Stakeholder theory

Stakeholder management and

strategic planning
Two broad stakeholder theories

Friedman

Freeman
 Theory one
Milton Friedman focus on the
shareholders as they only stakeholders
who matter. The business of business is
making a profit and building shareholder
value the prime purpose.
 Theory two

* The quickest way to destroy shareholder

value is to ignore stakeholders
 Where did it start?
R. Edward Freeman (1984)

Stakeholder theory is about identifying the

groups who are stakeholders in a
corporation and need to be managed
 Why are stakeholders important?
Corporations and organisations operate
with the consent of the community.
Communities comprise groups of
stakeholders
Winning the consent of these stakeholders
provides a licence to operate
 Who are stakeholders?
The directly involved:
- investors
- employees
- suppliers
- customers
 Other stakeholders
Government
Political parties
Trade unions
Community groups
NGOs
Plant neighbours
 A key question for you

Is the media a stakeholder?

Why pay attention to stakeholders?
Moral or philosophical reasons corporate
social responsibility

Practical reasons licence to operate

Strategic planning reasons identifying

opportunities and threats
Some key management questions
Why should specific companies pay
attention to stakeholders?
Who are the organisations stakeholders?
How do we identify them?
What is the basis for their
interest/legitimacy?
What do they want?
Some key management questions
Which stakeholders are most important?
How do we set priorities?
Do we need separate strategies for
different stakeholder groups?
Can we reach all stakeholder groups?
How do we balance stakeholder interests?
 Managing stakeholders a
strategic context
The quality of relationships with
stakeholders are the key determinant of
corporate reputation
Stakeholder management is the core of
public affairs management
Symmetric and asymmetric
communication theory is relevant to
stakeholder management
 Managing stakeholders an
communications approach
Identify the stakeholders
Identify the relationship you want with
them
Identify the urgency/timing need for
communicating with them
Identify their information needs
Identify the best communication channel
 Some practical examples
Employees face to face as frequently as
possible
Investors as laid down by ASX/ASIC
regulations
Governments building up goodwill for the
future
The media when and where appropriate
Managing stakeholders a PA and
issues management approach
Craig Fleishers emerging PA model:
Managing PA and issues management on
a year round process
Cultivating and maintaining enduring
stakeholder relationships
Influencing stakeholders using refined
information
Managing the grassroots
 Fleisher model
Communicating in an integrated manner
Continually aligning values and strategies
with the publics interests
Improving external relationships using
contemporary management practices
 Using PA planning techniques
Identify stakeholder management needs as
an integral part of:
Issues monitoring and environmental
scanning
Analysing threats and being sceptical
Using standard analytical tools: SWOT,
PEST, Porter model
 Planning techniques
Undertaking scenario planning: What ifs?
Constantly testing internal perception
against external realities
Creating risk, opportunity and issues
profile
Producing issues maps and stakeholder
matrices
 Setting priorities
Categorise stakeholders by:
Stakeholders directly interested in your
success
Allies and potential allies
Entrenched opponents
Independent monitors and opinion formers
Uninvolved
 Management strategies
Directly interested recruit as advocates
Allies encourage
Opponents neutralise
Independents maintain dialogue
Uninvolved monitor and anticipate
 Some conclusions
Two theories empirically one wrong and
one right
Focus on identifying stakeholders and why
they are important
Integrate stakeholder management into
strategic planning
Set stakeholder priorities