Managing Public Issues and Stakeholder Relationships Chapter 2 Managing Public Issues and Stakeholder Relationships

Ch. 2: Key Learning Objectives Evaluating public issues and their significance to the modern corporation Applying available tools or techniques to scan an organization’s multiple environments Describing the steps in the issue management process and determining how to make the process most effective Identifying who is responsible for managing public issues and the skills required to do so effectively Understanding how business can build collaborative relationships with stakeholders through engagement, dialogue, and network-building Identifying the benefits of stakeholder engagement to the business firm

Public Issues Public issue Any issue that is of mutual concern to an organization and one or more of its stakeholders Stakeholder expectations A mixture of people’s opinions, attitudes, and beliefs about what constitutes reasonable business behavior

Public Issues: Performance-Expectations Gap Discrepancy between what stakeholders expect and what an organization is actually doing Important to identify emergent expectations as early as possible Doing so can gain the company competitive advantage Failure to understand stakeholder concerns and to respond appropriately will: Cause the performance–expectations gap to grow The larger the gap, the greater the risk of stakeholder backlash or missing a major business opportunity

The Performance-Expectations Gap Figure 2.1 The Performance-Expectations Gap

Environmental Analysis and Intelligence A 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 Environmental intelligence The acquisition of information gained from analyzing the multiple environments affecting organizations

Eight Strategic Radar Screens Figure 2.2

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 Numerous ethical issues arise in acquisition and use of information gathered through competitive intelligence, public affairs managers must be keenly aware of these issues

The Issue Management Process Identify Issue Anticipating emerging concerns, or “horizon” issues Analyze Issue Evaluating the issue; coming to an understanding of how it will evolve and how it will affect the organization Generate Options Evaluating action options, involves complex judgments that take into account “non-quantifiable” factors like the company’s reputation Take Action Once option is chosen, must design and implement it Evaluate Results Must assess results of the program and made adjustments as needed

Organizing for Effective Issue Management Which part of the organization is mobilized to address a particular emerging issue often depends on the nature of the issue itself A corporation’s issue management activities are usually linked to both the board of directors and to top management levels 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

Stages in the Business-Stakeholder Relationship Over time, the nature of business’s relationship with its stakeholders often evolve through a series of stages Inactive – Companies ignore stakeholder concerns Reactive – companies act only when forced to do so, and then in a defensive manner Proactive – Companies try to anticipate stakeholder concerns Interactive –Companies actively engage stakeholders in an ongoing relationship of mutual respect, openness, and trust

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, by definition, to constitute engagement Engagement is most likely when both the company and its stakeholders both have an urgent and important goal, the motivation to participate, and the organizational capacity to engage with one another

Making Engagement Work Effectively In stakeholder dialogue, a business and its stakeholders come together for face-to-face conversations about issues of common concern Corporations sometimes encounter public issues that they can address effectively only by working collaboratively with other businesses and concerned persons and organizations in stakeholder networks Engaging with stakeholders benefits businesses by bringing in expertise, enhancing legitimacy, and generating creative solutions to common problems