STAKEHOLDERS COMMUNICATION AND MANAGEMENT

INTRODUCTION

Stakeholder

Stakeholders are individuals, groups of people, the community or society as a whole or

partially with ties and interests of the company. Individual, group, or community and society
can be said as a stakeholder if it has the characteristics that has the power, legitimacy, and the
importance to the company.

Interested parties (stakeholders) may consist of:

1. Employers (shareholders) represented the daily management.

2. The employees and the union.

3. Employers suppliers.

4. Public (consumers).

5. Communities.

6. Government.

These individuals and groups can have significant influence over the eventual success or
failure of the work.

Stakeholder Management and Communication

Stakeholder management and communication is the systematic identification, analysis,

planning and implementation of actions designed to engage with stakeholders. It is a set of
techniques that harnesses the positive influences and minimizes the effect of the negative
influences. It comprises four main steps:

 Identify stakeholders
 Assess their interest and influence
 Develop communication management plans
 Engage and influence stakeholders
Identifying stakeholders will be done using research, interviews, brainstorming, checklists,
lessons learned and so on. The stakeholders and their areas of interest are usually shown in a
table known as a stakeholder map. Typical types of stakeholders will include:

 Individuals and groups performing the work;

 Individuals and groups affected by the work;
 Owners, shareholders and customers;
 Statutory and regulatory bodies.

Each stakeholder will then be classified according to potential impact. This is usually shown
in a matrix that estimates interest and influence on a simple scale such as low/medium/high.
Those with an ability to directly affect the outputs or benefits are sometimes referred to as key
stakeholders. This analysis is used to develop a communication management plan.
Appropriate strategies and actions are then defined to engage with stakeholders in different
parts of the matrix.

Good communication channels are at the root of effective stakeholder engagement.

Communications with stakeholders who have high levels of interest and influence will be
managed differently from those with stakeholders of low interest and influence. Similarly,
communications with stakeholders who are inherently positive about the work will be
different from those with stakeholders who are negative. For example, when planning the
communications strategy for the certain project, the Project Manager must be aware of the
preferences of the project’s stakeholders. This will determine what communications
technologies should be used; it will also point out if money needs to be spent on
communicating. For instance, a distributed team might benefit from having video-
conferencing available.

As a conclusion, effective stakeholder management and communication is built on effective

communications. Therefore, each party should be sensitive to the interests of each other since
this will bring the good impact to an organization or project.
LITRETURE REVIEW

Organizations and corporations nowadays are not just trying to satisfy their customers but as
well creating value for their stakeholders (Benn, Abratt, and O’Leary, 2016). Stakeholders
can affect an organization and can impact whether or not an organization will achieve its
objectives (Preble, 2005) and there are some stakeholders whom an organization can’t
succeed without. Thus, it’s very important to understand who are the stakeholders of a firm or
a company, how can they be identified, and what are their attributes, how can they be
managed and how to respond and attend to their expectations. According to Clarkson (1995),
it is very important for managers to create a value for each stakeholder group in order to have
a strong and continued relationship with them. Having a strong relationship with stakeholders
is seen nowadays as a must for maximizing the organizations profits and to avoid any issues
that may have a negative impact on an organization’s objectives. Preble (2005) explains this
by saying that “stakeholders should be managed instrumentally, if profits are to be
maximized”.

Definition of stakeholders

The term and concept of “stakeholders” is very popular. It was first introduced in the 1960’s
(Stoney and Winstanley, 2001). It became so popular in management books and in managers’
thinking after Freeman (1984) published the book “Strategic management: A Stakeholder
Approach”.

According to Preble (2005), there were increased changes in organizations’ operating

environment in the 1970’s which caused Freeman’s call to managers to use stakeholder
framework to help interpret those external changes and events.

According to Preble (2005), some of these external changes which were noted by Freeman
(1984) include:

 The emergence of consumer, environmental, and other activist groups

 An increase in the scope of government (role as a watchdog)
 A global marketplace and increased foreign competition
 An increasingly hostile media
 A loss of confidence in business
Even though lots of articles and books have been published since Freeman’s book, there is
still no agreement on who (or what) a firm’s stakeholders are? which freeman calls “The
principle of who and what really counts?” and “to whom (or what) managers do pay
attention?”. (Mitchell, Agle, and Wood, 1997). Also, According to Fassin (2008) as cited in
Benn et al. (2016), there are ambiguities in the literature on the basic concepts of
stakeholder’s theory and stakeholders’ management as there are some difficulties in defining
and identifying stakeholders.

