did what we thought best and mitigated.” In the end, the port tore down the facilities and built a container terminal.

That was the start of a new beginning of the Port of Long Beach. The port was growing at a pace that couldn’t be handled in a sustainable way – growth that was accompanied by mounting challenges. The challenges would not diminish when stakeholders were ignored. So, eventually, they were engaged.

Cameron said, “In the 10-year period following our perfect storm, we learned to engage, to listen to the community, to be a major part of the community. Corporate culture was changed. In 2005, the port established its Green Port policy – a cultural overhaul designed to help move forward with meaningful, environmentally-sound sustainability programs.” That involves substantial, ongoing community engagement and investment.

“Instead of taking our community relationship as being least important, today, it is our most important mission,” Cameron said.

Port of Cleveland’s Proactive Stance

Will Friedman, president and CEO of the Port of Cleveland, agrees that engagement and education are critical. “PR and reputation management is especially important to us. We have a tax levy, and every five years there is a referendum,” he said.

Although the port has had its share of controversies, Friedman said it tries to live by three maxims: work hard to be credible, always be transparent and, if you commit, then deliver. He said the Port of Cleveland’s customer service programs embrace all stakeholders, including the community.

Being proactive can facilitate community engagement. Friedman cites the example of a former dredged spoil disposal site that created a peninsula jutting about 100 acres into the water. It was unused by the port, had revegetated itself and had become an important bird habitat. The port declared it a preserve and earned a considerable amount of goodwill in the process.

“Even when you are proactive, it is hard to win over everyone,” according to Friedman. He said the port’s strategic plans embody a new, more thoughtful, transparent and intentional relationship with the community, but that ports must be selective.

“There are tons of demands on us, but we still have a port to run. Judgment comes into play. And like anything else you look at ROI,” he said. That includes looking at opportunity costs, such as dollars saved by avoiding litigation, and also qualitative metrics.

Port of Prince Rupert Partnership for Prosperity

The Port of Prince Rupert resides alongside a municipality that comprises almost 40 percent aboriginal peoples. In a landmark agreement with the Lax Kw’alaams Indian Band and Metlakatla Indian Band, interests were aligned in a way that provides for future growth and expansion at the port.

Part settlement for container terminals falling within the traditional territory of the native people, the agreement guarantees First Nations participation in the economic opportunities created through the port while allowing continued growth and expansion of the port.

The agreement also provides for financial payments associated with impacts on traditional use of the site, provides jobs during construction and operations, and provides preferred contracting opportunities associated with the container terminal development and port operations.

The partnership, reached in 2011, allows the port and the Coast Tsimshian to work together toward the mutual objective of economic development in the Northwest Canada.

Showing Resolve

How port CEOs make tough stakeholder decisions will in large part define the success of ports in the coming decades. The buck stops at the CEO’s office.

Optimal stakeholder interaction is a vision to strive toward. Planning and engagement and education can be resource-intensive, frustrating, somewhat thankless pursuits, but it can also produce solid blocks of support for goals and better management practices.

Port CEOs who plan, think about business and communities in tandem, and manage their outreach can pave a path to sustainability and success. Positive stakeholder relationships are an investment in a port’s future that no port can do without.

A Stakeholder’s View: The Nature Conservancy

Why would a port take the time to work with a stakeholder, such as The Nature Conservancy? Some industry insiders would say ports should just stick to the knitting. But if the “knitting” involves altering coastal environments, ports are typically obligated to mitigate for unavoidable project impacts. If an organization such as the Nature Conservancy can offer recommendations to help make a habitat mitigation project better – more viable, more attractive, more cost-effective – then ports would be imprudent to ignore them. Take, for example, the following case:

In the Gulf of Mexico last spring, more than 800 volunteers and partners came together to rebuild oyster reefs in Pelican Point near Mobile, Ala. They moved nearly 13,000 interlocking concrete blocks that became the foundation for the reefs. The rebuilt oyster reefs minimize erosion, protect coastlines and infrastructure, and enhance important natural habitat for fish, birds and other marine life.

Over the past decade, The Nature Conservancy, in partnership with the National Oceanic and Atmospheric Administration, U.S. Army Corps of Engineers, U.S. Fish and Wildlife Service and others, has been putting science into action at more than 160 restoration sites around the globe and in every U.S. state. Together, it’s led the world’s largest seagrass restoration project in Virginia, conducted some of the most innovative coral restoration in Florida and the U.S. Virgin Islands, and directed the world’s largest oyster restoration initiative in the Gulf of Mexico.

Healthy, intact wetlands, coral reefs, oyster reefs, coastal dunes, mangroves and flood plains can blunt the impact of wind-driven waves, reducing erosion and minimizing flooding. “These natural barriers can act as a first line of defense. They buffer local communities and important infrastructure from flooding while contributing to local economies through recreation, fish production and other community benefits,” said Mark Tercek, president and CEO of The Nature Conservancy.

Learn more about the science of coastal restoration, the role nature can play reducing risk from coastal storms and providing benefits to the coastal economy at www.nature.org/RestorationWorks.

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