Chapter 2

Stakeholder Expectations

A mixture of people's OPINIONS, ATTITUDES, AND BELIEFS about what constitutes reasonable business behavior.

public issues

Any issue that is of mutual concern to an organization and one or more of its stakeholders.

Stages in the Business-Stakeholder Relationship

Over time, the nature of business's relationship with its stakeholders often evolve through a series of stages. "If it aint broke figure out how to break it" this allows you to understand how it works, and if things do happen, you know how to alter it. - Inactive - Companies ignore stakeholder concerns (usually the worst) - Reactive - Companies act only when forced to do so, and then in a defensive manner - Proactive - Companies try to anticipate stakeholder concerns (Ability to understand reviel problems or things to do) - Interactive -Companies actively engage stakeholders in an ongoing relationship of mutual respect, openness, and trust (The best choice) (Able to understand what they actually want and gain trust in shareholders)

Public Issue Life Cycle, 4 Phases...

Phase 1: Changing Stakeholder Expectations Phase 2: Political Action Phase 3: Formal Government Action Phase 4: Legal Implementation The power of the business lowers the further the life cycle goes. Moral of Story: Handle issues in a timely fashion before they escalate in the life cycle providing less and less discretionary power for the business.

How public issue is formed

When the expectations of the public and what is provided by a company/business does not match. (expectation gap).

Environmental Analysis

- A method managers use to GATHER INFORMATION ABOUT EXTERNAL ISSUES OR TRENDS - used to develop an organizational strategy that minimizes threats and takes advantage of new opportunities.

Stakeholder organizations bring a number of distinct strengths:

- Alert companies to emerging issues - Give a firm access to information via networking - Technical or scientific expertise in specific areas - Better result in the eyes of the public - Meet the society's expectations and generate good solutions - Improve a company's reputation

Organizing for Effective Issue Management

- Part of the organization is mobilized to address a particular emerging issue, it often depends on the nature of the issue itself. - Involve the board of directors and top management levels A good Manager embraces change because it is inevitable

Failure to understand stakeholder concerns and to respond appropriately will:

- Permit the performances-expectations gap to grow. - The larger the gap, the greater the risk of stakeholder backlash or of missing business opportunity. Example: Human antibiotic in chicken

Drivers of Stakeholder Engagement

- Stakeholder engagement is, at its core, a relationship. - The participation of a business organization and at least one stakeholder organization is necessary. Engagement: both the company and its stakeholders both have: - An urgent and important goal - The motivation to participate (need the stakeholders to be motivated to participate with you. (trust the undrlying key)). - The organizational capacity to engage with one another

Competitive Intelligence

- The systematic and continuous process of gathering, analyzing, and managing external information about the organization's competitors that can affect the organization's plans, decisions, and operations. - With the need to comply with all applicable laws, and to follow the professional standards of fairness and honesty. - Businesses need to keep up with their competitors moves or things will catch companies off guard. Ex: Wendy's dollar menu and McDonald's short term response almost costs them their business.

Effective global leadership on public issues requires three basic capabilities:

- Understanding of the changing business context - Ability to lead in the face of complexity - Connectedness: the ability to engage with external stakeholders in dialogue and partnership

Environmental Intelligence

- the acquisition of information gained from analyzing the multiple environments affecting organizations. - Knowledge gained from attending meetings and listening to public issues or expectations they demand.

The issue Management Process (5 steps)

1. IDENTIFY Issue - Anticipating emerging concerns, or "horizon" issues (think with emotion, take 59 minutes to understand the problem and one minute to act). 2. ANALYZE Issue - Organizations must understand how the issue is likely to evolve, and how it is likely to affect them (where did the issue come from?) 3. GENERATE Options - Requires complex judgments that incorporate ethical considerations like the company's reputation (More than one way to do something) 4. Take Action ACT - Once an option is chosen, the organization must design and implement a plan of action (make decision) 5. EVALUATE Results - Must assess results of the program and make adjustments if necessary (Analyze outcome) Constant cycle (Use STEEP in analysis)

Performance-Expectations Gap

When the expectations of the public and what is provided by a company/business does not match. it grows with time.