Microsoft word - ompwebsite-resources-stakedholderrels.rtf
Managing stakeholder relationships to ensure business success
It is a fundamental fact that any business can only be successful with the input, commitment and
support of people. It is people that buy, sell, and make decisions and so make business work, no
matter how automated a business model may be.
But people are more than just a firm’s customers or users of its services. To be successful –
especially in today’s world where society has so many ethical expectations of businesses - a business
needs to think in a rounded, systematic way about the overall range and variety of different types of
people it needs to relate to and keep happy.
These various people are often called ‘stakeholders‘ and effective management today calls for
businesses to adopt a conscious, pro-active process for ensuring they gain and maintain the support
and commitment of their particular stakeholders.
A good process for managing relations with a firm’s stakeholders consists of five key steps:
Identifying and categorising a firm’s various stakeholders
Segmenting and prioritising stakeholder groups
Getting to know the opinions and expectations of each stakeholder group
Communicating and engaging with stakeholders
Continuously reviewing stakeholders’ views and the impact of a firm’s communication
Identifying your stakeholders
Stakeholders are individuals and organisations that have an interest in the performance of your firm
and possibly the power to affect its performance. For practical purposes, stakeholders are normally
considered in terms of ‘stakeholder groups’ – clusters of similar people or organisations who can be
expected to hold similar views and expectations of your firm.
Who might these groups be ? Let’s take the example of retailer – say a local pharmacy. For such a
business the following types of stakeholder would apply:
- Owners / shareholders - Management and staff - Customers / patients - Product suppliers/wholesalers - NHS – all relevantlocal/regional/national bodies/services the pharmacy needs to work with - Other local healthcare professionals e.g. GPs, clinics, therapists - Industry, professional and regulatory bodies that work in the sector - Business service providers used – from energy to accounting services - Community & voluntary – e.g. local council, library/information services, resident support
- Media – local, regional and national press, websites etc the pharmacy or patients use - Financial / creditors - bankers, people who have given credit etc. - Competitors – other local pharmacists and alternative service providers
Some stakeholders obviously have more influence than others – either in terms of their business
value to you or influence over other stakeholders. That influence could be moral or subtle rather
than formal or contractual (for example, a local newspaper business columnist who has a particular
interest in watching how local retailers keep a clean and tidy shop frontage). Also, of course,
stakeholders differ in terms of how much positive interest they have in your business – either Segmenting and prioritising stakeholder groups The fact that stakeholder groups do differ in terms of their relative influence and interest in / positive support for your business gives rise to a simple but very helpful approach for prioritising your stakeholder communication efforts. It involves dividing stakeholders into four categories, and we illustrate by continuing with the example of a local pharmacy:
1. ‘Low influence, low interest’ stakeholders: Examples could be minor local tradesmen you
may possibly use in the future and other businesses in your community but not in the immediate neighbourhood.
2. ‘Low influence, high interest’ stakeholders: Examples would include local / other firms and
suppliers you actually use and individual patients/shoppers using your business. These people want and expect to receive your attention but you should not over-emphasize them in terms of your time and money.
3. ‘High influence, low interest’ stakeholders : For a typical, small pharmacy, examples might
be large/national suppliers and wholesalers used, professional and regulatory bodies, large organisational clients, and the local council. These are important people for you to communicate with and, if you know their low interest is really low regard or low support for you, you must find out what is driving their feelings, so you can address them.
4 ‘High influence, high interest’ stakeholders: These would typically include your
shareholders, management and staff, regular/long-standing patients , your loyal/high- spending customers, local and regional NHS bodies, and other local/regional health professionals you work with or have contact with. These are your ‘key players’ in terms of your stakeholder relations efforts: you must go out of your way to actively engage and nurture relationships with these people because they are in a position to ‘make or break’ you.
