Stakeholder And Issues Management Approaches Management Essay

S presentholder And Issues care start extinctes Management EssayThe stakeholder fill inment apostrophize is a response to the growth and complexity of contemporary organizations and the need to understand how they operate with their stakeholders and stockholders. Underlying the stakeholder management draw near is the ethical imperative that mandates businesses in their fiduciary relationships to their stockholders and shargonholders to 1) diddle in the best interests of and for the benefit of their guests, employees, suppliers, and stockholders and 2) respect and fulfill these stakeholders rights.The ethical dimension of this approach is based on the view that profit maximization is constrained by justice, that regard for individual rights should be extended to totally constituencies of business that induce a stake in the affairs of business, and that organizations do act in socially obligated ways not only because it is the right thing to do, but also to ensure their legi timacy.A. The Outsourcing Debate1. Competing stakeholder claims deform heated when executives must choose mingled with profit and the welf be of some or all stakeholders.2. Conflicting studies report that, on one hand, every dollar of collective spendingshifted offshore generates $1.13 in new wealth for Americas economy and, onthe other hand, U.S. workers may lose $120 billion in wages to outsourcing by2015. Arguments against outsourcing of origins and work includeJobs argon not presently being created in the private sector, which has not happened before in U.S. history.The U.S. trade deficit continues to escalate, with no trade surplus in the linked States for more than 20 years.At least three million jobs suck up been lost over the last three years, with no end in sight. The job loss is not only at lower levels, but also at middle and administrative levels.Local communities and states depend on individual and incarnate taxes to survive. Massive outsourcing nemesisens the Am eri plenty middle class as hearty as local communities.3. In a pluralistic society, corporate leading need a regularity that avails themunderstand and keep score on each of their stakeholders strategies, ethics,and agency relationships.2.2 Stakeholder Management Approach DefinedThe stakeholder approach argues that ethical principles can result in significant competitive advantage, and provides a framework that enables users to map and, ideally, manage pot relationships (present and potential) with groups to reach win-win collaborative outcomes.A stakeholder approach does not have to result from a crisis or controversial detail nor is it limited in its use to large enterprises. It can also be used as a planning method to anticipate and facilitate business decisions, events, and policy outcomes.A. Stakeholders1. A stakeholder is any individual or group who can affect or is affected by theactions, decisions, policies, practices, or goals of the organization.The focal stakeholder is the ships company or group that is the center or focus of an analysis.Primary stakeholders include owners, customers, employees, suppliers, stockholders and the board of directors.Secondary stakeholders include all other raise groups, such as the media, consumers, lobbyists, courts, governments, competitors, the public, and society.B. Stakes1. A stake is any interest, sh be, or claim that a group or individual has in theoutcome of a corporations policies, procedures, or actions toward others.2.3 How to Execute a Stakeholder AnalysisThe stakeholder analysis is a pragmatic way of identifying and understanding multiple (often competing) claims of many constituencies.A. Taking a Third-Party Objective commentator Perspective1. Taking a third-party objective observer perspective while doing the stakeholderanalysis in the following section helps students see all sides of an expiration and indeedobjectively evaluate the claims, actions, and outcomes of all parties.B. Role of the CE O in Stakeholder Analysis1. The stakeholder analysis is a series of seven steps aimed at the following tasks(Frederick et al, 1988) cadence 1 Map Stakeholder RelationshipsFigure 2.2 shows a general picture of an initial stakeholder map. The following five questions, in particular, offer a quick jump get weaving on the analysisWho ar our stakeholders currently?Who atomic number 18 our potential stakeholders?How does each stakeholder affect us?How do we affect each stakeholder?For each division and business, who atomic number 18 the stakeholders?Step 2 Map Stakeholder Coalitions.Determine and map any coalitions that have formed. Coalitions among and between stakeholders form around issues and stakes that they have or seek to have in super C.Step 3 Assess the Nature of Each Stakeholders InterestAlong with Step 4, this step helps in assessing the nature of each stakeholders power by identifying the interests of various stakeholders as supportive, nonsupportive, mixed blessing, or marginal.Step 4 Assess the Nature of Each Stakeholders Power.This part of the analysis asks, Whats in it for each stakeholder? and Who stands to win, lose, or buzz off over certain stakes? terzetto types of especially useful stakeholders are those with voting power, semipolitical power, and economic power (Freeman, 1984).Step 5 Identify Stakeholder clean-livingity and deterrent example ResponsibilitiesDetermine the ethics, responsibilities, and moral obligations your company has to each stakeholder.Figure 2.3 shows a matrix of stakeholder responsibilities.This part of the analysis should continue until you have completed matching the economic, legal, ethical, and entrustful responsibilities for each stakeholder, so that you can develop strategies toward each stakeholder you have identified.Step 6 Develop Specific Strategies