Chapter Two: Management of Stakeholders

2.1. Definition of Stakeholders

A stakeholder is a party that has an interest in a company and can either
affect or be affected by the business. The primary stakeholders in a
typical corporation are its investors, employees, customers, and
suppliers.However, with the increasing attention on corporate social
responsibility, the concept has been extended to include communities,
governments, and trade associations.

Key Elements
 A stakeholder has a vested interest in a company and can either affect
or be affected by a business' operations and performance.
 Typical stakeholders are investors, employees, customers, suppliers,
communities, governments, or trade associations.
 An entity's stakeholders can be both internal or external to the
organization.
 Shareholders are only one type of stakeholder that firms need to be
cognizant of.
 The public may also be construed as a stakeholder in some cases.

2.2. Stakeholder Management

Stakeholder management is the process by which you organize, monitor
and improve your relationships with your stakeholders.
It involves systematically identifying stakeholders; analyzing their needs
and expectations; and planning and implementing various tasks to engage
with them. A good stakeholder management process will be the means
through which you are able to coordinate your interactions and asses the
status and quality of your relationship with various stakeholders.

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Most definitions of stakeholder management tend to focus around the
idea that you can “manage your stakeholders (in order to get them to do
what you want)”. The emphasis is placed on creating a stakeholder
management plan that maps the level of interest and influence of
stakeholders and list various levels of engagement for the different
groups. A plan that is usually created at the start of the project and then
filed away to gather dust.
In most cases there is a legal and a strategic objective to undertaking
stakeholder engagement/consultation/management. You might have a
statutory or legal requirement to consult. And you hopefully have a clear
idea of the strategic benefits you might derive from doing it well. This
guide will show you how you can achieve both those objectives.
Good stakeholder management also brings in ‘business intelligence’.
Understanding stakeholder concerns and interests can lead to ideas for
products or services that will address stakeholder needs; and allow the
company to reduce costs and maximize value.
Stakeholder Management Process: Following are the key steps in
stakeholder management. Following through with these steps will help
you effectively address the requirements of your stakeholders and keep
them satisfied.

Stakeholder Identification: First step is to identify stakeholders of your

project. You can start by listing down anyone and everyone who is
affected by the project.You don’t need to worry about assigning them a
category yet; simply jot down their name or their company to specify.
Stakeholder Analysis”:In this step you will be evaluating the
stakeholders in terms of the power and interest they have over your
project. By categorizing them thus, you can decide which stakeholders
you should spend most and least effort on.

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The Power Interest Grid: The Power Interest grid is the most widely
used technique in stakeholder analysis. This tool helps you determine
what you will communicate to your stakeholders and how often you will
do so.
High Power/ Low Interest (Keep Satisfied): Make enough effort to
keep these stakeholders satisfied. But refrain from going overboard with
your communication efforts lest you make them bored.
Low Power/ High Interest ( Keep Informed): Provide adequate
information on the project to these people and ensure that they don’t have
any issues with the project.
Low Power/ Low Interest (Minimum Effort): Monitor these
stakeholders and their interest in the project and provide them with
adequate information without overloading them.
Stakeholder SWOT Analysis: Another great tool to analyze the
importance of your stakeholders and prioritize them is the SWOT
analysis.With it you can evaluate your stakeholders based on their
strengths and weaknesses, threats they pose to your project and the
opportunities they can bring to successfully complete the project.
Stakeholder Planning: Now that you have an idea about how and how
often you should communicate and engage with your stakeholders, it’s
time to create a plan to deliver the right message to the right stakeholder
in a timely manner.Before you go about creating your communication
plan, you should have a stakeholder profile by hand.
Stakeholder Profile : These profiles (you should have one for each
category of stakeholders) should list their needs, interests, goals,
responsibilities, level of power and interest, communication channels
etc.Then you can develop a communication plan for each stakeholder

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profile. The plan should specify information such as,The type of
information that should be communicated (the key message)
The engagement approach: The communication channels (eg: emails,
newsletters, video calls etc.)Frequency of engagement and the phase of
the project,Stakeholder Engagement,This is where you execute your
communication plan that you have created.While actively engaging with
the stakeholders, you need to constantly monitor them to identify whether
they may have issues with any development of the project.Take necessary
action to address them in order to get their continuous support.
2.3. Implications for CSR :
 corporate social responsibility (CSR), which we use to develop a
framework for consideration of the strategic implications of CSR.
 In recent years, scholars and managers have devoted greater attention
to the strategic implications of corporate social responsibility (CSR).
 CSR as situations where the firm goes beyond compliance and
engages in ‘actions that appear to further some social good, beyond
the interests of the firm and that which is required by law’.
 CSR activities have been posited to include incorporating social
characteristics or features into products and manufacturing processes
(e.g. aerosol products with no fluorocarbons or using
environmentally-friendly technologies), adopting progressive human
resource management practices (e.g. promoting employee
empowerment), achieving higher levels of environmental
performance through recycling and pollution abatement.
 Similarly, there is growing interest among managers in the
antecedents and consequences of CSR, especially for executives at
multi-national, multi-divisional companies. These corporate leaders
are mindful of the fact that business norms and standards, regulatory
frameworks, and stakeholder demand for CSR can vary substantially

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across nations, regions, and lines of business. They are also aware that
their divisional managers are under constant pressure from
employees, suppliers, community groups, NGOs, and government to
increase their involvement in CSR.