However, despite the lack of agreement on who exactly are the stakeholders of a firm and
how to identify those stakeholders, there isn’t much disagreement on who (or what) could
qualify for being a stakeholder. “Persons, groups, neighborhoods, organizations, institutions,
societies, and even the natural environment are generally thought to qualify as actual or
potential stakeholders.” (Mitchel et al., 1997).

Freeman and Reed (1983) define stakeholder as “an individual or group who can affect the
achievement of an organization’s objectives or who is affected by the achievement of an
organization’s objectives”. Some authors have viewed and defined stakeholders from a
different perspective. Clarkson (1995), for instance, identifies stakeholders as “persons or
groups that have, or claim, ownership, rights, or interests in a corporation and its activities,
past, present, or future”. There are many other definitions for the term ‘stakeholder’ in the
literature, however, according to Fassin (2008) as cited in Benn et al. (2016), the most
accepted definition is Freeman’s definition.

Identifying stakeholders

There are different views on what constitutes something or someone as a stakeholder to a

company. The views can be described as either being broad or narrow. (Mitchel et al., 1997)

The broad views are basically based on the fact that anyone can vitally affect or be affected by
a company. The idea behind broad views is to equip managers with the ability to recognize
and effectively respond to set of entities who may not have legitimate claims but still be
affected by the company nonetheless and thus affect the interests of those who have legitimate
claims. The ultimate aim of stakeholder management practice according to broad views can
be firm-centered, in which managers may want to know about all those who are actual or
potential stakeholders for firm-centered purposes such as economic well-being, winning
friends, taking advantage of opportunities, damage control, and so forth. Or, it could be
possibly because managers want to balance claims and interests within the firm’s social
system. (Mitchel et al., 1997)

On the other hand, narrow views are based on reality of managers limited resources, time, and
patience for dealing with lots of external constraints and attempts to define stakeholder groups
in terms of their relevance to a firm’s core economic interests. (Mitchel et al., 1997)

One of the broad views which can be used to identify stakeholders is Freeman’s definition.
According to Mitchel et al (1997), Freeman’s definition of stakeholders is one of the broadest
views and he states that the reason for that is “in the definition the basis of ‘stake’ can be
unidirectional or bidirectional and there’s no necessity for reciprocal impact as definitions
involving relationships, transactions, and contracts require”. He further argues that according
to freeman’s definition, the only ones excluded from being a stakeholder are those who don’t
have power (to affect a firm) or those who have no claim or relationship with the firm (are not
affected by the firm).

Narrow views, however, seem to have different criteria in identifying a stakeholder. For
instance, Clarkson (1995) defines stakeholders as voluntary or involuntary risk-bearers, those
who bear risk because of investing something of value in a firm or those or are placed at risk
because of the firm activities. Clarkson uses risk to denote stake status and states that without
risk there is no ‘stake’. According to Mitchel el al. (1997) “The use of risk to denote stake
appears to be a way to narrow the stakeholder field to those with legitimate claims, regardless
of their power to influence the firm or the legitimacy of their relationship to the firm.”. Some
have used ‘relationship existence’ as a criterion, for instance, Thompson et al. (1991) as cited
in Mitchel et al. (1997) definition of stakeholder states that the stakeholder is ‘in relationship
with an organization’.

Some may identify stakeholders based on relationship type and whether that relationship is
important for an organization to succeed. According to Clarkson (1995), there are two types
of stakeholders: Primary stakeholders and secondary stakeholders. He defined primary
stakeholders as “one without whose continuing participation the corporation cannot survive as
a going concern”. These include shareholders, employees, customers, suppliers, and the
public sector, mainly the government who regulate organizational activities and enforce taxes.
Both the organization and the primary stakeholders depend on each other.