and Tactics.First, consider whether to approach each stakeholder directly or indirectly. Second, see whether to do nothing, monitor, or take an offensive or defensive smear with certain stakeholders. Third, determine whether to accommodate, negotiate, manipulate, resist, avoid, or wait and see with specific stakeholders. Finally, decide what combination of strategies you want to employ.Figure 2.4 provides a useful typology for both identifying and deciding strategies to employ in a complex situation, based on potential for threat and potential for cooperation.Figure 2.5 presents an illustration of the typology in Figure 2.7, using the Microsoft solecism as an example.While developing specific strategies, it is important to keep the following points in mind if you are the focal stakeholderYour goal is to create a win-win set of outcomes, if possible.Keep your mission and responsibilities in mind as you move forward.Consider what the credibly consequences of your actions will be.Keep in mind that the means you use are important as the ends you seek.Step 7 Monitor Shifting CoalitionsBecause time and events can change the stakes and s takeholders, it is important to monitor the evolution of the issues and actions of the stakeholders, using Figure 2.4.C. Summary of Stakeholder Analysis1. The stakeholder approach should involve other decision makers inside and external the focal organization.2. The stakeholder analysis provides a rational arrogant basis for understandingissues touch in complex relationships between an organization and itsconstituencies.3. The extent to which the resultant strategies and outcomes are moral and areeffective for a firm and its stakeholders depends on many factors, including thevalues of the firms leaders, the stakeholders power, the legitimacy of theactions, the use of available resources, and the exigencies of the ever-changingenvironment.2.4 Negotiation Methods Resolving Stakeholder DisputesDisputes are part of stakeholder relationships. They occur between different stakeholder levels e.g. between professionals within an organization consumers and companies business to business (B 2B) governments and businesses and among coalitions and businesses.A. Stakeholder Dispute Resolution Methods1. Dispute resolution is an expertise cognise as alternative dispute resolution(ADR). Its techniques cover a variety of methods intended to help litigantsresolve conflicts (see Figure 2.6).2. Integrative approaches are characterized as followsProblems are seen as having more potential solutions than are immediately obvious.Resources are seen as expandable the goal is to expand the pie before dividing it.Parties attempting to create more potential solutions and processes are thus said to be value creating.Parties attempting to accommodate as many interests of each of the parties as possible.The so-called win-win or all gain approach.3. Distributive approaches have the following characteristicsProblems are seen as zero sum.Resources are imagined as fixed divide the pie.Value claiming.Haggling or splitting the difference.4. Relational approaches consider power, interests, rights , and ethics, and arebased onRelationship building.Narrative, deliberative, and other dialogical (i.e. dialogue-based) approaches to negotiation and mediation.Restorative justice and reconciliation (i.e., approaches that respect the dignity of every person, build understanding, and provide opportunities for victims to obtain return and for offenders to take responsibility for their actions).Other transformative approaches to peacebuilding.5. Four principles of negotiation used in almost any type of dispute includeSeparate the people from the problem. nidus on the interests rather than gravels.Generate a variety of options before settling on an agreement.Insist that the agreement be based on objective criteria.2.5 Stakeholder Approach and Ethical ReasoningThe stakeholder analysis requires the focal or principal stakeholders to define and fulfill their ethical obligations to the affected constituencies. Chapter 3 explains major ethical principles that can be used to examine individu al motivation for resolving an ethical dilemma, including rights, justice, utilitarianism, relativism, and universalism.2.6 Moral Responsibilities of Cross-Functional Area ProfessionalsOne goal of a stakeholder analysis is to encourage and prepare organisational managers to articulate their own moral responsibility, as well as the responsibilities of their company and their profession, toward their different constituencies.With the Internet, the transparency of all organizational actors and internal stakeholders increases the risk and stakes of unethical practices. Figure 2.7 illustrates a managers stakeholders.A. Marketing and Sales Professionals and Managers as Stakeholders1. Sales professionals and managers are continuously engaged-electronicallyand/or face-to-face-with customers, suppliers, and vendors.2. Moral dilemmas can surface for marketing managers who may be asked topromote unsafe yields or implement advertising campaigns that are untrue ornot in the consumers best inte rests.3. The stakeholder analysis helps marketing managers in virtuously questionablesituations in terms of identifying stakeholders and understanding the effects andconsequences of profits and services on them.B. RD Engineering Professionals and Managers as Stakeholders1. RD managers and engineers are responsible for the safety and reliability ofproduct design. RD managers must work and communicate effectively andconscientiously with professionals in manufacturing, marketing, andinformation systems senior managers contractors and governmentrepresentatives, to name a few stakeholders.2. Moral dilemmas can arise for RD engineers whose technical judgment andrisk assessments conflict with administrative managers