The stakeholder universe is becoming ever more complex for organisations. It has always been a challenge to determine which groups of stakeholders to focus on. Current trends are exacerbating this.
Traditionally there are three main types of stakeholders organisations have to consider. Firstly, there are the owners and funders of the business, such as shareholders and banks, that need to look after an organisation’s performance and strategy.
Secondly, there is the internal audience of staff and work colleagues. An organisation has to make sure that they are motivated and understand the organisation’s direction.
Thirdly, there are the external audiences of customers and suppliers, who have to be kept happy to ensure the consistency in buying and supplying.
All of these stakeholder groups still exist. Their expectations in terms of the depth of relationship, types of communication and level of interaction have become more demanding. On top of this, there is growth in the types of individuals and groups who must be viewed as valid stakeholders.
There is the increasing regulatory burden in many industries. Regulators and legislators have moved from being occasional stakeholders to representing multifaceted fulltime relationships.
Organisations are expected to make commitments on sustainability, reducing discrimination and looking into the needs of other forms of corporate social responsibility agendas. Social expectations of businesses are evolving and becoming more onerous. Journalism has become more sophisticated and intrusive.
These trends result in broader stakeholder universes. The groups an organisation must monitor, listen to and satisfy with complex information and reporting needs, continue to expand.
These lead to the needs for ever more sophisticated stakeholder analysis, based on a full mapping of the stakeholder universe. The risks from poor stakeholder management, whether reputational risk or other negative consequences, have grown and will continue to grow. Stakeholder management cannot be an ad-hoc exercise, but needs to be a robust and effective discipline.
Mapping the stakeholder universe starts with a detailed analysis of the organisation, the relationships it has and needs to have, and the groups with an interest in the success, failure and impact of the organisation’s activities. This can lead to a hugely complex set of stakeholders each with individual needs.
No organisation has the resources to satisfy every demand of every unique stakeholder. Therefore, having mapped the stakeholder universe, the next step must be to prioritise. There are several dimensions to stakeholder prioritisation.
Firstly, there is the simple activity of deciding which stakeholders to work with. But stakeholder prioritisation must be more sophisticated than this.
Which stakeholders get individual attention? Which are handled as part of a group? Who gets the personal attention of the CEO? Which stakeholders are delegated to professionals with more time to deal with them – or in some cases, the specialist skills and knowledge to handle the interactions?
Stakeholder management must be dynamic – monitoring, adapting to feedback and changes in the business environment..
Richard Newton is an internationally renowned author and consultant. He has written 12 books, which have been translated into 17 languages – including the award winning The Management Book. His latest book Managing Your Team Through Change was published in December 2014. Richard works worldwide through his consultancy Enixus Limited, helping corporations to deliver organisational change and performance improvement. His details can be found on linkedin at uk.linkedin.com/in/richardjenewton/en, and he can be followed on twitter at @RJNtalk. For more Consulting Corner articles, click here.
Published in English daily The Star, Malaysia, 9 May 2015