On the other hand, Clarkson (1995) defined secondary stakeholders as “those who influence
or affect, or are influenced or affected by, the corporation, but they are not engaged in
transactions with the corporation and are not essential for its survival”. These stakeholders
include the media, competitors, trade associations, and support groups (special interest
groups). While these stakeholders may not be essential for the functioning of a corporation,
they can influence how the organization is perceived and viewed by the public and other
governmental entities, and thus have an impact on an organization. (Preble, 2005)

However, with all these schemes in the literature to identify stakeholders, it should be noted
as well according to Preble (2005) that “actual stakeholder groups identified will be
dependent on a firm’s size, industry, and the location of its headquarters and operations.”. For
instance, if a company is considered large, it would probably have much more stakeholders
which need to be identified and managed than a small company. Nike corporation, for
instance, have a connection with 100-plus external non-profit stakeholder groups. (Preble,
2005)

Stakeholder attributes

With organizations having only limited resources, time, and energy, organizations and
managers will need a methodology which can enable them to prioritize stakeholders’ claims.
Mitchel et al. (1997) proposes that “stakeholder salience will be positively related to the
cumulative number of stakeholder attributes -power, legitimacy, and urgency- perceived by
managers to be present”

According to Mitchel et al. (1997) proposition, stakeholders can have three attributes:

 Power

According to Weber (1947) as cited in Mitchel el al (1997), power can be defined as “the
probability that one actor within a social relationship would be in a position to carry out
his own will despite resistance". In a firm or corporation settings, power can be defined as
“the ability to influence firm’s behavior, whether or not the stakeholder has a legitimate
claim”. (Agle et al., 1999 as cited in Preble, 2005). For instance, governments have power
over firms and can force firms to follow some rules and legislations, and to pay taxes.

 Legitimacy

According to Agle et al. (1999) as cited in Preble (2005), legitimacy is defined as “a claim
on a firm, based upon a contractual or legal obligation, a moral right, an at-risk status, or a
 stakeholder having a moral interest in the harms and benefits generated by a company’s
actions”

 Urgency

Urgency is defined as “the degree to which a stakeholder claims call for immediate
attention” (Mitchel et al., 1997). According to Mitchel et al. (1997), urgency exists only
when the relationship or claim is of a time-sensitive nature and when that relationship or
claim is important or critical to the stakeholder.

Moreover, Mitchel et al. (1997) states that these attributes have additional implications.
First, each attribute is variable and not steady state, meaning that it can change, for
instance power can be gained and lost, urgency and legitimacy can change for any entity
or stakeholder-manager relationship. Second, these attributes are socially constructed, not
objective, reality, and are a matter of multiple perceptions. Third, an individual or entity
may be conscious of possessing the attribute and may not, and even if the individual or
entity were conscious of the attribute possession, they may not be willing to exercise it.

Stakeholder engagement

As there are different definitions for the term ‘stakeholder’, there is also a wide range of
understandings and definitions of stakeholder engagement and what it really means.
According to Greenwood (2007), stakeholder engagement can be understood as “practices the
organization undertakes to involve stakeholders in a positive manner in organizational
activities.”. Whereas Jones (n.d.) for instance, defines stakeholder engagement as a ‘tool for
building partnerships between affected and interested parties’.

Even though stakeholder engagement may seem like a concept which can be easily
understood, it could mean different things to different people. Greenwood (2007) explains
further that despite the popularity of both terms ‘stakeholder’ and ‘stakeholder engagement’,
the area of stakeholder engagement is undertheorized. He further asserts that stakeholder
engagement can mean different things and can be seen from different perspectives. For
instance, he explains that from a managerial perspective, stakeholder engagement can be seen
as a tool to manage risks (Deegan, 2002 as cited in Greenwood, 2007), whereas from an
accountability perspective, stakeholder engagement can be understood as “mechanism by
which organizational accountability and responsibility towards stakeholders can be
acquitted”. (Gray, 2002 as cited in Greenwood, 2007).
Moreover, even though stakeholder engagement as a concept or a term may imply good
intentions, Greenwood (2007) posits that stakeholder engagement is an immoral practice. He
explains that the reason for that is simply because stakeholder engagement can be used in a
positive or negative way; it can be used to build cooperation in relationships or to deceive
other parties. Also, because of the fact that organizations who engage with stakeholders don’t
do so because of a moral objective or a moral obligation but rather to achieve organizational
objectives.

Managing stakeholder engagement

There are different approaches for managing stakeholder engagement. The reason for that is
because of the different understandings of the stakeholder concept and the high interest in it.
Bussy, Watson, Pitt, and Ewing (2001). For instance, Jones (n.d.) proposes that to have
successful stakeholder engagement in practice, an organization must be:

