an introduction to stakeholder theory

Download An Introduction To Stakeholder Theory

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  • 1. Stakeholder theory Stakeholder management and strategic planning

2. Two broad stakeholder theories

  • Friedman
  • Freeman

3. 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.

4. Theory two

  • * The quickest way to destroy shareholder value is to ignore stakeholders

5. 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

6. 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

7. Who are stakeholders?

  • The directly involved:
  • - investors
  • - employees
  • - suppliers
  • - customers

8. Other stakeholders

  • Government
  • Political parties
  • Trade unions
  • Community groups
  • NGOs
  • Plant neighbours

9. A key question for you

  • Is the media a stakeholder?

10. Why pay attention to stakeholders?

  • Moral or philosophical reasons corporate social responsibility
  • Practical reasons licence to operate
  • Strategic planning reasons identifying opportunities and threats

11. Some key management questions

  • Why should specific companies pay attention to stakeholders?
  • Who are the organisations stakeholders? How do we identify them?
  • What is the basis for their interest/legitimacy?
  • What do they want?

12. 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?

13. 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

14. 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

15. 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

16. Managing stakeholders a PA and issues management approach

  • Craig Fleishers 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

17. Fleisher model

  • Communicating in an integrated manner
  • Continually aligning values and strategies with the publics interests
  • Improving external relationships using contemporary management practices

18. 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

19. 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

20. Setting priorities

  • Categorise stakeholders by:
  • Stakeholders directly interested in your success
  • Allies and potential allies
  • Entrenched opponents
  • Independent monitors and opinion formers
  • Uninvolved

21. Management strategies

  • Directly interested recruit as advocates
  • Allies encourage
  • Opponents neutralise
  • Independents maintain dialogue
  • Uninvolved monitor and anticipate

22. 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

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