Business paper

Stakeholder Management BUS 166, Week 3 Matthew Maguire [email protected] San José State University

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1. Identifying public issues

2. Managing public issues

3. Engaging with stakeholders

4. Stakeholder analysis exercise: Businesses Respond to the Movement for School Safety

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Identifying public issues

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Public issues

Public issue = “any issue that is of mutual concern to an organization and one or more of its stakeholders” (p. 26)

Last week we looked the position of different stakeholders on a particular issue. But how do we (as managers) identify and prioritize public issues?

One approach is to look for performance- expectation gaps.

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The performance-expectations gap

Performance-expectations gap = “gap between what the firm wants to do or is doing and what stakeholders expect” (p. 26)

Failure to understand stakeholder concerns and to respond appropriately will permit the performance- expectations gap to grow.

”...the larger the gap, the greater the risk of stakeholder backlash or of missing a major business opportunity.” (p. 27)

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The performance-expectations gap

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The performance-expectations gap: An example

Public issue = Antibiotic resistance

The Pew Charitable Trusts, “McDonald’s to Limit Antibiotics in Chicken” https://www.pewtrusts.org/en/research-and-a nalysis/video/2015/mcdonalds-to-limit-antib iotics-in-chicken-huge-public-health-win

• Note: The Pew Charitable Trusts is an independent non-profit, non-governmental organization (NGO).

Epilogue: In 2018, McDonald’s committed itself to reducing antibiotics in its beef as well.

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The performance-expectations gap: Other examples

Public issue = Protection of personal information

• Instances of the illegal acquisition, or hacking, of individuals’ personal identification and financial information have become common occurrences.

Public issue = Gun violence and school safety in America

• Following the Parkland shootings in 2018, many businesses felt pressure to respond in some way to the movement for school safety.

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Keeping track of the business environment

Organizations need a systematic way of identifying, monitoring, and selecting public issues.

• Environmental analysis = “a method managers use to gather information about external issues and trends” (p. 29)

• Environmental intelligence = “the acquisition of information gained from analyzing the multiple environments affecting organizations” (p. 29)

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Eight strategic radar screens

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Managing public issues

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The issue management process

1. Identify issue • Anticipating emerging concerns, or “horizon” issues.

2. Analyze issue • Organizations must understand how the issue is likely to evolve, and how it is likely to affect them.

3. Generate options • Requires complex judgments that incorporate ethical considerations like the company’s reputation.

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The issue management process

4. Take action • Once an option is chosen, the organization must design and implement a plan of action.

5. Evaluate results • Must assess results of the program and make adjustments if necessary.

“Contemporary issue management is truly an interactive process, as forward-thinking companies must continually engage in a dialogue with their stakeholders about issues that matter...” (p. 36)

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The issue management process

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Organizing for effective issue management

Involve the board of directors and top management levels.

Effective global leadership on public issues requires three basic capabilities:

• Understanding of the changing business context. • Ability to lead in the face of complexity. • Connectedness: the ability to engage with external stakeholders in dialogue and partnership.

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Engaging with stakeholders

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The benefits of stakeholder engagement

Stakeholder organizations bring a number of distinct strengths:

• Alert companies to emerging issues • Give a firm access to information via networking • Technical or scientific expertise in specific areas • Better result in the eyes of the public • Meet the society’s expectations and generate good solutions

• Improve a company’s reputation

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Stages in the business-stakeholder relationship

Over time, the nature of business’s relationship with its stakeholders o ten evolves through a series of stages.

• Inactive = Companies ignore stakeholder concerns.

• Reactive = Companies act only when forced to do so, and then in a defensive manner.

• Proactive = Companies try to anticipate stakeholder concerns.

• Interactive = Companies actively engage stakeholders in an ongoing relationship of mutual respect, openness, and trust.

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Drivers of stakeholder engagement

Stakeholder engagement is, at its core, a relationship.

Engagement: both the company and its stakeholders both have:

• An urgent and important goal

• The motivation to participate

• The organizational capacity to engage with one another

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Drivers of stakeholder engagement

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The role of social media in stakeholder engagement

• Address public issues and engage stakeholders.

• Identify and solve problems faster.

• Share information better among their employees and partners.

• Bring customers’ ideas for new product designs to market earlier.

• Platforms to engage with multiple stakeholders, communication has become faster and more effective.

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Stakeholder networks

Addressing public issues by working collaboratively with other businesses, concerned persons and organizations in stakeholder networks.

Example: Nike • Nike received consumer pressure to incorporate organic cotton into its products.

• Problem: no single actor operating on its own can solve the problem.

• Solution: Nike forms a stakeholder network that includes farmers, cooperatives, merchants, processors, and financial institutions.

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Stakeholder analysis exercise

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Discussion case: Businesses Respond to the Movement for School Safety

What happened?

• A 19-year old student at Marjory Stoneman Douglas High School in Parkland, Florida brings to school an AR-15-style rifle, a vest with additional magazines, and a semi-automatic version of the M16 rifle and kills 17 people.

• Following the shooting, some activists specifically target the National Rifle Association (NRA), an advocacy organization that had vigorously opposed restrictions on gun ownership.

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Discussion case: Businesses Respond to the Movement for School Safety

What happened?

• Many businesses felt pressure to respond in some way to the movement for school safety, with several corporations deciding to cut ties with the NRA.

• MetLife, a large insurance company, announced it would end its discount program for NRA members.

• Several rental car companies—including Hertz, Enterprise, and Budget—also ended their discount programs for NRA members.

Should Delta Airlines, headquartered in Atlanta, follow suit and end its discount program for NRA members?

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Discussion case: Businesses Respond to the Movement for School Safety

1. Who are Delta’s relevant market and nonmarket stakeholders in this situation?

2. What are the various stakeholders’ interests? (Indicate whether or not they support Delta’s plan to end its discount program for NRA members.)

3. What sources of power do the relevant stakeholders have?

4. Dra t a stakeholder map of this case. What conclusions can you draw from it?

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