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Chapter 5 Stakeholders
Stakeholders are anyone or group with a percieved stake in an organization’s activities.
Their influence varies
Stakeholders “`inanimate”
Stakeholders can also extend to inanimate objects such as
the environment, business, government, civil society, and animals
typcial stakeholders of business segment
shareholders, Employees, Suppliers, Unions, creditors, government, civil society
T-S of Govt
Voters, politicians, supplier of goods and services to govt, business, civil society, foreign governments
T-S of civil society
volunteers, charities, communities, disenfranchised individuals, social cause groups, government, business
Pluralistic society
Where influence and power is dispered among a variety of instituions
their are autonomous to pursue their own interest but no completely independent
Diffusion of power STRENGHTS
prevents concentration of power
maximizes freedom
disperses individual allegiances
creates diversified loyalties
provides safeguards
Diffusion of Power Weaknesses
Self interested pursuit
organizations have similar goals
forces conflicts
promtoes inefficiancy
Shareholders
Are stakeholders,
they have unclear interests
some win/ some lose
observe how organizations treat stakeholders
stakeholder management cost money, cheaper than not managing
not static
stakeholder contributions are essential
influence of popular media
Movies and documentaries influence how we percieve business
more expensive for more of a product has a negative impact on the environment and society
Business and media
Buinesses believe:
reporters are uneducated
only interested in drama
inherent biases
do not respect “off the record”
Media
businesses are dishonest
excuses that they are only accountable to shareholders
overeact to reporting process
Media on CSR
Two focal points
Ethical, social, and environmental responsibilities of business of increasing interest to public
This has led to increased coverage of ethics in business and CSR in media
Corporations owning media recognize importance of CSR or sustainabilty
Guardian Newspapers’ Sustainability report
Consumer’s CSR influence
fair trade, boycotts, protests, outright damage/ industrial terrorism, the internet
Companies CSR influence
TD Ready Commitment, Ronald MCodnald house, Tim’s children’s foundaiton.
MPEA inc stakeholder Mapping
High interest + power:
Employees suppliers customers banks competion.
High interest low power
charities, schools
high power low interest:
government
Manager should (Stakeholder management)
Identify stakeholder and their stakes
Understand how corporations currently views stakeholders
examine and rank how each stakeholder will influence firm goals and their power
Economic, Legal, Ethical, and Philanthropic responsibilities does a firm have
Swot analysis
Stakeholder management pros
Simply good for business
ignoring stakeholder interest can have substantial economic consequences
provides more systematic approach to recognizing stakeholder expectations and deciding how to respond
Stakeholder management cons
Problems of identifying and prioritizing stakeholders
challenges in meeting expectations
dilution of top management focus (financial performance)
impracticality of shared governance
Issue
a question or matter in dispute where different views are held of what is or should be corporate performanec
issue maangement
a systemic proces by which the corporation can identify, evaluate, and respond to those economic, social and environmental issues.
Purposes and benefits of stakeholders:
Maintain a competitive advantage while minimizing surprises relating to events or trends in society
Systematic in coping with issues and stakeholder concerns leading to a much more dedicated role in society
Less likely to make a serious social/ethical mistake
Detect issues earlier, develop mechanism for coordinating and integrating management responses sooner
Issue life cycle stages
the degree of awareness of issues over time
T1: the issue is new
T2: the issue is increasing
T3: Prominent
T4: Peak
T5: declining
Issue management process
1) Identification of issues
proactive response
2) analysis of issues
3) ranking issues
4) formulating responses
5) implementing issue response
6) monitoring and evaluating responses
Crisis Management
The process of solving issues that require immediate and comprehensive responses.
Issue management purpose
enables corporation to reduce vulnerabiliies and enhance credibility
Stakeholder Engagement
efforts by a corporation to understand and involve relevant individuals, groups, or organizations by considering their moral concerns in strategic and operational initiatives.
stakeholder matrix mappign
a technique of categorizing an organization’s stakeholder by their influence
problematic -5/-5
educational programs
adrjust corporate plans
prepare defense plans if coalition forms
antagonistic -5/+5
take defensive action, prepare for undermining, counter-arguments, change plans to gain support
low priority +5/ -5
promote involvement
supporter +5/+5
reinforce postion through informing and ask to support others
Salience:
the degree to which priority is given to stakeholders
Three key elements of salience:
Power, Urgency, Legitimacy (desireability)
Resource dependency theory
a stakeholder that supplies a resource can exert some control over it
Resource dependancy theory strategies
Withholding strategy
Usage strategies
supplying a resource with specific use intentions
Influence pathway
when withholding and usage strategies are used by an ally of the stakeholder
Stakeholder Capacity model
An approach to identifying stakeholder in terms of their capacity to influence the organization and in terms of how risky they are
list, rank, compute, and associate each with a predetermined interval
determine how each stakeholder will be managed: partner, dialogue or passively observe
Stakeholder collaboration
Framwork for oranizations to develip collaborative stakeholder relationships
foundation
alignment
development
trust building
evalutaion
repeat
CHARLES HANDY
The purpose of business is to make profit to do more, to be even better.
