Session 2: Stakeholder
Management
Prof. Nathalie CRUTZEN
HEC-Management School of the University of Liege (Belgium)
June 2012
1
M. Friedman vs E. Freeman

Milton Friedman:
http://www.youtube.com/watch?v=RWsx1X8PV_A&feature=r
ela
Edward Freeman:
http://www.youtube.com/watch?v=bIRUaLcvPe8&playnext=
1&list=PL4A0FC27E72ABA1A1&index=23

Stakeholder
vs Stockholder theory
http://www.youtube.com/watch?v=bQIKaOFB0b8
2
Stakeholders’ model
• Only responsibility =
profit
Responsibility =
Profit, People & Planet
• Only accountable
to shareholders
Accountable to Society
• Only directed by
shareholders’ interests
Stakeholders’ interests
taken into account
Stakeholders

Definition: any individual or group which affects or
is affected by the organization

Stakeholder management: Balancing the competing
preferences or claims of specific stakeholders (SH)

How to find a “balance” – 3 criteria



Power – how much can they influence the organization?
Legitimacy – are their claims legitimate? actions appropriate?
Urgency – do their claims require immediate attention?
4
Who are the stakeholders of a
company ?
5
SHAREHOLDERS - STOCKHOLDERS
CONSUMERS
SUPPLIERS
LOCAL COMMUNITIES
http://www.arcelormittal.com/corp/news-and-media/multimedia-gallery/videogallery/arcelorMittal-in-liberia
NGOs
MEDIA
http://www.youtube.com/watch?v=-gq15FEyi9A
EMPLOYEES
http://www.youtube.com/watch?v=Zkc9FOucT-Q
External
Value Chain
External
NGOs, communities,
government, media,
unions, banks,…
Value chain
Customers, suppliers
Internal
Internal
Employees, managers,
shareholders
13
STAKEHOLDERS (Sabine Denis, 2012)
MARKETPLACE
Investors & analysts
Lenders, debtors &
insurers
Customers & Consumers
Suppliers
Business partners
Competitors
COMMUNITIES
Host communities
Local neighbours
Media & Social Networks
Government & regulators
Opinion Leaders
Sector & industry experts
ENVIRONMENT
Activists
People without a voice
WORKSPLACE
Employees
Trade Unions
Stakeholder management

3 approaches




Descriptive: legal requirement – "have to" deal with SH
Instrumental / pragmatic: see SH as means to reach performance goals
– "makes business sense"
Normative: the morally right thing to do – "should"
How?




Identify stakeholders (map)
Recognize the legitimacy of claims and issues
Integrate opportunities and risks into strategic planning
Develop internal SH management capability





Formalize relations  communication strategy and tools
Be pro-active, take initiatives (as opposed to reactive)
Involve staff who have frequent SH relations in strategic planning
Use, when feasible, a win-win negotiating approach
Tools




