Introduction Organizations exist to create valuable goods and service that people desire.

INTRODUCTIONOrganizations exist to create valuable goods and service that people desire and to create acceptable outcome for various groups of stakeholders.StakeholdersStakeholders are the people who have an interest, claim, or stake in organisation, in what it does, and in how well it performs.

Generally, stakeholders are motivated to participate in an organization if they receive inducements that exceed the value of the contributions they are required to make. Two main groups of organizational stakeholders Inside stakeholdersOutside stakeholders

Inside stakeholders These are the people who are closest to an organization and have the strongest or most direct claim on organizational resources.

ShareholdersManagersWorkforceShareholdersThey are the owners of the organization.Their claim on organizational resources is often considered superior to the claims of the other inside stakeholders.

Managers They are employees who are responsible for coordinating organizational resources and ensuring that an organizations goals are successfully met.Top managers are responsible to maximize future output of goods and services.Managers are agents of shareholders.

Role of managers (i) To Have Contacts -both within and outside the business. (ii) To Supervise- to avoid wastage of resources.

(iii) To Attain Targets-sales and production targets.

(iv) To Delegate Authority-to get done things by their subordinates, sufficient authority is delegated to carry out the duties by the subordinates

(v) To Hold Meetings with subordinates and other managers(vi) To Make Decisions-routine decisions likePurchase of raw materials, payment of wages, sanctioning leave to subordinate staff, etc.

WorkforceConsists of all non managerial employees.Members of the workforce have responsibilities and duties usually outlined in a job description that they are responsible for performing.An employees motivation to perform well relates to the rewards and punishments that the organization uses to influence job performance.Workforce mgt includes:

Payroll & benefitsTime & attendanceCareer & succession planningTalent management Learning management Performance managementForecasting and scheduling

OUTSIDE STAKEHOLDERS They are those people who do not own the organization, are not employed by it, but do have some interest in it.

CUSTOMERS

They are the largest outside stakeholder group. They have a direct effect on the organisations efficiency and an indirect effect on its ability to attract customers.

EXAMPLE Japanese cars remain so popular with U.S. consumers is that they still require fewer repairs than the average U.S. made vehicle. This reliability is the result of the use of components parts that meet stringent control standards. The close relationship between the large Japanese automakers and their suppliers is a stakeholder relationship that pays long-term dividends for both parties. Realizing this, the U.S. car manufacturers have also moved to establish strong relationships with their suppliers to increase quality, and the reliability of their vehicles has increased as a result.

GOVERNMENT Government has several claims on the organization.It wants co. to compete in a fair manner and obey the rules of free competition.Eg- payment and treatment of employees, workers health and workplace safety, nondiscriminatory hiring practices and other social and economic issues.The government has power to punish any co. that breaks the rules by taking legal actions against it.There is a need to control the relationship between a co. and the accounting firm which audits its books by, for example, limiting the no. of years such a relationship can endure.

TRADE UNIONSRelationship between a trade union and an organization can be one of conflict or cooperation. They have a direct effect on the productivity and effectiveness of the organization.Cooperation between managers and the union can lead to positive long term outcomes if both parties agree on an equitable division of the gains from an improvement in a co.s fortunes.

LOCAL COMMUNITIESLocal communities have a stake on the performance of the organizations because employment, housing, and the general well being of the community are strongly affected by the success or failure of local businesses.

GENERAL PUBLICGeneral public is happy when organizations do well against overseas competitors.Eg- French and Italians prefer domestically produced cars and other products, even when foreign products are clearly superior.

A nations public also wants its corporations to act in a socially responsible way, which means that corporations refrain from taking any actions that may injure or impose costs on other stakeholders.

ORGANISATIONAL EFFECTIVENESS: SATISFYING STAKEHOLDERS GOALS AND INTERESTS

Each stakeholder group is motivated to contribute to the organization by its own set of goals, and each group evaluates the effectiveness of the organization by judging how well it meets the groups specific goals.Often the goals conflict and stakeholder groups must bargain over the appropriate balance between the inducements and contributions. For this reason, organizations are often regarded as alliances or coalitions of stakeholders groups that directly or indirectly bargain with each other and use their power and influence to alter the balance of inducements and contributions in their favour. Eg- Enron and WorldCom collapsed when their illegal actions became public and their stakeholders refused to contribute: shareholders sold their stock, banks refused to lend money and debtors called in their loans.

There is no reason to assume that all stakeholders will be equally satisfied with the balance between inducements and contributions. To be effective, an organization must at least minimally satisfy the interests of all the groups that have a stake in the organization.

Problems that an organization faces as it tries to win stakeholders approval include

Choosing which stakeholder goals to satisfyDeciding how to allocate organizational rewards to different stakeholdersBalancing short term and long term goals.

stakeholdercontributioninducementNegative actionINSIDEShareholdersMoney and capitalDividends and stock appreciationSell their sharesManagersSkills and expertiseSalaries, bonus, stock options, status and powerLeave their jobWorkforceSkills and expertiseWages, bonus, stable employmentReduce the level of their performance or leave the organizationOUTSIDEcontributioninducementsCustomersRevenue from purchase of goods and servicesQuality and price of goods and servicesSuppliersHigh quality inputsRevenue from purchase of inputsGovernmentRules governing good business practiceFair and free competitonUnionsFree and fair collective bargainingEquitable share of inducementsCommunitySocial and economic infrastructureRevenue, taxes and employmentGeneral publicCustomer loyalty and reputationNational pride