Chapter 2 - Managing Public Issues and Stakeholder Relationships

Eight Environments to Analyze

1.) Customer Environment 2.) Competitor Environment 3.) Economic Environment 4.) Technological Environment 5.) Social Environment 6.) Political Environment 7.) Legal Environment 8.) Geophysical Environment

Evaluate Results

Continue to assess the results and make adjustments necessary for success.

Drivers of Stakeholder Engagement

It is a relationship. 1.)Both stakeholder and company have a common urgent and important goal 2.)the motivation to participate 3.)the organizational capacity to engage with one another.

Stakeholder Interaction Perks

-Often aware of shifts in popular sentiment before companies are -often operate in networks of organizations very different from themselves; gives them information about those networks -provides technical or scientific expertise

Three Basic Capabilities for Public Issue Leadership

1.) Understanding of business context: emerging environmental and social trends 2.) Ability to lead in complexity: many emerging issues are dominated by ambiguity (they need to be flexible, creative, and willing to learn) 3.)Connectedness: the ability to engage with external stakeholders in dialogue and partnership.

Stakeholder Materiality

Adaptation of an accounting term that focuses on the importance or significance of something. In this case, a method used to prioritize the relevance of the stakeholders and their issues to the company.

Public Issue

Any issue that is of mutual concern to an organization and one or more of its stakeholders. (public issues are sometimes called social issues or sociopolitical issues).

Motivation

Both sides motivated to help one another to solve the problem: -stakeholder has technical expertise -stakeholder can influence policy makers, legislation, bring lawsuits, or cause reputational harm -actually the best way to bring about change might be to help eachother

Goals

Both the business and the stakeholder must have a problem that they want solved. -must be both important and urgent

Organizing for Effective Issue Management

Depending on the issue type, different departments may take a leadership position in solving it's problems. Issue management is linked to BoD and C-level positions because of their strategic importance.

Generate Options

Involves generating, evaluating, and selecting among possible options. Requires complex judgments that incorporate ethical considerations, the reputation and good name; NON-QUANTIFIABLE FACTORS Public Profile is a good indicator of this.

Environmental Analysis

Method managers use to gather information about external issues and trends, so they can develop an organizational strategy that minimizes threats and takes advantage of new opportunities.

Take Action

Must design and implement a plan of action. These may or may not have unintended consequences associated with them. Ex: McDonald's hired third-party auditors to audit OSI's meat manufacturing process.

Stakeholder Networks

Sometimes some public issues are only solved by using stakeholder networks with other businesses and concerned persons and organizations. Ex: Nike, getting flack for synthetic cotton use, increasing organic cotton use to 7% by 2013; had to talk to farmers, manufacturers, regulators, banks

Performace-expectations gap

The gap between what the firm wants to do or is doing and what it's stakeholders expect.

Analyze Issue

The implications of the issue must be analyzed. Organizations must understand how the issue is likely to evolve; how it is likely to affect them.

Issue Management Process

The process of actively managing issues as they arise. Comes with five stages. 1.) Identify Issue 2.)Analyze Issue 3.)Generate Options 4.)Take Actions 5.)Evaluate Results

Stakeholder Dialogue

a business and its stakeholders come together for face-to-face conversations about issues of common concern. -describe their core interests and concerns -prepare a common definition of the problem -invent innovative solutions for mutual gain -establish procedures for implementing solutions

Reactive Relationship

act only when forced to do so, and in a defensive manner. -A Civil Action: movie about W.R. Grace spilling toxic materials in a lake, it then leaking into ground water and injurying/killing people. They were forced to defend themselves in court.

Identify Issue

anticipating emerging concerns, sometimes called "Horizon issues" because they seem to be just coming up over the horizon. - requires attention to all eight environments - McDonald's beginning of OSI Meat contamination problem

Interactive Relationship

companies actively engage with stakeholders in an ongoing relationship of mutual respect, openness, and trust. -Starbucks paired with Opportunity Finance Network to help in community lending across the nation.

Inactive Relationship

companies simply ignore stakeholder concerns. -Home Depot failed to listen to employees about data security system and have $3 billion in illegal purchases

Proactive Relationship

companies try to anticipate stakeholders concerns. -use environmental scanning practices -less likely to be blindsided by crises and negative surprises -stakeholders are still considered a problem to be managed rather than a resource

Organizational Capacity

helps engage the other in an open dialogue. -support from top leadership and adequately funded external affairs (with reporting relationship to top management) -issue management process that provides an opportunity for leaders to identify and respond quickly to shifts in the external environment.

Stages in Business-Stakeholder Relationship

inactive, reactive, proactive, interactive

Stakeholder Engagement

ongoing relationship building between a business and its stakeholders,

Environmental intelligence

the acquisition of information gained from analyzing the multiple environments affecting organizations