Mgmt110-ch4

What happens after the issues are plotted on an issue salience matrix?

o After the issues are plotted, they are ranked in decreasing order to importance. The priority issues for management would tend to be located in the upper right-hand corner. The next priority would be issues located in the upper left and lower right corners. Their influence on operations and the ease or difficulty of addressing the issues would be deciding factors for rating. Issues in the lower left corner are of little importance to stakeholders or management

Influence pathway

o An influence pathway occurs where withholding and usage strategies could be performed by an ally of the stakeholder with whom the organization has a resource dependence.

Basic stakeholder analysis

• All corporations should involve themselves in stakeholder management, even at a preliminary level. If nothing else, corporations should identify and attempt to understand the stakeholders that influence and are influenced by the corporation.

Definitions and examples of stakeholder types: definitive stakeholder

Management must address the claims of stakeholders immediately and give priority as they possess all three attributes (area 7). An example is shareholders voting to replace management

How is the importance of issues to stakeholders measured?

The importance of issues to stakeholders would be measured by surveys, media monitoring, NGO activities, government regulation or other action. The importance of issues to the corporation would be measured by internal interviews, employee feedback, management discussions, and Board attention

What happens after categorization is completed? Strategies for low priority stakeholders

Provide educational programs and promote involvement with supporters.

Stakeholder Analysis Worksheet

*look at pic of diagram*

Freeman's stakeholder management capability: Level 2

1. Determining the organizational processes used to manage relationships with stakeholders and fitting these processes with the stakeholder map of the organization ♣ Identifies the procedueres used to assess stakeholder. ♣ Some possible procedures: portfolio analysis, which freeman believes applies to some stakeholders but is too financially oriented, and strategic management, which applies if stakeholder questions are included in each component

Issues management process: 6 steps

1. Identification of issues—This step involves the formulation of issues in many ways, including social forecasting, futures research, environmental scanning, and public issues scanning. 2. Analysis of issues—In this step issues are described and evaluated, usually in writing, so that a consensus is achieved among managers. All stakeholders who are influenced and/or can influence the issue should be identified. Everyday Ethics 4.2 identifies a major issue confronting the telecommunications industry and the relevant stakeholders. 3. Ranking or prioritizing of issues—The purpose of this step is to establish the importance of the issues identified, which should be possible after the description of each issue has been agreed to in Step 2. 4. Formulating issue response—The choices available to the corporation are identified and evaluated. It is important to identify all response alternatives that may be pursued to address the issue. 5. Implementing issue response—At this stage, specific plans are formulated to implement the response selected. A work plan is developed to ensure the implementation of the response. 6. Monitoring and evaluating issue response—The status of the issue and the response is reviewed on a regular basis.

Freeman's stakeholder management capability: Level 1

1. Identifying the organizations stakeholders and their perceived stake according to the rational perspective ♣ Involves preparing a stakeholder map that identifies specific stakeholders ♣ An attempt must be made to ascertain the "stake" of each group and the power it has, keeping in mind that different perceptions of stake and power exist.

Freeman's stakeholder management capability: Level 3

1. Understanding the set of transactions or bargains between the organization and its stakeholders and deciding whether these negotiations fit the map and the process ♣ Deals with the actual interaction with stakeholders. ♣ It is important to employ managers with the appropriate value set to deal with particular stakeholders if the relationship is to be an effective one.

Freeman's stakeholder management capability

According the Freeman, the process an organization uses to manage relationships with its stakeholder groups involves three levels

What happens after categorization is completed?

After categorization is completed, managers can develop tactics or strategies to most appropriately deal with each stakeholder.

What happens after categorization is completed? Strategies for antagonistic stakeholders

Identify potential coalitions and take defensive action, prepare for undermining of supporters, anticipate nature of objections and develop counter-arguments, engage selected stakeholders in bargaining, and determine plan changes to gain support.

What happens after categorization is completed? Strategies for supporter stakeholders

Provide information to reinforce position, and ask supporters to influence indifferent stakeholders

Four categories that result from matrix mapping:

Problematic stakeholders Antagonistic stakeholders Low priority stakeholders Supporter stakeholders

Four categories that result from matrix mapping: Problematic stakeholders

Problematic stakeholders—those who would oppose the organization's course of action and are relatively unimportant to the organization.

What happens after categorization is completed? Strategies for problematic stakeholders

Target moderate stakeholders with educational programs, adjust corporate plans to accommodate stakeholders, and prepare defensive plans if coalitions of stakeholders form.

