1. Stakeholder And Issues Management Approaches
Chapter Two
Stakeholder And Issues Management Approaches

2. Stakeholder vs. Stockholder Approach to Ethics
The stakeholder approach is based on the view that all stakeholders should be treated fairly, resulting in better performance in the marketplace.
act in the best interests of and for the benefit of customers, employees, suppliers, and stockholders
respect and fulfill these stakeholders’ rights
The stockholder approach focuses solely on financial and economic relationships, with stockholders/owners as primary beneficiaries of managerial decisions.

3. Criticisms of Stakeholder Theory
negates and weakens fiduciary duties managers owe to stockholders
weakens the influence and power of stakeholder groups
weakens the firm
changes the long-term character of the capitalist system
How do you counter these arguments? What arguments exist in support of stakeholder theory?

4. Three Assumptions of Stakeholder Theory
Profit maximization is constrained by justice
Regard for individual rights should be extended to ALL constituencies that have a stake in the affairs of a business
Organizations are not simply or only economic in nature but can and do act in socially responsible ways, not only because it is the right thing to do, but also to ensure their legitimacy

5. Stakeholder Management Approach
Identifying and understanding multiple and often competing claims of many constituencies
Uses analytical methods for identifying, mapping, and evaluating corporate strategy with stakeholders
Based on the theory that certain ethical principles can result in competitive advantage
GOAL: Win/Win vs. Zero Sum

6. Owners Suppliers Organization Customers Employees
Primary Stakeholders
Owners Suppliers Organization Customers Employees

7. Secondary Stakeholders
Local community groups
Special Interest groups
Consumer groups
Environmental groups
Media
Society-at-large
American Civil Liberties groups
ETC
Should managers pay attention to the needs of these groups? What priority should they have?

8. How To Conduct a Stakeholder Analysis
The stakeholder analysis is a series of steps, conducted from an objective, third-party point of view:
Mapping stakeholder relationships
Mapping stakeholder coalitions
Assessing the nature of each stakeholder’s interest
Assessing the nature of each stakeholder’s power
Constructing a matrix of stakeholder moral responsibilities
Developing specific strategies and tactics
Monitoring shifting coalitions

9. Questions for Stakeholder Review
(Do these in Step 1 of S.A.)
Who are our current stakeholders?
Who are our potential stakeholders?
How does each stakeholder affect us?
How do we affect each stakeholder?
For each division and business, who are the stakeholders?

10. Questions for Stakeholder Review (con’t)
(Do these in subsequent steps in S.A.)
What assumptions does our current strategy make about each important stakeholder (at each level)?
What are the current “environmental variables” that affect us and our stakeholders?
How do we measure each of these variables and their impact on us and our stakeholders?
How do we keep score with our stakeholders?

11. Figure 2.2: Sample Stakeholder Map for a Large Corporation

12. Steps 2, 3 and 4: Assessing Coalitions, Interests and Power
Map any stakeholder coalitions that may help or hinder your strategy or decision
Assess the nature of each stakeholder’s interest
Assess the nature of each stakeholder’s power
Voting power
Political power
Economic power
Technological
Legal
Environmental
Cultural
Power over target individuals and/or groups

13. Figure 2.3: Step 5 - Stakeholder Moral Responsibility Matrix

14. Step 6: Develop Specific Strategies and Tactics
Consider whether to approach each stakeholder directly or indirectly
Decide to do nothing, monitor, taken an offensive or a defensive position with the stakeholder
Decide to accommodate, negotiate, manipulate, resist, avoid, or take a ‘wait and see’ approach
Decide which combination of strategies will work best with each stakeholder

15. Figure 2.4: Stakeholder Strategies

16. Step 7: Monitor Shifting Coalitions
Use the matrix from Step 6 to routinely monitor progress and the evolution of issues and actions by stakeholders (e.g., do they move from a ‘Marginal’ to a ‘Non-supporter’, or from a ‘Supporter’ to a ‘Marginal’?)

17. Figure 2.6: Stakeholder Dispute Resolution Methods

18. Resolving Stakeholder Disputes
Integrative/Relational
Problems: Win-win
Resources: Expandable
“Value creating”
Accommodate as many interests as possible
Relationship-building
Dialogical
Respect dignity and build understanding
Distributive/Power-based
Problems: Zero-sum
Resources: Fixed (divide up the ‘pie’)
“Value claiming”
Splitting the difference
Competition-focused
Authoritative
“Winning”

19. Fry and Ury’s Four Principles of Negotiation
Separate the people from the problem
Focus on interests rather than positions
Generate a variety of options before settling on an agreement
Insist that the agreement be based on objective criteria

20. Functional Managers’ Moral Responsibilities
Marketing and Sales professionals/managers
R & D and Engineering professionals/managers
Accounting and Finance professionals/managers
Public Relations professionals/managers
Human Resource professionals/managers

21. Issues Management
A formal process used to anticipate and take appropriate action to respond to emerging trends, concerns, or issues that can affect an organization or its stakeholders
Detects and addresses issues that may cause problems or harm
Helps to contain or resolve issues that could become potentially damaging crises
May be used as a complementary approach to stakeholder analysis (who is involved in the issue?)
Three frameworks

22. Issues Management and Stakeholder Analysis
Insert your issues management approach as the first step of your Stakeholder Analysis
Enhance the Stakeholder Analysis by asking:
Which stakeholders are affected by this issue?
Who has an interest in this issue?
Who is in a position to exert influence on the issue?
Who has expressed an opinion on the issue?

23. Two Issues Management Approaches
6-Step Issue Management Process
Most straightforward
More appropriate for companies or groups trying to understand, manage, and control their internal environments
Organization-specific

24. Figure 2.8: 6-Step Issues Management Approach

25. Two Issues Management Approaches
7-Phase Issue Development Process
Issues are believed to follow a developmental life cycle (Steven Fink)
Life-cycle stages suggested for tracking an issue:
A felt need arises
Media coverage is developed
Interest group development gains momentum
Policies are adopted by leading political jurisdictions
The federal government gives attention to the issue
Issues and policies evolve into legislation and regulation
Issues and policies enter litigation

26. Figure 2.9: 7-Phase Issue Development Process

27. A Related Model 4-Stage Issue Life Cycle (Thomas Marx):
Issues evolve from social expectations to social control through the following steps:
Social expectations
Political issues
Legislation
Social control

28. Figure 2.10: 4-Stage Issue Life Cycle

29. Two Crisis Management Approaches: Figure 2.11

30. Two Crisis Management Approaches: Figure 2.12

31. Suggested Corporate Actions during Crises
Face the problem
Take your lumps
Recognize that there is no such thing as a secret or private crisis
Stage war games
Use the firm’s philosophy, motto, or mission statement
Use the firm’s closeness to customers and end users for early feedback

32. Prerequisites for Issues/Crises Management Success
Top management is supportive and participates
Involvement is cross-departmental
The issues management unit fits with the firm’s culture
Output, instead of process, is the focus