 Proactive: by initiating communication, engaging with stakeholders, and building a

trustful relationship with them before the occurrence of any problems, issues, or
misunderstandings. Organizations shouldn’t wait for a crisis to happen in order to start
communicating with stakeholders.
 Open and inclusive: by listening to all interested stakeholders, engaging them in the
decision-making process to have their trust, and by being open to any thoughts they
might have.
 Honest
 Responsive: by taking stakeholders concerns seriously and actually taking actions to
address those concerns. An organization should not just try to defend or push its point
of view without any regards to stakeholders’ concerns.
 Transparent: by making everything clear and keeping everyone informed about the
decision-making process. No secret agendas.
 Utilizing a two-way dialogue
 Having a feedback program which result in improvements: by taking feedback on the
stakeholders’ engagement process itself and to take necessary actions if improvements
are needed.
Bourne (2015) proposes that to have an effective stakeholder engagement, the organization
must first be able to identify the stakeholders, analyze each stakeholder group expectations,
prioritize stakeholders, and then engage with stakeholders by: identifying each stakeholder
level of support for the organization, identifying the gaps between the stakeholder current
level of support and desired level of support, and finally taking actions to increase the
stakeholder level of support to reach the desired level or to change and influence the
stakeholder’s attitude.

Bussy et al. (2001) assert that many of the PR tools and models were developed before the era
of the internet and that internet increased the complexity of stakeholder communication
because nowadays stakeholders can talk to each other with or without the knowledge of the
organization and this complexity demands a new methodology for managing stakeholders and
communicating with them and as well managing the communication between stakeholders,
and for the reasons mentioned, they propose a new methodology which they called ‘integrated
internet stakeholder communication matrix’ (ISCM).

According to Bussy et al. (2001), the integrated internet stakeholder communication matrix is
constructed by:

 Identifying all the organization’s stakeholders and the links between them
 Find cases (examples) in which a stakeholder group in the matrix
communicates with another stakeholder group. This should be done for each
link between stakeholders in the matrix.
 Brainstorm about how such cases of communication among and between
stakeholders could occur in the organization’s environment and how they need
to be handled or addressed

Bussy et al. (2001) assert that the purpose of such matrix is to stimulate manager’s thinking
and that by studying other organizations’ cases of stakeholder communication, managers
should be able to assess, evaluate, and come up with strategies that would help in
communicating with their stakeholders and in addressing communication issues that could
possibly affect their organization in case it happens in their own stakeholders’ environment
STAKEHOLDER DIAGRAM

The inputs, tools and techniques, and outputs of this process are depicted in figure 1.

Figure 1 input,tool and technique and ouput

Manage stakeholder Engagement is the method of communicating and dealing with

stakeholders to satisfy their needs/expectations, address problems as they occur, and foster
appropriate stakeholder engagement in project activities throughout the project life cycle. The
key advantage of this method is that it allows the project manager to increase support and
minimize resistance from stakeholders, significantly increasing the probabilities to achieve
project success.

Changes in government policy and regulations could affect the organization adversely, if not
handled by the organization appropriately. Before making any changes as per the government
policy, organization should have an input program which includes stakeholder management
plan, communication management plan, change log and organizational process assets.

Tools and techniques used to manage stakeholder engagement include effective

communication methods like the use of email, meetings, process updates through the
computer network. Project manager uses effective social skills including active listening,
building trust, conflict resolution and overcoming resistance to change.

As for the outcome, if any issues or problems occur even after all the measurements to
counter the problem has been taken, an organization should opt to find the cause of the
problems. After identifying the source of the proble, the organization should then inform the
stakeholders of the changes that will take place and update all relevant documents for any
further action.
Four step in managing the stakeholder are shown as flowchart below :

Figure 2 : step in managing stakeholder

Identify stakeholder

Who will be impacted? Who are the decision makers in that area and who are the subject
matter experts? A good technique to apply in identifying stakeholders is to ask each
stakeholder identified to nominate other potential stakeholders.

Analyse their needs

What are the impacts? When do they occur? How does the impact affect the stakeholders ?
All stakeholders requirements and needs have to be considered.

Manage their expectation and needs

Manage stakeholders’ requirements and manage them through the constraints (time, scope
and budget) Make sure their expectations are set appropriately and do not overpromise on the
solution.

Check for changes

On a regular cycle go back and check with existing stakeholders whether things have
changed. Are there new stakeholders? Have impacts changed? Have priorities changed? The
more frequently you are in contact the quicker you will pick these issues up and be able to
deal with them.
The diagram below shows the relationship between influence power and stakeholder
engagement approach.

Figure 3 :the relationship between influence power and stakeholder engagement

Whether you intend to engage to meet a selected goal, or begin a long-term conversation, all
communication strategies must engage with the stakeholders. For instance, either by
completing stakeholders analysis, or carrying out cost effective approaches, can be chosen as
the communication strategy in efforts to engage with the stakeholders.

