Stakeholder And Issues Management Approaches

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• Stakeholder And Issues Management Approaches

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Chapter Topics

1. Why use a stakeholder management approach for
   business ethics?
2. Stakeholder management approach defined
3. How to execute a stakeholder analysis
4. Stakeholder approach and ethical reasoning
5. Moral responsibilities of functional area
   professionals
6. Three issues management approaches
7. Two crisis management approaches

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Why Use A Stakeholder Management Approach For
Business Ethics?

• The stakeholder approach is a response to the
  growth and complexity of understanding and study
  of the modern corporation and its influence on
  the environment.

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• The ethical dimension of this approach is based
  on the view that
• Profit maximization is constrained by justice
• Regard for individual rights should be extended
  to all constituencies that have a stake in the
  affairs of a business
• Organizations are not simply or only economic in
  nature but can and do act in socially responsible
  ways, not only because it is the right thing to
  do, but also to ensure their legitimacy

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Stakeholder Management Approach Defined

• The stakeholder approach provides a framework
  that enables users to map and ideally, manage the
  corporations relationships, both present and
  potential, with groups to reach win-win
  collaborative outcomes.
• It does not have to result from a crisis or
  controversial situation.
• It can be used as a planning method to anticipate
  and facilitate business decisions, events, and
  policy outcomes.
• Business units, teams, and groups can use this
  approach.

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Stakeholder Management Approach Defined

• Stakeholder any individual or group who can
  affect or is affected by the actions, decisions,
  policies, practices, or goals of the
  organization.
• Primary stakeholders of a firm owners,
  customers, employees, and suppliers.
• Secondary stakeholders all other interested
  groups such as the media, consumers, lobbyists,
  courts, governments, competitors, the public, and
  society.
• Stakes any interest, share, or claim that a
  group or individual has in the outcome of a
  corporations policies, procedures, or action
  toward others.

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How To Execute A Stakeholder Analysis

• The stakeholder approach is a pragmatic way of
  identifying and understanding multiple, often
  competing, political, social, legal, economic,
  and moral claims of many constituencies.
• The stakeholder analysis is a series of steps
  aimed at the following tasks
• Mapping stakeholder relationships
• Mapping stakeholder coalitions
• Assessing the nature of each stakeholders
  interest
• Assessing the nature of each stakeholders power
• Constructing a matrix of stakeholder moral
  responsibilities
• Developing specific strategies and tactics
• Monitoring shifting coalitions

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Stakeholder Approach And Ethical Reasoning

• The stakeholder analysis is an analytical method
  where no prescribed ethical principles or
  responsibility rules are built-in.
• Ethical reasoning in the stakeholder analysis
  means asking
• What is equitable, just, fair, and good for those
  who affect and are affected by business
  decisions?
• Who are the weaker stakeholders in terms of power
  and influence?
• Who can, who will, and who should help weaker
  stakeholders make their voices heard and
  encourage their participation in the decision
  process and outcomes?

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Moral Responsibilities Of Functional Area
Professionals

• One goal of a stakeholder analysis is to
  encourage and prepare organizational managers to
  articulate their own moral responsibility, as
  well as the responsibilities of the company and
  their profession, toward their different
  constituencies.
• Stakeholder analysis focuses the enterprises
  attention and moral decision-making process on
  external events.
• This approach applies internally, especially to
  individual managers in and across traditional
  function areas.

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Moral Responsibilities Of Functional Area
Professionals

• Traditional functional and expert areas include
• Marketing
• Research and development (R D)
• Manufacturing
• Public relations
• Human resource management (HRM)

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Three Issues Management Approaches

• First Approach 6-Step Issue Management Process
• Most straightforward
• More appropriate for companies or groups trying
  to understand, manage, and control their internal
  environments
• Involves the following steps
• Environmental scanning and issues identification
• Issues analysis
• Issues ranking and prioritizing
• Issues resolution strategizing
• Issues response and implementation
• Issues evaluation and monitoring

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Three Issues Management Approaches

• Second Approach 7-Phase Issue Development
  Process
• Issues are believed to follow a developmental
  life cycle
• Life-cycle stages suggested for tracking an
  issue
• A felt need arises
• Media coverage is developed
• Interest group development gains momentum
• 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

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Three Issues Management Approaches

• Third Approach 4-Stage Issue Life Cycle
• Thomas Marx observed that issues evolve from
  social expectations to social control through the
  following steps
• Social expectations
• Political issues
• Legislation
• Social control

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Two Crisis Management Approaches

• First Approach Precrisis Through Resolution
• According to this model, a crisis consists of
  four stages
• Prodromal (precrisis)
• Warning stage
• Acute
• Damage has been done
• Chronic
• Clean-up phase
• Resolved
• The crisis management goal

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Two Crisis Management Approaches

• Second Approach Reaction Through Accommodation
• Five phases of corporate social response to
  crises related to unsafe products, or product
  crisis management include
• Reaction
• A crisis has occurred
• Defense
• The company is overwhelmed by public attention
• Insight
• Most agonizing time
• Accommodation
• Addressing public pressure and anxiety
• Agency
• Company attempts to understand the causes

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Two Crisis Management Approaches

• Suggestions that corporations can follow to
  respond more effectively to crises include
• Face the problem
• Take your lumps
• Recognize that there is no such thing as a secret
  or private crisis
• Stage war games
• Use the firms philosophy, motto, or mission
  statement
• Use the firms closeness to customers and end
  users for early feedback

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Two Crisis Management Approaches

• Issues and crisis management methods and
  preventive techniques are effective in
  corporations only if
• Top management is supportive and participates
• Involvement is cross-departmental
• The issues management unit fits with the firms
  culture
• Output, instead of process, is the focus