Stakeholder Management
Stakeholder Analysis (Carroll & Buchholtz 2003)
Primary stakeholders
Secondary stakeholders
Social
Owners, shareholders and financiers (KKR)
Industry Groups
Employees
Government and regulators
Board of Directors
Competitors (Channel’s 9,10, 2)
Customers - TV Viewing audience
Media and commentators
Business Partners (Yahoo, AFL, TIVO)
Social groups/networks
Local communities
Unions
Foreign TV firms – TV content providers
Non-social
Natural Environment
Environmental interest groups
Future generation
Animal rights groups ?
Theory
Primary and secondary stakeholders
One of the simplest means of sorting out stakeholders is through the typology developed by
Wheeler & Sillanpää (1998). They have categorised stakeholders as either primary or
secondary, social or nonsocial.
Primary stakeholders are those with a direct stake in the organisation and its
success. Secondary stakeholders can also be influential, particularly with regard to an
organisation’s reputation and public standing. For these stakeholders, though, their
stake is less direct, reflecting their public or special interests.
In general, organisations are less accountable to secondary stakeholders,
although these stakeholders may represent legitimate public concerns
(Carroll & Buchholtz 2003). Example of these are shown in the table
below.
Carroll has pointed out that secondary stakeholders can quickly become
primary ones, as is the case when a particular interest group campaigns
against an organisation or its practices. Advances in media and
telecommunications technologies have attenuated the dynamic nature of
these categories in recent times.
Seven Key Questions for Stakeholder Analysis
1.
Who are BM team existing stakeholders?
2.
Who are BM team potential stakeholders?
3.
What are the stakeholders’ stakes?
4.
What opportunities and challenges do our stakeholders present to the BM
team?
5.
What impact does the BM team have on the stakeholders?
6.
What impact does the stakeholder have on the BM team?
7.
What strategies or actions should the BM team take to best handle the
stakeholder challenges and opportunities?
Mitchell, Ange & Wood’s Model for Characterising Stakeholders
Primary stakeholders
Secondary stakeholders
L = Latent
E = Expectant
D = Definitive
Power
Legitimacy
Urgency
L/E/D
Mitchell, Agle & Wood (1997)
Model of stakeholder identification and salience.
These authors begin with Freeman’s wide definition of stakeholders, and
classify them according to;
1. The stakeholder’s power to influence the organisation
2. The legitimacy of the stakeholder relationship
3. The urgency of the stakeholder’s claim on the organisation
(Mitchell Agle & Wood 1997)
Power
Power relates to one’s ability to influence another party’s actions or
decisions. As Pfeffer & Salancik (cited in Mitchell 1997, p. 865) have
famously said; “Power may be tricky to define, but it is not difficult to
recognise: (it is) the ability of those who possess power to bring about the
outcomes they desire”. In any relationship, power is held by those who can
make use of their physical resources, financial or material resources, or
‘symbolic’ resources such as the acceptance, prestige or esteem of others.
Legitimacy
Legitimacy is related to power, but is not the same thing. It is possible for
a stakeholder to have power but not legitimacy, as the case of a hostile
takeover of either a corporation (or a nation) clearly demonstrates.
Legitimacy can be best understood in terms of the definition you were
given in Unit 2: as perception that an organisation’s actions are desirable,
proper, or appropriate according to the stakeholder’s system of norms,
values, and beliefs. In other words, the organisation is seen as valid and
valued by its stakeholders.
Both legitimacy and power are transitory, and can be lost as well as
gained. Consider that an organisation may engage in employment or
environmental practices in one country that are legitimate in that country
but raise concerns amongst stakeholders elsewhere.
Urgency
How urgent, compelling or pressing a stakeholder’s claims are, forms the
third element of Mitchell, Agle & Wood’s typology. They see urgency as
related to the
time sensitivity, or degree to which a delay in attending to the claim is
unacceptable to the stakeholder
•
• criticality, or importance of the stakeholder’s claim to a relationship
with the organisation
You will probably recognise, as these scholars did, that there is a whole
field related to ‘issues’ or ‘crisis’ management that deals specifically with
this aspect of stakeholding.
Each of the above three attributes can be present to a greater or lesser
degree in all relationships, and may also change over time. It is important
to remember that different people may see the relative power, legitimacy
and urgency of a stakeholder’s claims differently. It is not an ‘objective’
reality that, for example, an activist group has a certain amount of power
or urgency. Instead, it is what the sociologists have termed a ‘socially
constructed’ reality, which will be affected by things like an organisation’s
culture, management values, and past experiences.
Mitchell and colleagues have taken the above three attributes and
developed a model for characterising stakeholders.
In its simplest form, there are three different types of stakeholders, shown
in Figure 7.2:
1. latent
2. moderate, or expectant
3. definitive, or highly salient
Latent stakeholders possess only one of the three defining characteristics.
Examples would include laid-off employees, or receivers of corporate
philanthropy, both of whom have legitimacy but not power or urgency.
Moderate or expectant stakeholders possess two attributes, and may be
viewed as ‘expecting’ something from the organisation. An example of a
moderate, expectant stakeholder would be the local Alaskan communities
affected by the Exxon Valdez oil spill. Their needs were urgent and
legitimate, but they were not powerful; they had to rely on the power of
the state government and the court system to have their claims recognised.
(Mitchell et al 1997)
Highly salient, or definitive stakeholders possess all three attributes, for
example, a dominant shareholder in a company.
The second reading for this Unit is taken from Wheeler & Sillanpää’s body
of work and outlines some general principles for stakeholder inclusion.
This reading provides a useful introduction to the next section.