Pull Communication is a technique used for a large audience who need access to information
for their use. All related stakeholders will gain access to the information provided anytime
they need or want. Pull Communication is only suitable for information dissemination that is
not urgent or essential. If the recipients do not gain the data, it will not effect on the project.

Push communications is communication that is delivered by the sender to the recipients.

While the communication can be confirmed that it was sent, it does not necessarily mean it
was received and understood. This communication method is usually used for sharing
information with the least important stakeholders.

Consultation means meeting and discussing to serve certain objectives or purpose. This
process involves two way communication but with limited involvement of one party, which is
the stakeholders. Stakeholders are involved, but they don’t have the authority or exercise the
power to influence other stakeholders. The two way communication during the consultation is
meant for addressing any specific questions that the stakeholders may have.

Participation. Stakeholders as apart of the team and engaged with delivering task given. It
involves two way engagement but stakeholder interest area are limited. Stakeholders
will participate in any project and making their own tasks.

Partnership is when two or more individual or parties share the profit and liabilities in an
organization. It involves two way engagement . The stakeholder and organization share
accountability and responsibility in any issues or risk. Both have the right to a make decision
and plan for an action.

Diagram below shows key organizational stakeholders.

Figure 4 : Key organizational stakeholders

External stakeholders

Suppliers are the ones who supplies and distribute products and services of the organization.
They are important in order to ensure all materials and requirements necessary are sufficient.

Society is a group of people that live together in one place. The society wants the
organization to contribute positively to its local environment and population.

Government ia a party that introduced and implement policies and procedure, law and
regulation. All activities that doing by organization must based on the law.

Creditors A creditor could be a term used in accounting to specify an entity, individual, or

company that has delivered a product, service, or loan, and is owed money by debtors

Shareholders is of the most powerful primary stakeholders. A stockholder, or shareholder, is

an individual or institution that legally owns a share of stock in a public or private
corporation.

Customers are the people that buy goods or sevices from an organization. Customers are one
of the key stakeholders as they can lead to higher sales and profit margins for an organization.
Customers demand that the organization produces high-quality products or services, but at a
low and affordable price.

Internal Stakeholders
Employees are people who contribute talent, knowledge and energy to the organization in
efforts to achieve the organizational goals. Employees represent the name and reputation of
their company as they are the ones that will be dealing with customers.

Manager is one of top managemnt that can be known as a leader. Brown and Mitchell (2010)
had mentioned leaders are the key to determine the outcome of organizational goals and to set
the tone for employee behaviour which may include promotion, appraisal and strategies

Owner is the individual or entity who owns a business entity in an effort to gain profit from
the operations of the company. Owners are the ones that has the ultimate power over decision
making regarding the organization operations, as well as have the right over the profits gained
in the organization.

SUGESTED DIAGRAM – SUMMARY

Key organizational
Stakeholders
stakeholders
engagement
approach

Aspect of Stakeholder
management and
communication

Identifying
Manage
stakeholders needs
stakeholder
engagement

Twenty six years since Freeman’s work, stakeholder theory has been applied to issues starting
from organizational restructuring to life management, from R&D management to watershed
management and from business ethics to logistics management. Beside theoretical
developments and practical applications, some stakeholder analysis tools were also developed
(Mitchell et al. 1997).

Figure 1 shows the input tools and output that can be used in measured stakeholder
satisfication. As in input it is important to have a good plan and know what stakeholder needs.
Tools that can be used as mentioned is to know suitable communication method to engage
with stakeholders. Then get alert if there any problem or issue occurs that can affect
stakeholder involvement.

However, Ramirez (1999) mentions that stakeholder analysis tools lack the power to analyse
the complicated and dynamic nature of environmental conflicts. The model is developed using
the system dynamics methodology, that was applied to complicated and dynamic problem
situations previously. And step to managing stakeholder might be used as can be seen in
figure 2.

Stakeholders needs and priorities are constantly shifting because of the enviromental changes
such as in terms of politics, social, technology and economy. Environmental changes such as
these may have direct effect on the organization operations. Therefore, major changes may
cause cause he organization some amount of time to recover and cope with the changes. This
step can help to know their requirement and meets their wants and needs.

