Stakeholder management

• A stakeholder is any group or individual who can affect or is affected by the achievement of the organization’s objective. Stakeholder theory suggests that firms should create value for all of these stakeholders

• Stakeholder management is the process of managing the relationships with these groups and individuals. Thus, managers have to balance to create as much value for stakeholders as possible while also keeping up with the firms objectives

• Key steps for effecively managing and aligning stakeholders interest to create value: (i) identifying stakeholders, (ii) mapping stakeholders, (iii) prioritizing stakeholders interests, and (iv) engaign with stakeholders

• Dependencies: Identify prospective stakeholders that are directly and indirectly dependent on the firm’s activities, produccts, services, or performance. Considers what stakeholders does the firm depend on to operate.

• Responsibility: Understand, to what prospective stakeholders the firm has an economic, legal, operational, or moral responsibility

• Urgency: Asses what prospective stakeholders require immediate attention when concerning economic, social or environmental issues

• Influence: Conclude what prospective stakeholders can impact the firm’s strategy or decision-making

1) List all stakeholder

2) Categorizes the stakeholders (internal vs. external, primary vs. secondary) and visually organize a map

• Prioritizing helps us to identify where to focus our attention on

• There are different approaches to prioritize stakeholders, the “collaboration-harm grid approach“ by Savage and colleagues is one

• Collaboration harm grid approach

  • Proposes two dimensions:

    1. Consider the stakeholder’s potential for threat to the company (determined by power, legitimacy, and urgency)

    2. Consider the potential of the stakeholder to cooperate with the company

  • The assessment will be based on a simple “yes“ or “no” answer, after which you can place the stakeholder into four categories:

    • Supportive stakeholders

    • Marginal Stakeholders

    • Non-supportive Stakeholders

    • Mixed blessing stakeholders

• After you have evaluated stakeholders, you have to decide on what strategy to implement

• To engage with your stakeholders, you have to communicate with them and/or collaborate on joint activites

  • Communicate: Engage in a conversation and ask them what issues they consider to be important and why. Transparency, honesty and factual information are valued by the stakeholders.

  • Collaborate: Develop joint activities with stakeholders and monitor the value created by the activites for the stakeholders

• Engagement can have various forms of execution. This execution should be based on the stakeholder prioritization, evaluated beforehand