Stakeholder mapping
Issues and impact charts
Priority table
Influence grid
15
Stakeholder management
5 key questions
1. Who are our stakeholders?
Stakeholder map
2. Which SH (demands) are
“priority” in terms of:
• Legitimacy, Power,(Urgency)
• Ability to help, ability to hurt,
and Likelihood of Acting
3. Which opportunities (potential
cooperation) and threats
(potential risks) do SH represent?
5.
•
•
•
•
4. What are our responsibilities
towards SH?
•Economic
•Legal
•Ethical
•Philanthropic
How to manage SH claims, relations?
Directly or indirectly, i.e., lobbying
Proactively or defensively
Negotiation strategy
Formalize SH relations within the
organization: centralized vs. decentralized
16
Stakeholder Management Tools
• Several tools
1. Stakeholder mapping (1)
2. Issues and impact charts (3)
3. Priority table (2)
4. Influence grid (2)
17
1. Typical stakeholder map
Government
Political
groups
Community
Shareholders
Financial
institutions
Special
interest
groups,
NGOs
Suppliers
Firm
Customers
Competitors
Unions
Employees
Media
Consumer
groups
Trade
assns.
18
ESC Rennes' stakeholders
Issues?
Accrediting
bodies
National
government
ministries
Local government
CCI
Financial
institutions
Prospects
Suppliers
Program
Students
Nationality
Associations
Competitors
ESCR
CGE - French
bus. school assn.
Alumni
International
partners
Parents
Admin.
staff
Media
Faculty
French feeder
schools
Management
Unions
Companies
Employees
French partner
schools
19
Mark and Spencer’s
Stakeholders
20
2. Issues and impacts
SH
Human
rights
Technology
implementation
Economic
impact
Safety /
social impact
Environmental
impact
Proposed
legislation
Customers
Suppliers
Employees
How do sustainability issues
affect specific stakeholders?
Regulators
Unions
NGOs
Does this group of stakeholders have an
interest in and an impact on our
activities in relation to this issue?
Investors
Unions
Media
21
3. Priority table
SH
Ability to help us
Ability to hurt us
Likelihood of acting
Overall priority
Customers
Suppliers
Employees
Regulators
Unions
NGOs
Investors
Unions
Media
Score from 1 (least) to 5 (most)
22
4. Influence Grid
High
Work together to
achieve common goals
Support
Enhance their
influence
Low
EMPOWER
PARTNER
Track behavior and
communications
Influence their
thinking
MONITOR
ENGAGE
Low
Influence
High
23
Something fishy
Case study



You are a purchasing manager for a multinational food company
specializing in the sale of fresh tuna and frozen fish products.
You have sub-contracted fishing boats using nets which, in addition
to catching tuna, ensnare and kill dolphins.
Your office regularly receives scientifically-valid reports from
government and environmental protection agencies about the
depletion of the world’s oceans. One of them, the Marine
Stewardship council (Fr.) keeps a close eye on your company’s
operations and offers a sustainable fishing label which you really
haven’t investigated.
24
Something fishy
Case study



Some of your fishing boats have physical
confrontations with Greenpeace which
oppose excessive fishing and the
mistreatment of dolphins.
In addition, the media (video) draw regular
attention to the plight of dolphins ensnared
in nets.
Some of your customers, like the Auchan
hyper market chain, have already taken a
position, and you’ve lost their business.
What if other retailers follow suit?
25
Something fishy
Case study - your turn!

Work in small groups for 30 mn. to analyze this
situation
Identify major stakeholders (SH map) and their “priority”
 Opportunities and risks
 How to manage stakeholders’ claims/relations?
(Use SH map and influence grid tools)


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More specifically, which strategy to use in dealing
with Greenpeace? see video. Remember that
Greenpeace is a large organization with its own
issues.
Click for video on Greenpeace
warrior spirit
Make recommendations
Be ready to present your analysis and
recommendations  Short PPT (5 min)
26
Stakeholder management
Key points

Map your stakeholders

Prioritize claims and issues in terms of legitimacy, power,
and urgency:

Use the stakeholder influence grid to segment SH in terms of support
and influence

Consider opportunities and risks and integrate these into
company objectives and strategy

Develop internal SH management capability




Generally speaking, be pro-active, take initiatives
Determine negotiation strategy with respect to each SH
Formalize relations: communication strategy and tools
For staff with frequent SH interactions


Train them in key issues and negotiation approaches
Involve them in strategic decisions
27
Interactive Game on
Stakeholders’ Theory
Objective

Experience what it can be like to manage social and
environmental issues in a business

To illustrate Session 2

This interactive game shows


How some decisions made by a firm may have an impact on
various stakeholders and influence their satisfaction
And how stakeholders may have an impact on a firm
http://www.btplc.com/Responsiblebusiness/Ourstory/Intera
ctivegames/BetterBusinessDilemmas/index.htm
Rules

On the "big screen"


By group

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Evolution of the stakeholders’ satisfaction according
to the "majority ": each group votes within some
precise deadlines (simple majority)
Please, follow (and register!) the evolution of your
own decisions on your laptop
After several questions…


General feedback
Questions to groups