seeking profit and time-to-market dead variants.C. Public Relations Managers as Stakeholders1. Public relations (PR) managers must invariablely interact with outside groups andcorporate executives, especially in an age when communications media,external relations, and public s crutiny play such vital roles.2. PR managers are responsible for transmitting, receiving, and interpretinginformation on employees, products, services, and the company.3. Moral dilemmas can arise when PR managers must defend or protect companyactions that have possible or known harmful effects on the public orstakeholders.D. Human Resource Managers as Stakeholders1. Human resource managers (HRMs) are on the front line of helping othermanagers recruit, hire, fire, promote, evaluate, reward, discipline, transfer, andcounsel employees. HRM professionals stakeholders include but are notlimited to employees, other managers and bosses, unions, community groups,government employees, lobbyists, and competitors.2. Human resource managers face constant ethical pressures and uncertainties overissues about invasion of privacy and violations of employees rights.3. Moral dilemmas can arise when affirmative action policies are threatened infavor of corporate decisions to hide biases or protect pro fits. HRMprofessionals also straddle the often-fine line between the individual rights ofemployees and corporate self-interests.E. Summary of Managerial Moral Responsibilities1. Expert and functional sphere managers are confronted with balancing operationalprofit goals with corporate moral obligations toward stakeholders. Using astakeholder analysis helps clarify the issues involved in resolving ethicaldilemmas.2.7 Issues Management, Stakeholder Approach, and morals Integrating FrameworksIssues management methods complement the stakeholder management approach. Issues management is also a formal process used to anticipate and take appropriate action to move to emerging trends, concerns, or issues that can affect an organization and its stakeholders.A. What is a Public Issue?Many national and international business-related controversies develop around the exposure of a single issue that evolves into more serious and costly issues. Stakeholder and issues management frameworks can be used to understand the evolution of these issues in order to responsibly manage or change their effects.B. Other Public IssuesThere are other types of public issues from the external environment that involve different companies and industries. For example the issue of corpulency has become prominent.Another issue that affects numerous stakeholders is drivers who drink.C. Stakeholder and Issues Management Connecting the Dots1. Issues and stakeholder management are used interchangeably by scholars andcorporate practitioners. The process begins by analyzing and then shapewhich issues are the most urgent and have (or may have) the greatest impact onthe organization.2. Stakeholder analysis questions help connect the dots in understanding andclosing the gaps of issues management.D. Moral Dimensions of Stakeholder and Issues Management1. Ethical reasoning and behavior are an important part of managing stakeholdersand issues because ethics is the energy that motivates people to respond t oissues. When ethical motives are absent from leaders and professionalsthinking and feeling, activities occur that cost all stakeholders.E. Introduction to Three Issue Management Frameworks1. This section presents three general issues frameworks for mapping andmanaging issues before and after they become crises, all of which can be usedwith the stakeholder management approach.F. First Approach 6-Step Issue Management Process1. The process involves the following steps, illustrated in Figure 2.8environmental scanning and issues identification.Issues analysis.Issues ranking and prioritizing.Issues resolution strategizing.Issues response and implementation.Issues evaluation and monitoring.2. These steps are part of a firms corporate planning process. This framework is abasic approach for proactively mapping, strategizing, and responding to issuesthat affect an organization.G. Second Approach 7-Phase Issue Development Process (Figure 2.9)1. Issues are believed to follow a developmental l ife cycle. Views differ on thestages and time involved in the life cycle.A felt need arises.Media coverage is developed.Interest group development gains momentum and grows.Policies are adopted by leading political jurisdictions.The federal government gives attention to the issue.Issues and policies evolve into legislation and regulation.Issues and policies enter litigation.H. 4-Stage Issue Life Cycle1. Thomas Marx observed that issues evolve from social expectations to social program line through with(predicate) the following stepsSocial expectations.Political issues.Legislation.Social control.2.8 Managing CrisesCrisis management methods evolved from the study of how corporations and leaders responded (and should have responded) to crises.Crises, from a corporations point of view, can deteriorate if the situation escalates in intensity, comes under close governmental scrutiny, interferes with normal operations, jeopardizes the positive image of the company or its officers, and dama ges a firms bottom line.A. First Approach Precrisis through Resolution (figure 2.11)1. According to this model, a crisis consists of four stagesProdromal (precrisis) warning symptoms.Acute damage done, point of no return.Chronic recover, self-analysis, self-doubt, healing.Resolution return to normalcy, the goal of crisis management.B. How Executives excite Responded to Crises1. Matthews, Goodpaster, and Nash have suggested five phases of corporate socialresponse to crises related to product crisis management, based on their study ofhow corporations have responded to serious crises. The