an introduction to stakeholder theory
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TRANSCRIPT
Stakeholder theory
Stakeholder management and
strategic planning
Two broad stakeholder theories
• Friedman
• Freeman
Theory one
• Milton Friedman – focus on the shareholders as they only stakeholders who matter. The business of business is making a profit and building shareholder value the prime purpose.
Theory two
* The quickest way to destroy shareholder value is to ignore stakeholders
Where did it start?
• R. Edward Freeman (1984)
• Stakeholder theory is about identifying the groups who are stakeholders in a corporation and need to be managed
Why are stakeholders important?
• Corporations and organisations operate with the consent of the community.
• Communities comprise groups of stakeholders
• Winning the consent of these stakeholders provides a licence to operate
Who are stakeholders?
• The directly involved:
- investors
- employees
- suppliers
- customers
Other stakeholders
• Government
• Political parties
• Trade unions
• Community groups
• NGOs
• Plant neighbours
A key question for you
• Is the media a stakeholder?
Why pay attention to stakeholders?
• Moral or philosophical reasons – corporate social responsibility
• Practical reasons – licence to operate
• Strategic planning reasons – identifying opportunities and threats
Some key management questions
• Why should specific companies pay attention to stakeholders?
• Who are the organisation’s stakeholders? How do we identify them?
• What is the basis for their interest/legitimacy?
• What do they want?
Some key management questions
• Which stakeholders are most important? How do we set priorities?
• Do we need separate strategies for different stakeholder groups?
• Can we reach all stakeholder groups?
• How do we balance stakeholder interests?
Managing stakeholders – a strategic context
• The quality of relationships with stakeholders are the key determinant of corporate reputation
• Stakeholder management is the core of public affairs management
• Symmetric and asymmetric communication theory is relevant to stakeholder management
Managing stakeholders – an communications approach
• Identify the stakeholders
• Identify the relationship you want with them
• Identify the urgency/timing need for communicating with them
• Identify their information needs
• Identify the best communication channel
Some practical examples
• Employees – face to face as frequently as possible
• Investors – as laid down by ASX/ASIC regulations
• Governments – building up goodwill for the future
• The media – when and where appropriate
Managing stakeholders – a PA and issues management approach
• Craig Fleisher’s emerging PA model:
• Managing PA and issues management on a year round process
• Cultivating and maintaining enduring stakeholder relationships
• Influencing stakeholders using refined information
• Managing the grassroots
Fleisher model
• Communicating in an integrated manner
• Continually aligning values and strategies with the public’s interests
• Improving external relationships using contemporary management practices
Using PA planning techniques
Identify stakeholder management needs as an integral part of:
• Issues monitoring and environmental scanning
• Analysing threats and being sceptical
• Using standard analytical tools: SWOT, PEST, Porter model
Planning techniques
• Undertaking scenario planning: What ifs?
• Constantly testing internal perception against external realities
• Creating risk, opportunity and issues profile
• Producing issues maps and stakeholder matrices
Setting priorities
Categorise stakeholders by:
• Stakeholders directly interested in your success
• Allies and potential allies
• Entrenched opponents
• Independent monitors and opinion formers
• Uninvolved
Management strategies
• Directly interested – recruit as advocates
• Allies – encourage
• Opponents – neutralise
• Independents – maintain dialogue
• Uninvolved – monitor and anticipate
Some conclusions
• Two theories – empirically one wrong and one right
• Focus on identifying stakeholders and why they are important
• Integrate stakeholder management into strategic planning
• Set stakeholder priorities