Stakeholder Management

Questions to be addressed for Stakeholder mgmt..

1. Who are our stakeholders? 2. What are their stakes? 3. What opportunities & challenges are presented by them?

4. What CSR does the firm have towards them?

5. What strategies and actions would be best to deal with these responsibilities?

Who is a Stakeholder?
Any group or individual who affects or is affected by the achievement of the organization's purpose.

ORGANIZATIONAL, ECONOMIC & SOCIETAL STAKEHOLDERS

Employees Managerial Stakeholders Unions Customers Creditors Distributors Suppliers Communities Govt. & Regulators Non-profits and NGOs Environment

Classification of Stakeholders
Primary Social Stakeholders Investors Employees &Managers Secondary Social Stakeholders Govt & regulators Civic Institutions Primary Non-Social Stakeholders Natural environment Future generations Secondary Non Social Environmental pressure groups Animal welfare organisations

Local Communities
Suppliers

Social Pressure groups

Media and academic commentators Trade bodies, industry associations Competitors

Non human species

Other business partners

What are the stakes?

Examples Customer Segment 1 High Users of product, seek improvement in product Customer Segment 2 Low users of product, required substitute Employees Job security and pensions Political Parties Able to influence regulatory process

Influence of National and Regional variations on CSR

High stress environments the area has had along period of economic disadvantage Structurally disadvantaged areas remote places Crisis Zone Collapse of a dominant company or industry Transitional Area Forced to change areas regions based on a firm or industry are forced to change due to new entrants

Other factors..
Culture Role of government Developed, developing and emerging countries

Importance can be judged based on

Power ability of stakeholder to influence organizational decisions and actions Legitimacy how far the organization perceives the activities of stakeholders as appropriate and desirable Urgency the importance of stakeholder claim to immediate actions

Based on the above

Latent - one attribute Expectant - two Definitive all three

 Benefits to stakeholder
Functional Psychosocial desirable end-states based on individual values

Benefit to company
Cost reduction Revenue enhancement Increased market value Improved competitive conditions

 Benefits thru customer stakeholder

Improved loyalty Improved image and reputation (build reputation or lower reputation risk)

Benefits thru investor stakeholder

Screened portfolios Improved reputation Decreased long-term risk

Benefits thru government stakeholder

Thru
Core business operations and investments Strategic philanthropy and community investing Public policy dialogue, advocacy and institution building

Results in
Gaining license to operate (tax credit, M& A agreements, product/process monitoring) Developing connections with decision makers Shaping policies and regulatory environment

 Benefits thru community stakeholder

Enhanced local reputation and integration

Benefits thru supplier stakeholder

Decreased cost Increased revenue

Benefits thru employee stakeholder

Commitment and motivation Recruitment and retention New skills and training

Capitalizing CSR through Stakeholder Orientation

Four stages 1. Identification 2. Commitment 3. Trust 4. Satisfaction

Stakeholder Map
Step 1: Identify generic stakeholders (Primary and Secondary Group) Step 2: Historic Analysis of the environment of the firm Step 3: Identify Specific stakeholder groups Step 4: Identify the stakes of these specific groups Step 5: Identify the networks among the stakeholder groups.

Identifying Key Stakeholders

Companys Influence Low Insignificant High

Stakeholders Interest

Low Priority for attention

Medium priority for attention

Significant

Medium Priority for attention

High Priority for attention

The Process Level

What are the processes a firm follows to achieve a fit with the external environments?

Types of partnering with Stakeholders

Knowledge Sharing thru feasibility studies, proposals and evaluations Dialogue Informed Consent Contractual Shared Work Plans Shared Responsibility
(Warner and Sullivan 2003)

Interacting With Stakeholders (Transactional Level)

Routine Transactions Buying, selling, dividends, AGM Others Handling customer complaints, press meets, meeting financial analysts, union, local government bodies, other government officials Employees

The Wal-Mart Controversy!!

Wal-Mart us one of the most powerful companies in the world. At the foundation of the companys success, however is its strategy of minimizing costs, which relies on many policies that affect stakeholders in different ways. Detail the various ways in which Wal-Mart affects several stakeholder groups and what the company has to offer to each of those groups. Is there a net-positive or a net-negative impact on each of them?