phases, illustrated inFigure 2.12, areReaction lack of complete information, lack of time to analyze the event thoroughly.Defense overwhelmed by public attention, recoiling under media pressure.Insight stakes are substantial, executives bring to pass and confirm whether company is at fault.Accommodation address public pressure and anxiety.Agency understand causes of safety issue and develop education program for the public.C. Crisis Management Recommendations1. Corporations can respond more effectively to crises byFacing the problem and telling the truth.Taking their lumps in one big news story.Recognizing there is no such thing as a secret or private crisis.Staging war games.Using their motto, philosophy, or mission statement to respond to a crisis.Using their closeness to customers and end users for early feed spikelet.2. The following tactical recommendations are helpful crisis prevention andmanagement techniquesUnderstand your entire business and dependencies.Carry out a business impact assessment.Complete a 360-degree risk assessment.Develop a feasible, relevant, and attractive response.Plan exercising, maintenance, and auditing.3. Issues and crisis management methods and preventive techniques are effectivein corporations only ifTop management is supportive and participates.Involvement is cross departmental.The issues management unit fits with the firms culture.O utput, instead of process, is the focus.Ethical Insight 2.1 Consultants Split On Bridgestones Crisis ManagementThis case study examines how certain crisis management experts viewed the handling of the Bridgestone/Firestone scenario. The experts express their ideas and opinions on the case.questionsWhat, if anything should Mattels CEO have done differently in this scenario/case to have prevented and/or avoided the resulting crisis? Explain. reply Students opinions will vary. There were a number of factors at play, many of which were internal to Mattel, but others that were not. The answer should involve a discussion of the stakeholder framework. The stakeholder analysis provides a rational, systematic basis for understanding issues involved in complex relationships between an organization and its constituents. It helps decision makers structure strategic planning sessions and decide how to meet the moral obligations of all stakeholders. The extent to which the resultant strategies an d outcomes are moral and are effective for a firm and its stakeholders depends on many factors, including the values of the firms leaders, the stakeholders power, the legitimacy of the actions, the use of availableresources, and the exigencies of the changing environment.Briefly describe a situation in which you were a major stakeholder. How was the situation resolved (or not resolved)? What methods were used to resolve the situation? Looking back now, what methods could or should have been used to resolve that situation? For example, what would you now recommend happen to effectively resolve it fairly? dish up Students responses will vary harmonize to their own experiences.Which of the types of power (described in this chapter) that stakeholders can use have you effectively used in a conflict or disagreement over a complex issue? Briefly explain the outcome and evaluate your use(s) of power.Answer The students answer will vary. The answer should involve a description of power from the chapter. Three types of power stakeholders can use are (1) voting power, (2) political power, and (3) economic power. For example, owners and stockholders can vote their choices to affect the firms decisions. Federal, state, and local governments can exercise their political power by increasing regulations. Consumers can exercise their economic power by boycotting a firms products.Which roles and responsibilities in this chapter have you assumed in an organization? What pressures did you experience in that role that presented ethical dilemmas or issues for you? Explain.Answer Students responses will vary tally to their own experiences.What are the reasons for encouraging managers to use the stakeholder approach? Would these reasons apply to teams?Answer why should individual expert and functional subject field managers use the stakeholder analysis? First, by thinking in terms of stakeholders, managers can acknowledge and being to change their perceptual biases, blind spots, an d harmful activities that affect the firms and their units operations. The analysis allows them to see and perform their roles and moral responsibilities toward external and internal groups. Second, by seeing how managers in a firm dish out their complex stakeholder relationships, individual managers can begin to create value and realize corporate moral and legal obligations toward stakeholders. Third, the basis for increasing the quality of cross-functional communication and integrating can be developed. The process and results of the stakeholder analysis can provide a platform for opening corporate communication channels to discuss stressful, unrealistic, or unchaste expectations, problems, and pressures that often lead to illegal and unethical activities, such as creating faulty products, price-fixing, cheating, and lying. Finally, by identifying specific stakeholders responsibilities, expert area managers can begin to see common patterns of pressures, resources, and ethical i ssues across the firm. An enterprises moral identity and mission can be identified or reinforced. Moreover, managers can begin to think ahead and operate with moral responsibility as they perform their work. These underlying concepts can apply to any group, team, or area managers for doing stakeholder analysis.Give a recent example of a corporation that had to publicly manage a crisis. Did the company spokesperson respond effectively to stakeholders regarding the crisis? What