Figure 3 shows about the relationship influences power and stakeholders. According to
Hjortso (2005) , the stakeholder circle tool is developed for every project through a technique
that identifies and prioritises key project stakeholders then develops an engagement strategy
to make and maintain strong relationships with those key stakeholders. In systems thinking
literature, a stakeholder analysis tool known as ‘rapid stakeholder and conflict assessment’ are
develop to support cognitive mapping that was used.

Friedman (2006) states that the organization itself should be thought of as grouping of
stakeholders and also the purpose of the organization should be to manage their interests,
needs and viewpoints As represent in figure 4 , key organizatinal stakeholder was developed
by Freeman. Freeman’s original framework included eleven stakeholders on a non-exhaustive
basis. Freeman added competitors and two important external stakeholders which are the
government and also the communities.

CRITIQUES OF STAKEHOLDER MANAGEMENT

The several types of company stakeholders can be grouped either as internal or external, as
well as primary or secondary stakeholders. In Malaysia, it is obvious that media is often being
regarded as a tool, if not as a secondary stakeholder, instead of being part of key stakeholders
group. Media will act like a “savior” in certain situations. When things get out of control and
crisis happens, only then people start to realize how important media is especially in shaping
the public agenda. By right, media should be part of key stakeholders group. This is because
media is more influential in many cases as media is the primary purpose to drive solutions.
Stakeholder media will be used to ‘tackle’ the society, not only for reputation and crisis
management but also for branding.

In Malaysia, corporations and companies especially the large enterprises exercise significant
power. With big corporations comes a bigger responsibility towards the stakeholders as they
tend to be the potential beneficiaries or risk bearers of the company. The stakeholder groups
may differ from one another in terms of their jurisdiction, power, interests and time as well as
their resources that they possess over the company or organization. This draws a line between
stakeholders and key stakeholders of a company. However, there are companies that have
awarded stakeholders financially even if the output of the company does not reach the key
performance index targeted. On the other hand, there are also stakeholders that lose the
money that they had invested when companies do not achieve the desired outcomes. There are
instances of institutions or companies that try to channel their communication in a generic
manner which may not suit all of the niche and fragmented stakeholders of the company. This
is mostly affecting the less resourced stakeholders or in other words those that are not key
stakeholders of the company, causing them be unfairly compensated.

Unlike in Malaysia, foreign countries may identify several types of stakeholders in a company
rather than group them together as one like what is currently practiced in Malaysia. Instead,
they have several level of stakeholder groups that are grouped. That is, Primary level,
secondary level, internal and external stakeholders. Hence, the different level creates a
different impact.

In Malaysia, it tends to be hierarchical in our current practice. The top and prioritized ones
will be the main stakeholder and their opinion matters the most. Hence, those in lower
positions are not being prioritized because they don’t have the power in decision-making and
may be deemed insignificant to the company. The same goes to engagement session with
stakeholders, as it is only carried out when it is required. The barrier in stakeholder
management in Malaysia is that actions are only taken once a crisis becomes critical.
Engagement session is not a significant part of the working culture. It is crucial for
organizations to have the belief that stakeholder engagement creates good teamwork across all
level of stakeholders, regardless of what position, he or she is in. This means that, all group or
level of stakeholders are welcome to give their opinions, as well as have a say in decision
making.

Stakeholder engagement is important in sustainability in terms of financial long term profit,

social and environmental impact. We need to ensure the engagement of the stakeholders are
strong as a basis, not just by managing them. Engagement has to be retained and it’s a
prolonged long term effort. If stakeholders are not being taken care of, it is difficult to set a
higher benchmark for sustainability. The concepts of a strong stakeholder management are
communication and crisis management. When these two concepts are being strongly
implemented and applied, any challenges faced by a company can be minimized and
neutralized. The worst case scenario is where the existing relationship with stakeholders are
weak, when an issue occurs, they find it difficult to handle and from an issue it becomes a
prolong crisis.

In addition to companies knowing their methods and plans of engagement to maintain good
stakeholder management, stakeholders must also be able to express what are their
expectations as well as be knowledgeable about certain issues, especially those concerning
and revolving around the company. The business profit-driven factor which is the main
priority of the company, may also cause newsletters or any form of information to be
disseminated to them in an untimely and inappropriate manner. In certain cases, even with
adequate, timely and appropriate information disseminated to the stakeholders, sometimes
they are still unable to raise their issues and concerns. As companies may give a certain time
frame for stakeholders to address certain concerns and issues, hence it may be a challenge as
it may require more time. Representatives may find the time given to be unrealistic, as they
have their own personal tasks and careers to handle and take care of as well.