Svendsen provides a framework or guide for organizations that wish to develop collaborative stakeholder relationships. The framework, identified as FOSTERing stakeholder relationships, involves six steps:

o Creating a foundation—The beginning stage involves relationship building in a strategic mode by incorporating it into corporate missions, values, and ethics guidelines. o Organizational alignment—The organization's internal systems and structures need to be aligned—that is, put in a state of readiness—to support the development of collaborative relationships including dialogue with stakeholders to obtain a clear understanding of their comments and perceptions. o Strategy development—A strategy is necessary to forge new stakeholder relationships. o Trust building—Trust is essential for stable social relationships as it promotes cooperation and understanding. o Evaluation—The effectiveness of the relationship-building effort must be assessed and improvements identified. o Repeat the process—The process is repeated to further improve social performance

A second source of power or influence involves the resource dependence that arises from relationships between stakeholders

o Direct strategies are those in which the stakeholder itself manipulates the flow of resources by withholding or through usage conditions. o Indirect strategies are those where the stakeholder works through an ally by having the ally manipulate the flow of resources by withholding or through usage conditions. Indirect strategies require substantial communication and cooperation between stakeholders and are difficult to sustain

Definitions and examples of stakeholder types: Expectant stakeholders

o Expectant stakeholders: Expectant stakeholders possess two attributes, are more salient, and require more attention from management. There are three types: ♣ Dominant—Have legitimate claims and have power to act upon the claims (area 4). An example is shareholders and creditors who expect to receive management's attention. ♣ Dangerous—Possess power and urgency attributes but lack legitimacy; will be coercive and possibly violent thus making the stakeholder dangerous (area 5). This is illustrated when employees are involved in wildcat strikes or sabotage, or by interest group terrorism or blockages. ♣ Dependent—Stakeholders who lack power but have urgent legitimate claims and often depend on others for power (area 6). Examples are local residents of the environment who depend on a dominant stakeholder, often the government.

Definitions and examples of stakeholder types: latent stakeholders

o Latent stakeholders: Managers may not recognize the existence of these stakeholders or may not give them any attention. There are three types: ♣ Dormant—Possess power and should receive attention, as in the case of a fired or laid-off employee speaking out against the firm or filing wrongful dismissal suit (area 1). ♣ Discretionary—Possess legitimacy, as would the recipients of discretionary corporate social responsibility (area 2). ♣ Demanding—Possess urgency, as with a lone picketer opposing actions of the corporation who gets passing attention as he/she is troublesome but not dangerous (area 3).

Definitions and examples of stakeholder types: non-stakeholder

o Non-stakeholder: non- or potential stakeholders- individuals or entities possessing none of the attributes

Stakeholder identification and salience: three attributes

o Power is exercising a relationship among social actors in which one social actor, A, can get another social actor, B, to do something that B would not otherwise do. Power can be based upon force or threat, incentives, or symbolic influences. o Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definition that is based on the individual, the organization, or society. o Urgency is the degree to which the stakeholder's claim or relationship calls for immediate attention, and exists when a claim or relationship is of a time-sensitive nature and when that claim or relationship is important or critical to the stakeholder

Resource dependence

o Resource dependence: exists when a stakeholder is supplying a resource and can exert some form of control over it

Issue salience analysis- issue salience matrix

o The approach is to analyze the importance of issues to the corporation's stakeholders and the corporation's management. The attempt is to rank the issues by importance instead of the stakeholders. For any issue, one or several stakeholders may be influenced or in a situation where the corporation can be influence them. The results of this salience or importance analysis are plotted on a two-dimension grid by "Importance to stakeholders involved with the issue" and the "Importance to the corporation's business."

Stakeholder type and corresponding strategy to manage their threat: Type 1

o Type 1: Supportive stakeholder and strategy—This is the ideal stakeholder, providing support by being a low threat and high on potential for cooperation. Examples are boards of directors, managers, employees, parent companies, and possibly suppliers and service providers. The strategy for managing this type of stakeholder is to encourage the cooperative potential and not ignore them or take them for granted.

Stakeholder type and corresponding strategy to manage their threat: type 2

o Type 2: The marginal stakeholder and strategy—These stakeholders are neither highly threatening nor especially cooperative. They potentially have a stake, but it varies by issue or is limited to particular issues. Examples are consumer groups, shareholders, and professional associations for employees. The strategy for managing stakeholders of this type is to monitor them closely while recognizing that their interests are narrow and issue-specific.

Stakeholder type and corresponding strategy to manage their threat: type 3

o Type 3: The non-supportive stakeholder and strategy—These stakeholders have a high threat potential, but low cooperation potential. Because of this, they are the most challenging to manage. Examples for, say, a manufacturing firm are competing firms, employee unions, government, and perhaps the media. The strategy to follow with this type of stakeholder is defensive, attempting to reduce the organization's dependence on the stakeholder.

Stakeholder type and corresponding strategy to manage their threat: type 4

o Type 4: The mixed blessing stakeholder and strategy—These stakeholders play a major role in the organization as their threat and cooperation potential are high. Examples are employees who are in short supply, important clients, and organizations with complementary products or services. The two arrows in Figure 4.2 represent the two possibilities for such stakeholders: to become supportive or non-supportive. The strategy to deal with this type of stakeholder is collaboration of some sort, for example joint ventures, alliances, or mergers. *look at pic of diagram*

additional features that make the stakeholder attributes dynamic

the attributes are variable—that is, they do not exist in a steady state; the attributes are socially constructed—not objective; and the consciousness and wilful exercise of the attributes may or may not be present.

