The Corporation and

Chapter Its Stakeholders

1

Business
and
Society

POST, LAWRENCE, WEBER

 Figure 1-1a

A range of levels for understanding the

business-government-society relationship
Broad conceptual level

Economy/ Politics/
Business Government

Society/Culture
 Figure 1-1b

A range of levels for understanding the

business-government-society relationship
Intermediate level

Industry Governments:
in general; national, state,
industry local, foreign
sectors Stakeholders
 Figure 1-1c

A range of levels for understanding the

business-government-society relationship
Practical, applied management level

Specific
Corporation
government
X Primary and agencies and
secondary actors
stakeholders
 Figure 1-2
Relations between a business firm and its
primary stakeholders

Employees
(Unions) Stockholders
Wholesalers Distribute Sell
(Retailers) products labor
Invest
Business capital

Buy firm Creditors

products Lend
(Managers) money

Sell
materials
Customers Suppliers
Investor Relations

 Fiduciary Responsibilities
 Financial Bottom Line
 Best practices
 Transparency
 Accountability
 Fair return to shareholders
 Balance among interests
Employee Relations
 Wages,
contribution, and
meaning
 Human and
Intellectual
Capital
 Commitment
 Loyalty
Failed Assumptions about
Employee Relationships
 Employees are costs
 Short-term orientation
 Dehumanizing practices
 Lack of delegation of
responsibility and authority
 Perverse norms of management
 “tough” or mean management
 paralysis of analysis
Employee Practices that work...

 Employment Security
 Selective Hiring
 Self-managed teams and decentralization
 High performance based compensation
 extensive training
 Reduction of status differences
 Sharing Information
Employee Commitment
 Clear vision and values
 elaborate common purposes
 Inspirational and meaningful
 Part of something bigger
 “Cult-like” cultures
 Fair treatment
 Two-way communications
 Customer Relations
 Relationship marketing
 Customer franchise = Trust
 Build loyalty

 On-going relationships
and regular interaction
 Meet real needs
 Product/Service Quality
 Suppliers, Allies, Partners
 Relationships based on
trust, quality, and
commitment
 Bottom line is
infrastructure, delivery,
and quality
 Similar codes of conduct,
standards, and
expectations
 Need integrity on both
sides
 Figure 1-3
Relations between a business firm and
some of its other (secondary) stakeholders
Local Federal,
The Communities State
General Positive, and Local
Public negative Jobs, Governments
opinion environment
Regulation,
Advice, Business taxes
Business research Firm Foreign
Support
Image, Friendly, Governments
Groups
publicity (Managers) hostile

Social Social
Media demands Activist
Groups
 Public Affairs

 Government and “publics” relationships

 Rules of society
 infrastructure

Sumber : Waddock
 Media Relations
 Image management
 Reputation management
 Advocacy and public image
 Build consensus
 Multiple means to “frame” the
company’s position
 press releases, advertising,
newsletters, reports
 General media relationships
 reporters know and trust company
Sumber : Waddock
Community Relations
 Corporate Community Relation Strategies
 Build relations
 Identify issues and concerns
 Design appropriate programs
 Communities of Interest
 Site Communities
 Employee communities
 Fenceline communities
 Impact communities
 Cyber Communities
 common interest communities
Sumber : Waddock
 Standards of Excellence
Corporate Community
Relations
 Leadership
 Issues Management
 Relationship Building
 Strategy
 Accountability
 Infrastructure
 Measurement
Social vision/social capital

 THE KEYS:
 Balance company interests with
the community
 Trust and relationship
 Show individual and company
leadership
 Become “neighbor of choice”
 Figure 1-4

Forces that shape the business and society

relationship
Economic competition:
strategic and social challenges

Ethical expectations and

Business and public values
its
Stakeholders Changing role of government
and public policy

Ecological and natural resource

concerns

Technology and new knowledge

World Class Manufacturing
 Safety orientation
 Involved, committed workforce
 JIT manufacturing and delivery
 Product flow focus
 Preventive maintenance
 Management of bottlenecks
 Total quality management
 Fast setups
 Low inventories
 Supportive policies/procedures

