Managerial Ethics and Social Responsibility-1

Chapter2-ManagingPublicIssuesandStakeholderRelationships.pptx

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Chapter 2

Managing Public Issues and Stakeholder Relationships

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Ch. 2: Key Learning Objectives

2-1 Identifying public issues and analyzing gaps between corporate performance and stakeholder expectations.

2-2 Applying available tools or techniques to scan an organization’s multiple environments and assessing stakeholder materiality.

2-3 Describing the steps in the issue management process and determining how to make the process most effective.

2-4 Identifying the managerial skills required to respond to emerging issues effectively.

2-5 Understanding how businesses can effectively engage with its stakeholders, what drives this engagement, and the role social media can play.

2-6 Recognizing the value of creating stakeholder dialogue and networks.

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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.

Stakeholder Expectations: A mixture of people’s opinions, attitudes, and beliefs about what constitutes reasonable business behavior.

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Public Issues: Performance-Expectations Gap

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 business opportunity.

Example:

Antibiotics in chicken.

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The Performance-Expectations Gap

Figure 2.1

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Environmental Analysis and Intelligence

Environmental Analysis: A method managers use to gather information about external issues and trends

to develop an organizational strategy that minimizes threats and takes advantage of new opportunities.

Environmental Intelligence: the acquisition of information gained from analyzing the multiple environments affecting organizations.

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Eight Strategic Radar Screens

Figure 2.2

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Competitive Intelligence

The systematic and continuous process of gathering, analyzing, and managing external information about the organization’s competitors that can affect the organization’s plans, decisions, and operations.

With the need to comply with all applicable laws, and to follow the professional standards of fairness and honesty.

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Stakeholder Materiality*

Figure 2.3

*Adaptation of an accounting term to prioritize the relevance of the stakeholders and their issues to the company.

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The Issue Management Process1

Identify Issue

Anticipating emerging concerns, or “horizon” issues.

Analyze Issue

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

Generate Options

Requires complex judgments that incorporate ethical considerations like the company’s reputation.

Take Action

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

Evaluate Results

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

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The Issue Management Process2

Figure 2.4

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Long description slide needed

Organizing for Effective Issue Management

Part of the organization is mobilized to address a particular emerging issue, it often depends on the nature of the issue itself.

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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Stages in the Business-Stakeholder Relationship

Over time, the nature of business’s relationship with its stakeholders often evolve 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 Engagement1

Stakeholder engagement is, at its core, a relationship.

The participation of a business organization and at least one stakeholder organization is necessary.

Engagement: both the company and its stakeholders 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 Engagement2

From Figure 2.5

	Company	Stakeholder(s)
Goal	To improve corporate reputation; to earn a license to operate; to win approval of society.	To change corporate behavior on an issue of concern.
Motivation	Needs stakeholder involvement because of their expertise or control of critical resources.	Governmental campaigns, protest perceived as inadequate to change corporate behavior.
Organizational capacity	Top leaders committed to engagement; well-funded department of external (stakeholder) affairs.	Experienced staff; core group of activists committed to dialogue with business.

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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 Dialogue

Business and its Stakeholders come to face-to-face conversations.

Core interest and concerns, common definition of a problem.

Understandings and concerns of all parties.

Invent innovative solutions and implement them.

Example: Merck.

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http://files.visir-network.eu/wp-content/uploads/2012/06/consult.jpg

Stakeholder Networks

Addressing public issues by:

working collaboratively with other businesses, concerned persons and organizations in stakeholder networks.

Example: Nike.

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The Benefits of 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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Accessibility Content: Text Alternatives for Images

The Performance-Expectations Gap Text Alternative

On the left side of the illustration, there is a vertically positioned rectangular box that is labeled performance (social and economic), ranging from high to low. At the bottom of the illustration, there is a horizontally placed rectangular box that is labeled time, with an arrow pointing to the right. There are two lines positioned in the area between the two rectangular boxes. The first line lies on the top and slants upward. This line is labeled expected corporate performance (what stakeholders expect). The second line runs parallel to the box labeled time, and this line slants slightly upward. This line is labeled actual corporate performance (what actually happens). A line arises from the center of the first line, and another line arises from the center of the second line. These two lines converge to point at a rectangular box that is labeled performance–expectations gap. The gap shows the difference between what was expected and what actually happened.

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Eight Strategic Radar Screens Text Alternative

At the center of the illustration, there is content that reads seeking environmental intelligence. Eight double-ended arrows point at this text. There are circles on the other end of these arrows. In a clockwise manner of appearance, these circles are labeled as follows:

Customer environment.

Competitor environment.

Economic environment.

Technological environment.

Social environment.

Political environment.

Legal environment.

Geophysical environment.

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Stakeholder Materiality* Text Alternative

The y-axis is labeled stakeholder interest, with a range from the bottom to the top indicating low to high interest.

The x-axis is labeled impact on Nestlé, with a range from left to right of moderate to major significance.

Below the x-axis is a key with symbols that are used to represent different types of business concerns including nutrition; rural development; water; environmental sustainability; and our people, human rights, and compliance.

Topics of the types listed above are scattered within the illustration depending on their stakeholder interests and significance to the firm.

From low interest and moderate significance to high interest and major significance, the data reads as follows:

Employee safety, health, and wellness.

Natural resource stewardship.

Animal welfare.

Women’s empowerment.

Water, sanitation, and hygiene.

Fair employment and youth employability.

Food and nutrition security.

Resource efficiency, (food) waste, and circular economy.

Climate change.

Rural development and poverty alleviation.

Responsible sourcing and traceability.

Business ethics.

Human rights.

Responsible marketing and influence.

Food and product safety.

Water stewardship.

Over- and under-nutrition is at the top of the chart.

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The Issue Management Process2 Text Alternative

It contains five circles placed in a circular manner. Each circle is connected to the next via a curved arrow in a never-ending cycle. In a clockwise manner of appearance, these five circles are labeled as follows:

Identify issues.

Analyze issue.

Generate options.

Take action.

Evaluate results.

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