should the company have done differently in its handling of the crisis?Answer Students responses will vary according to their own awareness of recent corporate public confidence issues. Some suggested examples includeTexacoracial discriminationMitsubishisexual harassmentArcher-Daniels-Midland come withprice fixingReynolds Tobaccocontroversy regarding health problems of smokingEnron, WorldComaccounting fraudArthur Andersonineffective auditing proceduresPolitical Partiescampaign financing/fundraisingDescribe how you would feel and what actions you would take if you worked in a company and saw a potential crisis emerging at the prodromal or precrisis stage. What would you say, to whom, and why?Answer Students responses will vary according to their own experiences.Using Figure 2.4, identify a complex issue-related controversy or situation in which you, as a stakeholder, were persuaded to move from one position (cell) to another and why e.g., from nonsupportive to supportive, or from mixed blessing to marginal. Explain why you moved and what the outcome was.Answer Students responses will vary according to their own experiences. vie both the pros and cons of stakeholder theory, using some of the arguments in the chapter, as well as your own. What is your evaluation of the usefulness of stakeholder theory and methods in understanding and analyzing complex issues?Answer Students responses will vary according to their own experiences. They should include in their answer pros and cons from the ch apter. Cons (1) negates and weakens fiduciary duties managers owe to stockholders (2) weakens the influence and power of stakeholder groups (3) weakens the firm and (4) changes the long-term character of the capitalist system. Pros (1) The approach provides an analytical method for determining how various constituencies affect and are affected by business activities. (2) It also provides a means for assessing the power, legitimacy, and moral responsibility of managers strategies in terms of how they meet the needs and obligations of stakeholders.exercises(Responses to the following exercises will vary with students experiences and views. However, sample responses are provided as suggestions where possible.)Describe a situation in which you were a stakeholder. What was the issue? What were your stakes? Who were the other stakeholders? What was the outcome? Did you have a win-win resolution? If not, who won, who lost, and why?Answer A local department store had a policy that switch m ust be returned within 30 days of purchase for a cash refund. As a customer of this department store, I had purchased an item as a gift for a friends wedding. The wedding was canceled, and I went to the store to return the item I had purchased. I had my receipt and the item had not been opened. The date on the receipt showed I had purchased the item 34 days earlier. The clerk at the returns desk refused to accept the return callable to the fact that the purchase was made more than 30 days ago. Given the reason for the purchase and return, I felt that this was unreasonable and requested to speak to the manager. After careful consideration and much argument, the manager hold to accept the return, but only as an in-store exchange credit. Due to the hassles involved, both parties came away as losers. As a customer, I was not totally comfortable and will most likely take my business to another store with a more liberal and personalized refund policy. The manager lost due to having to argue with me and this resulted in the loss of my business.Recall your personal work history. Who were your managers most important stakeholders? What, in general, were your managers major stakes in his or her particular position?Answer In almost every business circumstance, the managers most important stakeholder has been the customer. The line most often heard was The customer is always right. It makes sense for the customer to be the most important stakeholder, because without the customer no other stakeholders would exist. If the customers are not satisfied, then they conduct their business elsewhere and the company ceases to exist.In your company or one in which you have worked, what is the industry? The major external environments? Your product or service? Describe the major influences of each environment on your company (for example, on its competitiveness and ability to survive). Evaluate how well your company is managing its environments strategically, operationally, and te chnologically, as well as in relation to new products and public reputation.Answer ABC Consulting and Accounting, Inc. The industry of business consulting and accounting. The environments that most often accompany the consulting and accounting firms are economic, legal, and government/regulatory.The service provided by ABC consists of all accounting functionsbookkeeping, monetary statement preparation, tax preparation, auditing, etc. The consulting services provided consist of reorganization, cost analysis, tax planning, capital investment planning, budgeting, etc. Potential stakeholders are government regulatory agencies-FASB, GAAP-as well as the stockholders of the business customers, their customers, their employees, etc. Each stakeholder affects ABC by either limiting what can be done in regards to reorganizing or analyzing the strengths and weaknesses of the firms that are our customers, or by the way that the accounting records are kept and reported. We affect our stakeholder s by providing the service that they requested to the best of our ability.Choose one type of functional area manager described in the chapter. Describe a dilemma involving this manager, taken from a recent media report. Discuss how a stakeholder analysis could have helped or would help that manager work effectively with stakeholders.Answer Regarding th