Stakeholder identification and salience: salience

the degree to which managers give priority to competing stakeholder claims

Four categories that result from matrix mapping: Low priority

those who support the organization's course of action and are relatively unimportant to the organization

Four categories that result from matrix mapping: Antagonistic stakeholders

those who would oppose or be hostile to the organization's course of action and are very important to the organization.

Four categories that result from matrix mapping: Supporter stakeholders

those who would support the organization's course of action and are important to the organization.7

Stakeholders potential for threat

• Diagnosing the potential for threat involves ascertaining the stakeholder's power to disrupt the organization's accomplishment of its objectives. Diagnosing the potential for cooperation allows the organization to move beyond defensive and offensive strategies against a threat to a situation in which cooperation with stakeholders allows the organization to accomplish its objectives. The stakeholder's potential for threat or cooperation becomes the basis for categorizing, on a matrix, the types of stakeholders. The figure below indicates that stakeholders can be classified into four types—supportive, marginal, non-supportive, and mixed blessing—and that different strategies exist for responding to each type.

Stakeholder management capability

• Freeman defines Stakeholder management capability as: the ability of managers to identify stakeholders and their influence, to develop the organizational practices to understand stakeholders, and to undertake direct contact with stakeholders.

Stakeholder identification and salience

• Mitchell, Agle, and Wood developed a theory of stakeholder identification and salience based upon stakeholder possession of one or more of three attributes: power, legitimacy, and urgency.

Why are stakeholder analysis maps or diagrams helpful?

• Stakeholder analysis maps or diagrams are helpful in realizing the amount of stakeholders and the real and possible influences these stakeholders can have on the corporation

Stakeholder typology

• The authors group the stakeholders into the following classes: (a) those with one attribute are latent or warrant low salience (areas 1, 2, and 3); (b) those with two attributes are expectant or moderately salient (areas 4, 5, and 6); and (c) those with three attributes are definitive or highly salient (area 7). Individuals or entities possessing none of the attributes are non- or potential stakeholders (area 8).

5 questions a corporation can use to increase its understanding of its stakeholders

• The corporation can increase its understanding of these stakeholders by answering the following questions, which will capture the essential information needed for effective stakeholder management: 1. Who are our stakeholders? 2. What are their stakes? 3. What opportunities and challenges are presented to our firm? 4. What responsibilities (economic, legal, ethical and philanthropic) does our firm have to all its stakeholders? 5. What strategies or actions should our firm take to best deal with stakeholder challenges and opportunities?

Stakeholder Matrix Mapping

• The interpretation of the relationships between the organization and the stakeholder is very important. • Matrix mapping: a technique of categorizing an organization's stakeholders by their influence according to two variables, and usually involves plotting them on a two-by-two matrix. Managers need such a methodology for assessing the importance or power of stakeholders to achieve their demands and whether they have the means or resources to influence.

Stakeholder Matrix Mapping: break down

• The matrix in Figure 4.1 illustrates one methodology in which stakeholders are categorized according to their position on a particular issue or proposal and their importance. On the vertical axis, the stakeholders are identified and assessed on whether they oppose the corporation on the issue or support it. A numerical value of 0 to −5 is assigned to those stakeholders opposing, and a value of 0 to +5 is assigned to those supporting. The importance of stakeholders is measured on a horizontal axis and varies from least, at a value of 0, to most, at a value of 10. After the two values are agreed upon, the location of the stakeholder is plotted on the matrix. • This stakeholder matrix mapping uses two variables relating to position and importance

Two general means of control over an organization

• Types of resource control and the types of influence pathways determine the influence strategies available to stakeholders. There are two general means of control over an organization: withholding strategies and usage strategies. o Withholding strategies: those where the stakeholder discontinues providing a resource to an organization with the intention of changing a certain behavior. o Usage strategies: those in which the stakeholder continues to supply a resource but specifies how it will be used- that is, it attaches conditions to the use of the resource.

Stakeholder collaboration

• approach focuses on building stakeholder relationships that are reciprocal, evolving, and mutually defined, and that are a source of opportunity and competitive advantage. • Collaboration: is a meta-capability to establish and maintain relationships that allows the organization to tap into a powerful source of creative energy, a large pool of innovative ideas, and a wider network o The goal is to increase the organizations environmental stability and to enhance control over changing circumstances. o The approach would be more integrated and company-wide, with responsibility for stakeholder collaboration assigned to a senior executive. • Stakeholder collaboration is also referred to as stakeholder engagement in the academic literature and in corporate reports

Importance of issue management processes

♣ This process ensures that the most salient or critical issues are addressed. The remaining issues are not dropped, but are maintained in a list that is reformulated on a regular basis.