Sumber : Waddock
World Class Services

 Employee Accessibility
 Competence
 Attitude
 Communication
 Credibility
 Features/ Innovation
 Responsiveness
 Tangible Results
 Trust and commitment
comes from...
 Superior resources, opportunities
and benefits to competitors
 Maintaining high integrity,
standards of conduct, and values
 And assuring partners do, too

 Communicating important
information
 including expectations, market
intelligence, and evaluation
 Avoiding opportunistic behavior
 Business and
Chapter Public Issues
2

Business
and
Society

POST, LAWRENCE, WEBER

 Figure 2-1

The macroevironment of business

Economic forces Social forces
- Unemployment - Demographic changes
- Interest rates - Social values
- Imports and exports - Lifestyles
- Balance of payments

Corporation

Political forces Technological

- Political relationships Forces
- Political processes - New products and processes
- Political change - Innovation
- Scientific discovery; R&D
 Figure 2-2

The performance-expectations gap

Corporate Stakeholder
Performance Expectations

“How wide is the gap?”

- Actual performance - Expected corporate performance

- Outcomes - What stakeholders want
- Results - Satisfaction
- Impacts on others - Disappointment or anger
 Figure 2-3

High The public issue life cycle

Phase 1: Phase 2: Phase 3: Phase 4:
Changing Political Formal Legal
Stakeholder Government
Action Implementation
Expectations Action

Life Cycle of Issue

Management
Discretion

Low Time
 Exhibit 2-A

Corporate public affairs activities

Federal government relations Public relations
State government relations Media relations
Community relations Employee communications
Trade association relations Education affairs/outreach
Local government relations Volunteer programs
Contributions/philanthropy Advertising
Grassroots management International public affairs
Issues management Environmental affairs
Political action committee (PAC) Stockholder relations
Public interest group relations Institutional investor relations
Regulatory affairs Consumer affairs

Source: See Foundation for Public Affairs, “State of Public Affairs, 2000,” Washington, DC: FPA, 2000. J.E. Post
and J.J. Griffin, “State of Corporate Public Affairs, 1996,” Washington, DC: FPA, 1997.
 Figure 2-4

The “value added” derived from public

affairs management
Social and Political
Internal
Intelligence*
communication**

** Capacity for sharing information

* Accurate understanding of the
with internal constituencies,
people, issues, trends, and factors
Including the CEO and senior
that can affect the achievement of
executives of key staff and
strategic goals and objectives.
operating areas.

External
*** Demonstrated capacity
action programs*** for executing programs
that achieve desired results
with stakeholders.
 Figure 2-5
The issues management process
Research
Issues Issues
Identification Analysis
Performance Judgement
evaluation and priority
setting

Results Policy
Options

Implementation
Program
Policy and
Design strategy selection
 Figure 2-6
The issues priority matrix
Impact of Issue on Company
High Medium Low

High

Medium

Low
 Figure 2-7
Strategic management approach to
managing external relations
Crisis Issues Strategic
management management planning

Amount of
uncertainty
Today low high Future
- Focus on the “here - Near-term and intermediate - Long-term and intermediate
and now” focus on problem focus
- Intense pressure - Significant pressure - Limited pressure
on decision makers; on decision makers; on decision makers;
- Little opportunity to - Some opportunity to - Ample opportunity to
make course corrections make course corrections make course corrections
- Reactive mode of - Proactive and interactive - Proactive mode of action
action dominates modes of action dominate (anticipatory) dominates
0
 Figure 2-8
Four basic strategies of response
to stakeholder issues
Inactive Stakeholder expectations Organization does
Strategy changes not change

Reactive Stakeholder expectations Organization resists, then

Strategy change first responds to stakeholders

Proactive Organization Stakeholder expectations

Strategy initiates change and relations are changing

Organization and environment are changing and there

Interactive is an effort to adjust to one another’s needs
Strategy
Organization Stakeholders