Chapter 7
Ethics, the study of moral dilemmas and decisions, focusing on how to minimize issues and errors
John C Maxwell
the only way to treat people in life or in business is the golden rule
Golden rule:
treat others how you want to be treated.
Ethics of Business
rules, standards, norms, beliefs that provide guidelines for behavior in specific situations
Value judgements:
subjective evaluations of what is considered important
Moral standards:
how individuals judge actions
Duties:
are the attitudes and behaviors we feel that others have a right to expect of us because of their relationship to us, be it personal, professional, or societal.
Ethical implication of business
Level 1: Ethical Implications
2: Assessing ethical questions based on methodology and the simplest methodology is economic efficiency
3: You're starting to use some of the core ethical principles, and you theoretically have some systematic methodology of going through ethical problems to find solutions that are more appropriate and and least harmful.
Ethical implications:
Owners: fair and accurate disclosure
Employees: hiring, firing, wages, privacy, etc…
Consumers: advertising, product safety
Competitors: industrial espionage, how do you engage in non-comp. behaviour
Suppliers: kickbacks; gifts; bribes
government legal compliance; lobbying
society
Respect for the environment; corporate giving
Influences on ethical behaviour
Influences on Individuals
Corporate or Organizational Influences
Economic Efficiency Influences
Government and Legal System Influences
Societal Influences
Influence on ethical behaviour contd
Individual morals, National and ethnic cultures
Government legislation and regulation, The legal system
Religion, Colleagues or peers, Education, Media, Corporate mission, vision, and values statements
Union contracts , Competitive behaviour, Activists or advocacy groups (NGOs) , Business or industry organizations, Professional associations
Ethical Influence (Focus)
Morals
ideals for behaviour
Duties
The attitudes and behaviours we feel that others have a right to expect of us because of their relationship with us, be it personal, professional, or societal
Values
clear and uncompromising statements about what is important to us
Descriptive ethics
What is
Normative ethics:
What should be
what is the act of ethics? (Graph process)
7 commonly cited principles
#1 self interest: Individuals set their own standards, based on their own values
#2 personal virtue ethics - ethical standards on comparisons with others
#3 ethics of caring: do unto others as you would want done to you
#4 utilitarian ethic: most benefit to the most people, most harm to the least people
#5 universal rules ethics: treat people as people, not as tools
#6 individual rights ethics: relies on a list of agreed upon rights for everyone
#7 ethics of justice: considers moral decisions based on justice
#8 government requirement ethics: whatever government requires as ethical Law represents the minimum moral standard
#9 Economic efficiency ethic: Focusing on market efficiency to gain an equitable society
Moral reasoning:
a systemic approach to thinking or reasoning through the implication of moral problems or issues
Moral reasoning process
Define moral issue
Gather information
Identify stakeholders
Develop alternative solutions
Consider judgements, standards and ethical principles
Identify stakeholder consequences/ benefits
Determine practical constraints
are legal or financial limits
Decide on action
Ethical Dilemma:
A situation in a personal or business situation where you must make a decision between two or more equal mutually exclusive courses of action.
approaches to defensible ethical action
Otto Bremer: Four questions
Josephson: Bell, Book, Candle
Nash
Pagano
Integrated ethical decision model
Otto bremer
What is happening?
What should be happening ?
How do we get there
Why are we doing this?
Josephon
Look for signs, identify a course of action within laws or rules outlines, how will your decision look to the public eye
Nash’s questions
What is the problem
How does it look from someone else's pov
How did this happen
Who do we owe loyalty to- org, customer, employer, etc-
What this SPECIFIC decision
Will it lead to probable results
Who can it injure
Who has been/ needs to be consulted
Is it a smart long term division
Make a decision we can stick by
Symbolic potential
What exceptions would you allow.
Pagano
Is it legal
greatest good for greatest number?
