Session 2: Stakeholder Management

1. Session 2: Stakeholder Management Prof. Nathalie CRUTZEN HEC-Management School of the University of Liege (Belgium) June 2012

2. M. Friedmanvs E. Freeman Milton Friedman: http://www.youtube.com/watch?v=RWsx1X8PV_A&feature=rela Edward Freeman: http://www.youtube.com/watch?v=bIRUaLcvPe8&playnext=1&list=PL4A0FC27E72ABA1A1&index=23 Stakeholder vs Stockholder theory http://www.youtube.com/watch?v=bQIKaOFB0b8 2

3. Stakeholders’ model Responsibility = Profit, People& Planet Accountableto Society Stakeholders’ interests taken into account • Only responsibility = profit • Only accountable to shareholders • Only directedbyshareholders’ interests

4. Stakeholders Definition: any individual or group which affects or is affected by the organization Stakeholder management: Balancing the competing preferences or claims of specific stakeholders (SH) How to find a “balance” – 3 criteria Power – how much can they influence the organization? Legitimacy – are their claims legitimate? actions appropriate? Urgency – do their claims require immediate attention? 4

5. Who are the stakeholders of a company ? 5

6. SHAREHOLDERS - STOCKHOLDERS

7. CONSUMERS

8. SUPPLIERS

9. LOCAL COMMUNITIES http://www.arcelormittal.com/corp/news-and-media/multimedia-gallery/video-gallery/arcelorMittal-in-liberia

10. NGOs

11. MEDIA http://www.youtube.com/watch?v=-gq15FEyi9A

12. EMPLOYEES http://www.youtube.com/watch?v=Zkc9FOucT-Q

13. External NGOs, communities, government, media, unions, banks,… External Value Chain Value chain Customers, suppliers Internal Internal Employees, managers, shareholders

14. STAKEHOLDERS (Sabine Denis, 2012)

15. Stakeholder management 3 approaches Descriptive: legal requirement – "have to" deal with SH Instrumental / pragmatic: see SH as means to reach performance goals – "makes business sense" Normative: the morally right thing to do – "should" How? Identify stakeholders (map) Recognize the legitimacy of claims and issues Integrate opportunities and risks into strategic planning Develop internal SH management capability Formalize relations  communication strategy and tools Be pro-active, take initiatives (as opposed to reactive) Involve staff who have frequent SH relations in strategic planning Use, when feasible, a win-win negotiating approach Tools Stakeholder mapping Issues and impact charts Priority table Influence grid 15

16. Stakeholder management5 key questions 1. Who are our stakeholders? Stakeholder map • 2. Which SH (demands) are “priority” in terms of: • Legitimacy, Power,(Urgency) • Ability to help, ability to hurt, and Likelihood of Acting 3. Which opportunities (potential cooperation) and threats (potential risks) do SH represent? • 4. What are our responsibilities towards SH? • Economic • Legal • Ethical • Philanthropic • 5. How to manage SH claims, relations? • Directly or indirectly, i.e., lobbying • Proactively or defensively • Negotiation strategy • Formalize SH relations within the organization: centralized vs. decentralized 16

17. Stakeholder Management Tools • Several tools • Stakeholder mapping (1) • Issues and impact charts (3) • Priority table (2) • Influence grid (2) 17

18. 1. Typical stakeholder map Community Political groups Shareholders Government Financial institutions Special interest groups, NGOs Suppliers Customers Firm Competitors Unions Trade assns. Employees Consumer groups Media 18

19. ESC Rennes' stakeholders Issues? Accrediting bodies Local government CCI National government ministries Financial institutions Prospects Suppliers Program Students Nationality Competitors ESCR Associations Alumni CGE - French bus. school assn. International partners Parents Admin. staff Faculty French feeder schools Media Management Companies Unions Employees French partner schools

20. Mark and Spencer’s Stakeholders

21. 2. Issues and impacts How do sustainability issues affect specific stakeholders? Does this group of stakeholders have an interest in and an impact on our activities in relation to this issue?

22. 3. Priority table Score from 1 (least) to 5 (most)

23. 4. Influence Grid High Work together to achieve common goals Enhance their influence EMPOWER PARTNER Support Influence their thinking Track behavior and communications ENGAGE MONITOR Low Low High Influence

24. Something fishyCase study • You are a purchasing manager for a multinational food company specializing in the sale of fresh tuna and frozen fish products. • You have sub-contracted fishing boats using nets which, in addition to catching tuna, ensnare and kill dolphins. • Your office regularly receives scientifically-valid reports from government and environmental protection agencies about the depletion of the world’s oceans. One of them, the Marine Stewardship council (Fr.) keeps a close eye on your company’s operations and offers a sustainable fishing label which you really haven’t investigated.

25. Something fishyCase study • Some of your fishing boats have physical confrontations with Greenpeace which oppose excessive fishing and the mistreatment of dolphins. • In addition, the media (video)draw regular attention to the plight of dolphins ensnared in nets. • Some of your customers, like the Auchan hyper market chain, have already taken a position, and you’ve lost their business. What if other retailers follow suit?

26. Something fishyCase study - your turn! • Work in small groups for 30 mn. to analyze this situation • Identify major stakeholders (SH map) and their “priority” • Opportunities and risks • How to manage stakeholders’ claims/relations? (Use SH map and influence grid tools) • More specifically, which strategy to use in dealing with Greenpeace? see video. Remember that Greenpeace is a large organization with its own issues. • Make recommendations • Be ready to present your analysis and recommendations  Short PPT (5 min) Click for video on Greenpeace warrior spirit

27. Stakeholder managementKey points Map your stakeholders Prioritize claims and issues in terms of legitimacy, power, and urgency: Use the stakeholder influence grid to segment SH in terms of support and influence Consider opportunities and risks and integrate these into company objectives and strategy Develop internal SH management capability Generally speaking, be pro-active, take initiatives Determine negotiation strategy with respect to each SH Formalize relations: communication strategy and tools For staff with frequent SH interactions Train them in key issues and negotiation approaches Involve them in strategic decisions 27

28. Interactive Game on Stakeholders’ Theory

29. Objective • Experiencewhatitcanbelike to manage social and environmental issues in a business • To illustrate Session 2 • This interactive game shows • How somedecisions made by a firmmay have an impact on variousstakeholders and influence their satisfaction • And how stakeholdersmay have an impact on a firm http://www.btplc.com/Responsiblebusiness/Ourstory/Interactivegames/BetterBusinessDilemmas/index.htm

30. Rules On the "bigscreen" Evolutionof the stakeholders’ satisfaction according to the "majority": each group votes withinsomeprecise deadlines (simple majority) By group Please, follow (and register!) the evolution of yourowndecisions on yourlaptop Afterseveral questions… General feedback Questions to groups