Stakeholders and Stakeholder Mapping

Summary

This concise session delves into the fundamentals of stakeholders versus shareholders, underscoring the crucial distinctions between the two. It emphasizes that stakeholders encompass anyone with an interest in a company's decisions and activities, from employees and customers to suppliers and society at large, unlike shareholders who own parts of the company. The discussion extends to the diverse interests stakeholders have in a business, highlighting potential conflicts among these interests. Additionally, it introduces stakeholder mapping as a strategic approach for businesses to prioritize their engagement based on stakeholders' power and interest levels, ensuring management focuses on the most influential groups to maintain harmony and drive organizational success.

Takeaways

• 👥 Stakeholders are individuals, groups, organizations, or businesses with an interest in a company's activities and decisions, but they don't necessarily own it.
• 📜 The term 'stakeholders' should be distinguished from 'shareholders'; the latter are owners of the business, typically with a financial interest in its success.
• 👨‍💼 Stakeholders include a diverse range of parties such as employees, managers, customers, suppliers, creditors, and societal groups like the government and community.
• 🤝 Stakeholders have varying interests in the business, which can sometimes lead to conflicting priorities and demands.
• 💡 Shareholders are primarily interested in the financial performance of the company, including profitability, dividends, and share price appreciation.
• 🛍️ Customers are stakeholders who seek value for money, quality products, and good customer service.
• 🚚 Suppliers are concerned with being paid for their goods and services, as well as maintaining a continuous business relationship with the company.
• 🌐 Society at large is interested in the ethical and socially responsible conduct of businesses, including compliance with laws and regulations.
• 🔄 Stakeholder interests can conflict with one another, such as when automation benefits shareholders but may disadvantage employees.
• 🗺 Stakeholder mapping is a theory that suggests businesses should focus more on stakeholders with both high power and high interest, engaging with them regularly and managing conflicts effectively.
• 📊 The concept of stakeholder mapping helps businesses prioritize their engagement efforts, directing most resources to the most influential and concerned stakeholders.

Q & A

What is the definition of a stakeholder?

A stakeholder is an individual, group of people, organization, or business that has an interest in the activities and decisions taken by a company. This includes employees, customers, suppliers, government, and society at large, among others.

How is a stakeholder different from a shareholder?

A stakeholder is anyone with an interest in a company's activities, while a shareholder is an owner or part-owner of a company, typically by owning shares or stocks. Shareholders are a specific type of stakeholder, but not all stakeholders are shareholders.

What are some examples of stakeholders in a business?

Examples of stakeholders include employees, managers, customers, suppliers, creditors, government entities, and societal groups. Each stakeholder has different interests and concerns related to the company's operations and decisions.

What are the different interests that stakeholders might have in a business?

Stakeholders have varied interests in a business, such as financial performance for shareholders, quality and customer service for customers, timely payments and continued business for suppliers, regulatory compliance and ethical behavior for society, and job security and good working conditions for employees.

How can stakeholder interests sometimes conflict with each other?

Stakeholder interests can conflict when a decision made by the business benefits one group of stakeholders while negatively affecting another. For example, introducing automation might increase efficiency and profits, pleasing shareholders, but potentially leading to job losses for employees.

What is the theory of stakeholder mapping?

Stakeholder mapping is a concept that helps a business understand and address the varying levels of power and interest among its stakeholders. It involves identifying which stakeholders have the most power and interest in the company's activities and focusing management efforts on engaging with these key stakeholders.

Why is it important for a business to map its stakeholders?

Stakeholder mapping is important because it helps a business prioritize its resources and efforts on the stakeholders who have the most significant impact on the company. By understanding the power and interest levels of different stakeholders, a business can manage relationships more effectively and address potential conflicts.

How should a business respond to stakeholders with high power and high interest?

A business should engage regularly and closely with stakeholders who have both high power and high interest. This involves maintaining open communication channels, being responsive to their concerns, and ensuring their needs are considered in decision-making processes.

What is the approach for stakeholders with low power and low interest?