This type of classification of your stakeholders is suitable not only for a high-level review for each
stakeholder group in terms of their overall relationship with your firm, but can also be used at a
more tactical level for assessing stakeholders in connection with a specific business issue or goal
you are interested in. For instance, if your business is planning to close down one of its offices and
relocate to another area of town, you could use the basis of the four status categories to help
classify which of your stakeholders are likely to be valuable supporters (allies), uninterested ‘fence- sitters’, or opponents and so you can plan differential communication and influencing measures Identifying your stakeholders’ opinions and expectations Once you have identified and classified your firm’s stakeholders, you then need to gain a good ‘feel’ for what are the key views and expectations held by each group, so you can design and implement appropriate communication efforts. The information does not need to be as extensive as the understanding you will - hopefully - already have about your customers and patients but should still representative and reliable. The main types of information you need about each stakeholder group include:
- what they think generally of your firm at the moment and what aspects they see as more
- what their specific opinions are concerning major issues, plans or ideas your business has in
mind / whether they are mostly positive or negative towards you and why
- how they expect a firm like yours to go about its day-to-day affairs and relate to the wider
- what particular aspects of your firm they are most interested or concerned about and want
- how exactly they would like you to keep in contact - how much they would like to actively get involved with you and engage with what your firm
does rather than just receive information ‘passively’
Except for major individuals or organisations within a stakeholder group who form a very large slice of that group or who are particularly vocal and have a disproportionate influencing effect on others (who you should go and talk to individually), it is normally adequate to develop an overall picture or assessment of opinion for each stakeholder group by approaching a reasonable cross-section of people from a group, rather than trying to go and consult every member of a group (highly unlikely to be feasible, anyway). For a small or mid-sized business, there is no need to get too precise or sophisticated about this information exercise. The simplest tools to use are usually: feedback from customer satisfaction surveys; direct 1: 1 meetings or extended telephone conversations with a selection of individual stakeholders from a group; holding one or two dedicated discussion groups or ‘open-meetings’ with several people from a group ; a questionnaire using email or hard-copy letter; a feedback survey on your website; and feedback/opinion cards in your pharmacy store. Other, more indirect methods include reading relevant local and professional press and asking your staff for their views about how different stakeholders feel.
Communicating and engaging with stakeholders There is a whole range of tools and techniques available to you to communicate and engage with stakeholders. Keeping things simple, though, the best approach is to employ four or five general techniques that reach several of your stakeholder groups at the same time, backed up by a few more intensive, interactive methods to engage more fully and in more detail with your most significant stakeholders within groups. Your most valuable ‘general’ communication tools should include the following:
- your website – should contain ongoing news and information about your business as well as
routine information about your services.
- a general, hand-out leaflet about your business and services (ideally updated each year)
- a periodic newsletter - an e-mail version at least that is widely circulated - holding of one or two update / feedback forum meetings with your major stakeholder
- occasional press releases and articles you can write covering news about your business or
topical issues for local/professional media
- You / your senior staff networking at local community/professional functions/events Be sure to address topics in your communications which you know some stakeholder groups have concerns about (or misunderstand) and include response / feedback mechanisms, wherever possible, so that stakeholders can ‘talk back’ to you rather than just be ‘talked at’: this is what building relationships is all about. The most effective ‘engagement’ methods to use with your most significant stakeholders – where there is the opportunity crucially to have a two-way dialogue with people – typically include:
- Periodic 1:1 visits / meetings - Periodic 1:1 telephone conversation - Annual or twice-yearly seminar or discussion group aimed at a targeted stakeholder group - Regular news / feedback/ planning meetings with your management and staff team - Periodic ‘informal’ social event aimed at your key commercial and professional contacts - Periodic informal / hospitality events for selected groups Continually monitor stakeholders and your communications The final step in the stakeholder management process is to periodically – at least once a year - carry out an updated review of who are the main individuals and organisations in all your stakeholder groups, check you have a good ‘handle’ on their latest views, and also review the results of your various communication activities. For reviewing your communications results, at one level, measure direct responses to individual activities like the number of major stakeholders who agree to meet with you 1:1, number of people who downloaded your newsletter off your website, and how many people turned up to each of your events. At a higher level, try and judge how much you have detected, compared to last year, improvements in positive interest in or support for your firm across each stakeholder group, particularly major players within each group. Overall, stakeholder relationship management is more of an art than exact science, but it can still be handled systematically and methodically. Best to try and organise for success than to leave to chance ! Owen Morris Partnership 2011
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