Slide- CH 4

• Stakeholder engagement involves efforts by a corporation to understand and involve relevant individuals, groups, or organizations by considering their moral concerns
• Issue analysis is an effort to understand the source, nature, and extent of a question or matter in dispute facing a corporation, which will result in addressing or resolving the matter
• Basic Stakeholder Analysis involves corporations asking questions like:

  • Who are our stakeholders?
  • What are their stakes?
  • What opportunities and challenges are presented to our firm?
  • What responsibilities does our firm have to all its stakeholders?
  • What strategies or actions should our firm use to deal with stakeholder challenges and opportunities?
• Freeman’s Stakeholder Management Capability refers to the ability of managers to:

  • Identify stakeholders and their influence
  • Develop organizational practices to understand stakeholders
  • Undertake direct contact with stakeholders
• Stakeholder Matrix Mapping is a technique of categorizing an organization’s stakeholders by their influence according to two variables and plotting them on a two-by-two matrix:

  • Y Axis: Oppose or support corporation
  • X Axis: Importance of stakeholders
  • This allows managers to assess the power of stakeholders to achieve their demands and whether they have the means or resources to influence
• The Position / Importance Stakeholder Matrix categorizes stakeholders into four categories:

  • Problematic stakeholders
  • Antagonistic stakeholders
  • Low priority stakeholders
  • Supporter stakeholders
  • Managers can develop tactics and strategies to deal with each stakeholder appropriately after categorization
• The Diagnostic Typology of Organizational Stakeholders involves two critical assessments:

  • Stakeholders’ potential to threaten the organization
  • Their potential to cooperate with it
  • Stakeholders can be classified into four types: Supportive, Marginal, Non-supportive, and Mixed-blessing stakeholders
• Stakeholder Identification and Salience is based on stakeholder possession of attributes like power, legitimacy, and urgency, enabling managers to categorize stakeholder-management relationships systematically
• Stakeholder Influence Strategies involve stakeholders trying to influence the organization's decision-making or behavior through resource dependence and control over resources
• Resource dependence exists when a stakeholder supplies a resource and can exert some form of control over it
• Two general means of control over an organization:

  • Withholding strategies: stakeholder discontinues providing a resource with the intention of changing a certain behavior
  • Usage strategies: stakeholder continues to supply the resource but specifies how it is to be used, attaching conditions
• Resource dependence can also arise from relationships between stakeholders, where an influence pathway allows an ally of the stakeholder with whom the organization has a resource dependence to use withholding and usage strategies
• Four influence strategy possibilities:

  • Indirect/usage
  • Indirect/withholding
  • Direct/withholding
  • Direct/usage
• Stakeholder collaboration aims to establish and maintain relationships that allow the organization to tap into a powerful source of energy, ideas, and a wider network
• Stakeholder collaboration is more integrated and company-wide, with responsibility often assigned to senior executives
• Approaches to corporate-stakeholder relations:

  • Stakeholder Management:
  • Fragmented among various departments
  • Focus on managing relationships
  • Emphasis on buffering the organization
  • Linked to short-term business goals
  • Stakeholder Collaboration:
  • Integrated management approach
  • Focus on building relationships
  • Emphasis on creating opportunities and mutual benefits
  • Linked to long-term business goals
• FOSTERing is a framework for organizations to develop collaborative stakeholder relationships involving six steps:

  • Creating a foundation
  • Organizational alignment
  • Strategy development
  • Trust building
  • Evaluation
  • Repeat the process
• Issue Management Process involves six steps:

  • Identification of issues
  • Analysis of issues
  • Ranking or prioritizing of issues
  • Formulating issue response
  • Implementing issue response
  • Monitoring and evaluating issue response
• Issue materiality (sustainability materiality) refers to a question or matter that is sufficiently important to warrant management's attention, reflecting the organization's significant economic, environmental, and social impacts
• Issue Materiality Matrix:

  • Issues are plotted and ranked in decreasing order of importance
  • Priority issues for management would be in the upper right-hand corner
  • Influence on operations and ease or difficulty of addressing the issues are deciding factors for rating
  • Issues in the lower left corner are of little importance to stakeholders or management
• The appropriate identification of stakeholders is crucial for business corporations to understand the environment in which they operate
• Freeman's stakeholder management capability provides a good starting point for understanding stakeholder relationships
• Frooman's influence strategies provide a perspective on understanding stakeholders, emphasizing that stakeholders can influence one another and the corporation in direct and indirect ways, by withholding or specifying usage conditions
• The most sophisticated approach to understanding stakeholders is through collaboration, changing the approach from managing stakeholders to dialoguing with them
• Issue materiality analysis has a logical connection to stakeholder analysis, enhancing management's understanding of the environment in which the corporation operates