For stakeholders with low power and low interest, a business should communicate only when necessary, without expending excessive resources or management time. The focus should be on maintaining basic levels of satisfaction and addressing any issues that arise.

How does the concept of corporate social responsibility relate to stakeholders?

Corporate social responsibility (CSR) relates to how a business considers its wider societal stakeholders and acts ethically and responsibly. This includes complying with laws and regulations, minimizing negative impacts on the environment and community, and contributing positively to society.

What is a potential conflict that may arise from a business decision and how might it be managed?

A potential conflict could arise, for example, from adding extra shifts to increase factory capacity. While this might benefit suppliers and customers by ensuring product availability, the local community might oppose it due to increased noise and traffic. To manage such conflicts, a business should engage in dialogue with all stakeholders, assess the potential impacts, and seek balanced solutions that consider the interests of all parties involved.

Outlines

00:00

📚 Introduction to Stakeholders and Stakeholder Mapping

This paragraph introduces the concept of stakeholders, emphasizing that they can be individuals, groups, organizations, or businesses with an interest in a company's activities and decisions. It distinguishes stakeholders from shareholders, noting that while shareholders own the business, stakeholders may not necessarily own it but are affected by its operations. The paragraph highlights various types of stakeholders, such as employees, managers, customers, suppliers, creditors, and society at large. It underscores that stakeholders have differing interests in the business, which can sometimes conflict with one another. The section concludes with a brief overview of stakeholder mapping, a theory that suggests businesses should focus more on stakeholders with higher power and interest levels.

05:02

🤝 Managing Stakeholder Conflict and Power Dynamics

The second paragraph delves into the potential conflicts of interest that can arise among stakeholders due to business decisions. It introduces the concept of stakeholder mapping as a tool for businesses to manage these conflicts effectively. The theory posits that stakeholders with greater power and interest in the business should be engaged more frequently and closely, while those with less power and interest require less frequent communication. The paragraph emphasizes the importance of understanding and managing the power dynamics among stakeholders to ensure the business operates efficiently and maintains positive relationships with its key stakeholders.

Keywords

💡Stakeholders

Stakeholders refer to individuals, groups, organizations, or businesses that have an interest in the activities and decisions of a company. They may include employees, customers, suppliers, or even the government and society at large. The concept is central to the video as it emphasizes that stakeholders, though not necessarily owners, have a vested interest in the company's operations and can influence or be influenced by its decisions.

💡Shareholders

Shareholders are the owners of a limited company. They invest money in the company and expect a return on their investment, such as dividends or an increase in share value. Unlike stakeholders, shareholders have a legal and financial claim on the company's assets and profits. The video clarifies the difference between stakeholders and shareholders, noting that while shareholders are stakeholders, not all stakeholders are shareholders.

💡Interests

Interests in the context of the video refer to the concerns, desires, or objectives that stakeholders have regarding the business's operations and decisions. These interests can vary widely among different stakeholder groups and may sometimes conflict with each other. The video highlights the importance of understanding these diverse interests and managing them effectively.

💡Conflict

Conflict arises when the interests of different stakeholder groups are incompatible or opposing. For example, a decision that benefits shareholders by increasing profits might negatively impact employees through job cuts. The video discusses how businesses must navigate these conflicts by understanding the varying interests and power dynamics among stakeholders.

💡Power

In the context of the video, power refers to the influence or control a stakeholder has over a business. Some stakeholders, like banks or major customers, may wield more power due to their financial contributions or the significance of their relationship with the business. The video emphasizes that businesses should prioritize their engagement based on the power stakeholders hold.

💡Stakeholder Mapping

Stakeholder mapping is a theory or method that helps businesses identify and prioritize their stakeholders based on their level of interest and power. The goal is to allocate the company's resources and management attention effectively by focusing on those stakeholders who are both powerful and highly interested in the business's activities.