should action be universal standard
would you do it if it appeared on TV
do you want the same to happen to you
Get an unbiased second opinion
Integrated ethical decision model
Does the decision involve what is right, just and fair? | Does the decision affect the decision-maker or other parties? |
Is the decision legal? | If yes, then it is an ethical decision |
Deontological test
consistent with my ideals for behaviour
teleological test
best outcome for greatest number of people and worst outcome for the fewest
Myths of business ethics
It’s easy to be ethical
Unethical behavior in business is the result of bad people
Ethics cannot be taught or influenced
Ethical leadership is mostly about leader integrity
Ethics can be managed through formal ethics codes and programs
People are less ethical than they used to be
Challenges of ethics in business
“Do the right thing” is insufficient
It’s not easy to be ethical - decisions are complex
Unethical behaviour is not just a few bad apples, it's the entire culture. They just dismiss who got caught
People always will be unethical
Most people believe they are acting ethically towards others
manager person table chart
Importance of business ethics
Eases the public
provides contributions to society
mitigates business malpractices
formulates solutions to ethical complexity with efficiency
how to combat violations that occur in business and across countries
how to asses benefits and problems with managing ethics
issues that transcend the traditional framework of business studies and confront some of the most important questions faced by society
Business and government relations
The prevailing view that business and government rarely agree and that the other “doesn’t get it”
Government perspective on BG relations
governments: open responsive, industry reps have an impact
busineses: do not understand govt decision making, proposals do not respond to needs of public govt eyond self interest
Corporate perspective on BG relations
Busineses: understand how govt works, belives their proposals are balanced
govt: do not believe businesses are adequatelu consultered in government. Nor do businesses representation have real impact on govt decisions
Jane jacob’s two syndromes
the guardian value syndrome vs the comercial value syndrome
The guardian
Risk averse, public interest, collcetivist
AKA government
the commercial
risk tolerant, private interest, individualist
AKA Business
components of Commercial syndrome
Agreements
Collaboration
Private interest
Innovation
Investors
Work ethic
Risk-takers
components of Guardian syndromes
Authority and rules
Shunning of trade and coercion
Public interest
Tradition
Protectors
Risk averse
W.T standbury
created a model to asses factors affecting business and its successes
Nature of relations between business and its primary stakeholders
The degree to which the government intervenes and controls success
The perceptions of the public
gov
policy arena size, regional distribution of seats in legislature, actions of other governments, extent of government intervention instruments, behaviour of media, legal and constitutional allocation of power, public opinion
They clash in “Policy Arena” meaning
Businesses lobby government while govt regulate business
Confrontational model
Each sector always attempting to protect and further its own interests
Standbury’s framework
Portrait of business facing off against government, strategizing within environmental contraints to shape outcomes according to their preferences and priorities
conclusion of business and government relations
Theyu are different and influenced by diferent factors, their policy is the outcome of different processes and influences, only reasonsable to better understand one another)
Four external areas of senior management interact with GOVT:
Meetings with elected officials,
dialogue with regulatory personnel,
maintaining relations with the corporations various constituents,
overseeing communications with the public
Business dealing with government - fundamental errors
Dealing only with politicians
Approaching at the wrong time
Providing long reports to politicians
Wading in on an issue too late
Assuming influence is directly proportional to company size
Using an unprepared, disorganized and uncoordinated approach
Reacting to government on an issue-by-issue basis
Lobbying
An activity, directed at decision makers, carried out on behalf of special interests to influence public policy outcomes.
The act states any oral or written communication made to a public office holder
Types of lobbyists + role
Consulting (not on payroll), Third party (lobby on behalf of client), in-house (company or NPO employee)
Asks in lobbying
Procurement, freebies (grants), policy (most common and compliacted)
Joe Jordon 4 types or rules
Good rules, bad rules, new rules, sad rules
Good rules
The rule is acceptable but interpretation is not
difficulty: GEETTING GOVERNMENT TO INTERPRET IT DIFERENTLY
Bad rules
Unacceptable rule
Difficulty: getting govt to drop the rule
New rule
Propsing a new rule
dif: getting govt to adopt the new rule
sad rule
the current rule is obsolete and must be changed
dif: getting the government to change the rule
The point is: that there are rules in place, and to create policy these rules need to be met and these rules increase the word count.
Pythagorean Theorem: 24 worlds
Gettysburg address: 286
USDD: 1300
CRF: 2609
Sale of cabbage: 26’911
Strategic issues
Trying to create a law for something down the road
reuires resolution from top, with public opinion
Proactive work
Operational issues
More technical, a reaction
We need something fixed
bottom up decisions, may be resolved without public stand/input
Direct lobbying
formal and informal meetings, telephone calls, emails, litigation, petitions, protests
Indirect lobbying
Think Tanks are an increasingly popular form of indirect lobbying
Trying to convince voters
Advocacy advertising
MEDIA
Advocacy advertising
any paid public communication or message, from an identified source and in a conventional medium of public advertising, which represents information or a point of view bearing on a publicly recognized controversial issue
purpose of advocacy advertising
designed to sell ideas, Aimed directly at policymakers
The ultimate objective is to influence public opinion and public policy on an item that is of importance to the advertiser
five key target of advocacy advertising
Key stakeholders
Politions and public servant advisors
Media influencers
Influential intellectual leaders
Politically aware persons with influence
Think Tanks
An organization or group of experts researching and advising on issues of society, science, technology, industry or business
types of think tanks Academic,
funding from grants, orgs, private indv
agenda set by researchers
nature of research: idea-driven, long-term, future-oriented. findings to serve all humanity
types of think tanks Contract,
funding, government contracts
agenda: government needs
research: government contractor needs; long0term future oriented distributed to contract authority
types of think tanks Advoacy
constitutents play a significant role
agenda: driven by ideology
nature: short-term focus; ideologically driven research with finding distributed to constituents
Note 
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