VERY often in the media you will hear people talk about ‘stakeholders’.
It can be in reference to community groups, football clubs, social enterprises, governments - you name the organisation and it will have stakeholders. The real question however is: do we understand when, how and why to engage in ‘stakeholder management’?
In 1984 R. Edward Freeman is credited with significantly developing stakeholder theory in his book 'Strategic Management: A Stakeholder Approach', where he promoted the idea that it wasn’t just shareholders who had a ‘stake’ in the company, there were many other groups in the mix.
He suggested a wide definition of stakeholders as being “any group or individual who can affect or is affected by the achievement of the organisation’s objectives”.
While this has been refined multiple times since to define it as (for example) people who have placed something at risk in their relationship with the business’, Freeman’s definition is as good a place as any to start with.
If we take a professional football club, the following could all legitimately be considered stakeholders: Owners, executive board, players, management, supporters, staff (from the physio room to the kitchen to ticket sales) and often one person could belong to multiple stakeholder groups; if your security guard is a fan, a member of a supporter’s group and owns shares in the club perhaps.
If we go in a wider arc, you then have others affected by the club’s objectives: FIFA, UEFA, EPL, the government, the media, the PFA and so on.
Now, not all of these will have the same degree of importance and therefore not all need equal attention; a key part of stakeholder management is understanding, identifying and categorising them to know the difference.
An easy and often used way is to think of stakeholders in terms of four groups:
• High power & high interest: These are the key ones who you need to fully engage with, focus on, and keep informed as a priority. They will keep you on your toes and need a lot of management.
• High power & low interest: Ensure they are kept satisfied but there is no need to bore them with incessant communication. As long as they feel they are getting what they need they will be content.
• Low power & high interest: Keep them informed, make them feel part of the loop but release that they are not in a position to significantly affect matters. That being said, while they may not have much tangible power, they can certainly create noise if unhappy so can’t and shouldn’t be ignored.
• Low power & low interest: Give this group adequate information and updates, but don’t overload. This is where least effort is focused as they can’t really affect much in reality and will rarely be exercised enough to do much even when unhappy.
Stakeholder management therefore is the process of developing, managing and controlling the relationship with all these different groups, for the benefit of the business.
An easy five-step plan to start with is as follows:
1. Understand and map out who your stakeholders are, as per the aforementioned power v interest approach. Ask yourself do they have a direct impact on the economic transactions of the business i.e. primary stakeholders (employees, customers, suppliers etc), or are they just affected by these i.e. secondary stakeholders (media, general public etc.)
2. Next determine the power balance between you, them and the company. Can one person make life very difficult (e.g., a major shareholder)? Are they individually weak, but collectively powerful (e.g. fans)? Consider even if they might align with other stakeholders on some issues creating a more powerful unit.
3. Find out what is important to them; what do the really want to hear about: Are they only interested in profits or is public image a big thing? Do shareholders care if a business is regularly mired in scandal if it is turning a massive profit, or are they very focused on social responsibility and what the business can give back to the local community and would be horrified by any negative press?
4. Establish how they like to be communicated with. Some stakeholders prefer public forums, some focus on social media, others just want a detailed spreadsheet or report on their desk. Once you understand their preferences, use these as the primary vehicle or communication.
5. Create a plan of action in terms of engagement and communication, which you will then subsequently be able to execute, monitor and refine.
It can be a tricky business managing stakeholders – the key is to separate what/who is important and what/who isn’t and dedicate your time and resources accordingly.
:: Barry Shannon is head of HR at STATSports