💡Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) refers to a business's commitment to act ethically and contribute positively to society, beyond just追求 profits. This includes complying with laws and regulations, as well as considering the social and environmental impacts of their operations. The concept is closely related to the interests of societal stakeholders, as it addresses the broader impact of business activities on the community and environment.

💡Customer Service

Customer service is the assistance and support provided to customers before, during, and after their purchase of a product or service. It is a critical aspect of the relationship between a business and its customers, who are stakeholders as they seek value for their money and good quality products. The video emphasizes that customers have an interest in receiving excellent customer service as part of their stakeholder role.

💡Automation

Automation refers to the use of technology to perform tasks with minimal human intervention, often to increase efficiency and productivity. In the context of the video, automation can affect various stakeholders differently, such as shareholders who may benefit from increased profits and employees who may face job displacement. The video uses automation as an example of how business decisions can create conflicts among stakeholders.

💡Dividends

Dividends are payments made by a corporation to its shareholders, typically as a distribution of profits. They represent a return on investment for the shareholders and are a key financial interest for them. The video notes that shareholders are particularly interested in the business's financial performance, including its ability to pay out dividends.

💡Ethical Behavior

Ethical behavior in business refers to conducting operations with integrity, fairness, and social responsibility. It involves making decisions that are not only legal but also morally right, considering the impact on all stakeholders, including society at large. The video links ethical behavior to the concept of CSR, emphasizing that businesses have a wider responsibility to act in a socially responsible manner.

Highlights

Stakeholders are individuals, groups, organizations, or businesses with an interest in a company's activities and decisions.

There is a distinction between stakeholders and shareholders; stakeholders may not necessarily own the business.

Shareholders are owners of a limited company and may have overlapping interests with stakeholders.

Different stakeholders have varying interests in the business, such as employees, customers, suppliers, creditors, and society.

Shareholders are primarily interested in the financial performance, dividends, and share price appreciation of the business.

Customers are stakeholders because they seek value for money, quality products, and good customer service.

Suppliers are stakeholders with an interest in being paid and continuing to supply the business.

Society and government are stakeholders with interests in corporate social responsibility and ethical business practices.

Stakeholder interests can sometimes conflict, with decisions supported by some and opposed by others.

The introduction of automation may be supported by shareholders but opposed by employees fearing job loss.

Stakeholder mapping involves understanding the power and interest levels of different stakeholders.

Businesses should focus on engaging with stakeholders who have both high power and high interest in the company.

Stakeholder mapping helps businesses manage their relationships by prioritizing communication and engagement based on power and interest.

Less powerful stakeholders with low interest may only require necessary communication, allowing management to focus on key stakeholders.

The theory of stakeholder mapping provides a framework for businesses to address the different power dynamics among stakeholders.

This session offers a quick reminder and understanding of the concept of stakeholders and the importance of stakeholder mapping.

Conflict management among stakeholders is a crucial aspect that businesses need to navigate carefully.

The session emphasizes the importance of balancing the interests of various stakeholders to ensure business success.