Stakeholders decision making are influenced by the importance of each stakeholder, which is
a function of their power, legitimacy and urgency. Stakeholder has legitimacy when its action
toward the firm are widely seen as desirable, proper or appropriate within the norms,values
and beliefs of the larger society. Urgency exists when a relationship or claim is of a time-
sensitive nature and when that relationship or claim is important or critical to the stakeholder.
As we can see, urgency is the extent to which stakeholder efforts call for immediate attention
by a firm.

Combining these three attributes may generate types of stakeholders which are; Dormant, as
they possess power to impose their will buy not having a legitimate relationship or an urgent
claim, their power remain unused; Discretionary stakeholder, they possess legitimacy, but
have no power to influence and no urgent claim. There is no pressure to engage in a
relationship with a stakeholder; Demanding stakeholder, this exist where the sole stakeholder
relationship attribute is urgency; Dangerous stakeholder, this possess urgency and power but
not legitimacy and maybe coercive or dangerous. The use of coercive power often
accompanies illegitimate status.

It is said that in terms of business practices for the well being of a company seeking to protect
business interests, it is important for companies to note and identify the stakeholders and what
are their expectations and demands to be prioritized. This is important as different
stakeholders may have different and varying needs and expectations. The level of engagement
is also the extent to which the companies communicate with the relevant stakeholders,
whether it is consultation based or genuine dialogue as discussed by Bendell (2003) in his
typology of talking levels which is on dialogue as manipulation and dialogue as placation.

There have been critiques by scholars that argue that because the act of stakeholder
engagement is time consuming and an intensive process, managers and person in charge in
organizations would rather focus their power and resources on a more business and profit
driven purpose and interest instead of focusing their resources and efforts on stakeholder
management, that may even have adverse effects on the business performance (Kerr, 2004).

Another critique is on the willingness to negotiate and tolerate the equality and mutual
understanding regarding business and interests concerns of both parties of companies and the
stakeholders. This constitutes to, as Grunig (1992) terms it, “Excellent Public Relations”.
Grunig (1992) further explains that stakeholder engagement that is symmetrical is more
towards the organization itself as to protecting their interest by maintaining legitimacy, in
order to restrict or limit the demands of the stakeholders.

MAXIS CASE STUDY

Maxis Berhad is leading telecommunication services in Malaysia. It was founded in year 1993
by Ananda Krishnan who is one of the richest men in Malaysia. The company provides a
wide range of innovative mobile, fixed, and international network services to their customers.
Moreover, Maxis was the first Telecommunication Company who launched the 3G services,
such as 3G connect Card, PC Webmail, Video Mail, and 3G prepaid.

In 1999, Maxis introduced the popular prepaid brand "Hotlink", which currently has about
11.6 million subscribers. Maxis uses the dialling prefixes of "012", "017", "014-2" and "011-
2". Users can choose between any of the numbers. As competitors such as Digi and Celcom
Telecommunication which offer lower prices and lots of offers and promotion, Maxis sells
their prepaid starter pack as low as RM8.

In addition, the company also operates in international gateway services. Its geographical
operations spread across Malaysia, Indonesia, and India. In 2006, the readers of the Wall
Street Journal Asia have rated Maxis as Malaysia’s most admired company in The Wall Street
Journal Asia survey.

However, in 2016, Maxis found itself in a middle of fierce row with its customers over its
offering of significantly cheaper mobile price plans to certain users only. This incident began
when a user from the Lowyat forum posted his frustration and discovery towards Maxis’s
provided services, despite being a loyal customer for 10 years.

The user who posted his frustration went by the name of Jackson5759 shared, “ I’m from
Sabah and now Maxis got special offer for all Sabah & Sarawak users and I don’t know what
exactly is the offer because Maxis is telling me there is a RM30 discount on my plan and my
friend told me that Maxis told her the offer is 2GB extra data for her. I’m very pissed off
about Maxis earlier my friend decided to change her Maxis postpaid line to the Celcom
postpaid plan which come with 10gb Data + unlimited calls. So once Celcom started to port
her line, Maxis directly call my friend to counter offer her with exclusive plans.”

Moreover, further anger was drawn after the user revealed that Maxis has cheaper 4G price
plans for Sabah and Sarawak in east Malaysia than the rest of the country. After failing to get
the same deal, the user decided to switch to a competitor, at which point Maxis allegedly
allowed him to have the cheaper deal.
The post then had gone viral with many netizens backing up his statements with their own
personal experiences and encounter with Maxis and their unprofessional treatment. As a
result, dozens of customers have written of their intention to leave Maxis and switch to their
competitors such as Celcom or Digi, which have more competitive price plans.

