STAKEHOLDER MANAGEMENT APPROACH

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STAKEHOLDER MANAGEMENT APPROACH:

STAKEHOLDER MANAGEMENT APPROACH

DEFINITION:

DEFINITION Stakeholder Approach: provides a framework that enables users to map, and ideally, manage the corporation’s relationships (present and potential) with groups to reach ‘win-win’ collaborative outcomes. Here, ‘win-win’ means making moral decisions that benefit everyone in terms of justice, fairness & economic interests.

STAKEHOLDERS:

STAKEHOLDERS A stakeholder is any individual or group who can affect or is affected by the actions, decisions, policies, practices or goals of the organization. Focal stakeholder is the company or group that is the center and focus of our analysis. Primary stakeholders include the owners, customers, employees and suppliers of a firm. Secondary stakeholders include other interested groups like the media, consumers, courts, govt., competitors, public & society.

STAKE:

STAKE Stake is any interest, share or claim that a group or individual has in the outcome of a corporation’s policies, procedures, or actions towards others. Stakes can be present, past or future oriented. Stakes are not necessarily obvious or explicit.

STAKEHOLDER ANALYSIS:

STAKEHOLDER ANALYSIS Mapping stakeholder relationships Mapping stakeholder coalitions Assessing the nature of each stakeholder’s interest Assessing the nature of each stakeholder’s power Constructing a matrix of stakeholder moral responsibilities Developing specific strategies and tactics Monitoring shifting coalitions

MAPPING STAKEHOLDER RELATIONSHIPS:

MAPPING STAKEHOLDER RELATIONSHIPS

CUSTOMERS/CONSUMERS:

CUSTOMERS/CONSUMERS Safe products Reliable service Honest information Fair treatment Protection from product/service harm

SUPPLIERS & DISTRIBUTORS:

SUPPLIERS & DISTRIBUTORS Fairness Truthfulness in transactions & contracts Mutual respect Honest information sharing Timely payment

COMPETITORS:

COMPETITORS Promote open markets Follow laws and rights Act ethically in all business transactions

ENVIRONMENT:

ENVIRONMENT Protect and respect environment Improve and sustain nature Prevent waste

COMMUNITIES/SOCIETY:

COMMUNITIES/SOCIETY Respect laws, rights Respect values and culture Support and promote economic, social, social health and human development Be a good corporate citizen

GOVERNMENT:

GOVERNMENT Law abiding Follow fair standards and procedures Promote societal and community safety and health

MAPPING STAKEHOLDER COALITIONS:

MAPPING STAKEHOLDER COALITIONS Determine and map any coalitions that have formed between stakeholders. Coalitions generally form around issues & stakes they have in common (Eg. Competitors may join forces if they see an advantage in numbers).

ASSESSING NATURE OF EACH STAKEHOLDER’S INTEREST:

ASSESSING NATURE OF EACH STAKEHOLDER’S INTEREST Identify the supporters (active & nonactive, or uncommitted), and the active opposition.

ASSESSING NATURE OF EACH STAKEHOLDER’S POWER:

ASSESSING NATURE OF EACH STAKEHOLDER’S POWER What’s in it for each stakeholder? Who stands to win, lose? Power stakeholders can be those with Voting power Political power Economic power

IDENTIFYING STAKEHOLDER ETHICS & MORAL RESPONSIBILITIES:

IDENTIFYING STAKEHOLDER ETHICS & MORAL RESPONSIBILITIES Determine the ethics, responsibilities and moral obligations your company has to each stakeholder (eg. Owners, customers, employees, public etc.) Legal Economic Ethical Voluntary

DEVELOPING SPECIFIC STRATEGIES & TACTICS:

DEVELOPING SPECIFIC STRATEGIES & TACTICS Consider whether to approach each stakeholder directly or indirectly. Decide whether to do nothing, monitor or take an offensive or defensive position with certain stakeholders. Determine whether to accommodate, negotiate, manipulate, resist, avoid, or ‘wait and see’ with specific stakeholders. Decide what combination of strategies to employ with each stakeholder.

DEVELOPING SPECIFIC STRATEGIES & TACTICS:

DEVELOPING SPECIFIC STRATEGIES & TACTICS TYPE 1 – Supportive Stakeholders (Low potential for threat and high potential for cooperation) Eg. Employees, suppliers, trade associations, board members, parent company, vendors. Strategy: Involve the supportive stakeholder

DEVELOPING SPECIFIC STRATEGIES & TACTICS:

DEVELOPING SPECIFIC STRATEGIES & TACTICS TYPE 2 – Marginal Stakeholder (low potential for both threat and cooperation) – may not be interested in issues of concern. Eg. OEMs, Media. Strategy: Monitor the stakeholder (wait & see), and minimize expenditure of resources until there is a change in the position of the stakeholder.

DEVELOPING SPECIFIC STRATEGIES & TACTICS:

DEVELOPING SPECIFIC STRATEGIES & TACTICS TYPE 3 – Non-supportive Stakeholder (high potential for threat and low potential for cooperation) – may not be interested in issues of concern. Eg. Government (Central & State), suppliers Strategy: Defend the interests of your organization and reduce dependence on stakeholder.

DEVELOPING SPECIFIC STRATEGIES & TACTICS:

DEVELOPING SPECIFIC STRATEGIES & TACTICS TYPE 4 – Mixed blessing Stakeholder (high potential for both threat and cooperation) – may not be interested in issues of concern. Eg. Many customers, employees Strategy: Collaborative strategy where you attempt to move the stakeholder to the focal company’s interests in the goal

DEVELOPING SPECIFIC STRATEGIES & TACTICS:

DEVELOPING SPECIFIC STRATEGIES & TACTICS Keep the following points in mind while developing strategies: Your goal is to create win-win outcomes if possible Ask – what is our business, who are our customers, what are our responsibilities to the stakeholders, public and firm? Consider the probable consequences of your actions – for who, at what costs, over what period? Keep in mind that the means you use are as important as the ends you seek.

MONITORING SHIFTING COALITIONS:

MONITORING SHIFTING COALITIONS Need to constantly monitor the evolution of issues and actions of the stakeholders since time and events can change the stakes and stakeholders. Tracking trends and events can help the CEO take the right decisions.

FOUR PRINCIPLES OF ETHICALLY EFFECTIVE ORGANIZATIONS:

FOUR PRINCIPLES OF ETHICALLY EFFECTIVE ORGANIZATIONS High ethics firms are at ease interacting with diverse internal and external stakeholder groups. Obsessed with fairness – person’s interests count as much as their own. Responsibility is individual rather than collective (each individual is responsible for himself). Have a purpose, a way of operating which are valued by the members. The purpose connect the firm to the environment.

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