Transcripts

hi there

let's do some quick revision on the

concept of stakeholders and also spend a

couple of minutes

on a theory called stakeholder mapping

at the end of this session

a quick reminder about what we mean by a

stakeholder it can be an individual it

can be a group of people it can be

another organization or business

it's anyone who has an interest in the

activities

and the decisions taken by a business

and a key point to remember here

is that there is a difference between

stakeholders and a similar sounding term

shareholders so be really clear and take

care if you see a question with one or

other of these two terms in it to make

sure you've picked the right one

stakeholders what we'll look at in this

session are those who have an interest

in the business but they don't

necessarily own it but they don't own it

they may work for the business as an

employee or a manager a type of employee

there may be a transactional

relationship for example a customer

you're a stakeholder in the businesses

you buy from it could be a supplier and

of course it's other external

stakeholders such as the government and

society at large

shareholders similar sounding word but

there is a very important difference

they own the business shareholders are

the owners

of a limited company for example now of

course they may also be stakeholders

they may work in the business

they may benefit from the activities of

the business but there is a difference

hopefully you're happy with that

let's just spend a couple of minutes

refreshing our memory as to what we mean

by stakeholders there are lots of

different types of stakeholders we've

mentioned some already employees

managers customer suppliers

creditors

firms that the business owes money to

and of course society

and the government

and the key point to remember about

stakeholders is that they have different

interests in the business activity let's

pick out a couple from this table on the

screen there well clearly uh

shareholders are interested in the

activities of the business in terms of

how it performs financially what profits

does it make

is it able to pay out a dividend

to shareholders as a return on their

investment

if it's a public company is the share

price of the business rising that's an

interest for them and also is the

business being run properly most

shareholders in larger businesses

aren't involved in the day-to-day

running of the businesses what's known

as a divorce between ownership and

control so they want to be happy that

their business is being run properly

let's pick out another one there

customers customers are a stakeholder

because they have an interest in getting

value for money they have an interest in

receiving

a good quality customer service and

getting a product that is of the right

quality

let's pick out one or two more

suppliers

clearly they're a stakeholder in the

business they're selling to a business

they want to make sure of course that

they'll be paid

for the goods and services that they

provide

but also they have a an interest in

continuing to supply the business

because at the end of the day that

business

is one of their customers isn't it and

also let's pick up the bottom one there

society this links really closely with

the concept of corporate social

responsibility the wider responsibility

of businesses to their societal

stakeholders

for example the extent to which a

business complies with regulations and

laws but also wider than that acting

ethically acting in a socially

responsible way

so key point with this stakeholders have

lots of different interests in different

parts of the business

and the second key point is to remember

that sometimes the stakeholder interest

will create a conflict a business

decision can be supported by one

stakeholder stakeholder group or

possibly more than one

but it could just as easily be opposed

by a different stakeholder group

let's pick up an example out here from

the table

let's pick uh

introduction of greater automation it's

likely to be supported not support

supported

by

shareholders if it leads to greater

efficiency and profits

but it's possibly

unlikely and more likely to be opposed

by employees particularly if it results

in employees losing their jobs

adding extra shifts to increase the

capacity of a factory for example

again customers and suppliers suppliers

may find that

absolutely something they want to

support it may result in more

reliable delivery a greater availability

of the product

however a local community whilst they

may enjoy the benefit of the extra jobs

and employment

they may not welcome the additional

noise the additional traffic

there is a cost associated with extra

capacity so key points stakeholders have

an interest in the business but

sometimes depending on the business

decision

the stakeholder interest can come into

conflict and that course raises an issue

with the business as to how to deal with

stakeholder conflict how should you deal

with them

and

this comes on to the final part of this

session the theory of stakeholder

mapping which is really to say

how does a business address the fact

that stakeholders have different power

for example

if i'm running a business and i i owe

half a million to the bank

and my cash flow is pretty weak and i'm

not making profits that bank has a lot

of power over me

it's a very important stakeholder

a lot more power than perhaps an

individual customer or one of my

employees

so some stakeholders have more power

than others how should a business manage

the difference between stakeholder power

and that leads us on to this concept

called stakeholder mapping

now it's a simple concept

and essentially it's this

the idea is that a business

should spend more time responding to

stakeholders who have firstly a high

level of power

but also a higher level of interest

they're very closely

interested in the activities of the

business and therefore if that's the

case

the business should engage regularly

closely with those stakeholders

keeping constant

regular communication with them take

notice of what the stakeholder is saying

it's important to keep on the right side

and understand

that stakeholder group

conversely if a stakeholder has

relatively little power or no power over

the business

and has a relatively low level of

interest in the activities of business

you don't need to keep communicating

with them every day just communicate

when necessary

focus the management time on the most

important stakeholders with the highest

power so that's the takeaway of

stakeholder mapping

management should spend most time

working closely with the most powerful

stakeholders who have the greatest

interest in the business

there we go that's a very quick overview

of the concept of stakeholders

how stakeholder conflicts arise and also

how a business should address the

different power

held by different stakeholders and

hopefully you found that useful

you