Though the post has been on the surface for about a month now, it is only when Maxis posted
an official statement to their Facebook page that has led to a major PR Crisis. Refer to Image
1.

Image 1

Instead of actually addressing the customer’s issue and offering some solution, they released a
statement calling jackson5759’s post “exaggerated” and saying the price plan talked about in
the post does not exist in the way it was described. This has resulted, thousands of angry
emojis, 1.3k comments and 1689 shares.
After 5 days from their initial statement, Maxis issued a mini teaser statement on what seemed
to finally be their official response to the whole issue. Refer to Image 2.

Image 2

Then at 3pm, Maxis CEO, Morten and its CMO, Dushyan appeared on a LIVE Video on their
Facebook Page. The video stream was eagerly lapped up by people interested on this issue
and so far it received 108,000 views which make it one of their best videos ever. See Image 3.

Image 3

Unfortunately for Maxis, the whole official statement hoping to clear things out didn’t go
well. Survey shows Maxis lost over a million subscribers while Digi subscribers have
increased to 450,000 new subscribers in the first quarter of 2016. The company mishandled
response to the viral incident in April with what many consumers called an arrogant and tone-
deaf statement.

Recommendation

Maxis crisis is a lesson which should be learnt, not just by business entities but also other
organisations on how to manage a crisis in the cyberspace.

A proper message towards their customers is part and partial for any organization in today’s
technology and age. Through the feedbacks and comments of the public, it has a great impact
on a brand reputation and customer loyalty within a business market on social media
platforms.

Maxis used generic copy and paste replies to every customer’s comments. The replies seem to
lack of sincerity. As employees use social media on behalf of a company, specific guidelines
need to be set as a reference.

A method of overcoming the miscommunication handled by the Maxis representative is by

training employees to manage their social media behaviour. By introducing effective training,
the organization’sexposure to risk from a legal standpoint is reduced.

Nonetheless, an organization needs to have an appropriate type of response strategy to the

specific questions and complaints. Instead of a one-to-many communication, a customised
message is the most effective way to express the pleasure and sincerity towards their
customers.

Lastly, to issue a ‘personalised usage report’ to each of their postpaid customers, which
highlights value, flexibility, network usage and speed. For example, with the unique ‘data
pool’ service that they provide, demonstrating the value that the service provides for a family
may be a win. Also, if they could start showing users how they could save money by
switching plans or using data, this would go a long way towards earning back trust.

CONCLUSION
In a nutshell, effective communication between all parties is crucial in any stakeholder
engagement and management practice in the world we live in today. Therefore, organizations
must be proactive and vigilant as well as pay attention to the interests of one another in order
to have good output in return and bring positive impact to all the parties involved. As
discussed earlier, with the emergence of consumers rights, environmental protection and
several activist groups, increase in scope of government control and regulations, increasingly
competitive global marketplace and hostile media acting as watchdogs, all of these factors
gives us even more concrete reasons as to why effective communication in stakeholder
management is imperative in today’s world.

Each stakeholder groups and parties, regardless of whether primary or secondary, internal or
external, have direct impact on the organization that it is affiliated with. The difference
between these stakeholders is the power and control that they are able to assert in decision
makings of the organization. Nevertheless, it does not discredit and disregard the importance
of the other stakeholders. Even though these stakeholders are not deemed as essential as the
other stakeholder groups in terms of the well being or functionality of an organization or
corporation, they are still influential on how the image of the organization is being perceived
by the general public as well as government entities, hence reflects the direct impact it has on
the organization.

Therefore, in order to facilitate effective communication in any stakeholder engagements, one

of the crucial attributes is to be proactive, open and inclusive, honest, responsive, transparent,
utilizing two-way dialogue as well as feedback programs to facilitate improvements. As
discussed in the Maxis case study, had Maxis adhered to the guidelines mentioned, the crisis,
if not avoided, could have been handled and tackled in an efficient and effective manner
before it further deteriorated causing irrevocable loss to the company. The huge loss that
Maxis had to bear was evident in a survey done after the crisis, which shows Maxis had in
fact lost over a million subscribers and gave way to Digi which gained over 450,000 new
subscribers as a result of the mishandled response to crisis that happened recently in April
2016.

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