Analysing Stakeholders Influence

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Casablanca – Stakeholders Influence is powerfully and deeply rooted in many complex business situations: financial negotiation with a bank, sales persuasion in a retail chain, unions boycott and demonstrations, defining a competitive strategy, safety regulation banning products exports, to name few.

Influence in business and management is related to trust, stakeholders, scarcity, competition, and attachment. It is fascinating how stakeholders influence impacts all the business operations, sustainability, and reputation whether it is at the level of top, middle or even line management. Therefore, understanding and analysing stakeholders’ influence/influencers is a key success factor to effective and efficient management of companies. Such an analysis can be done through the following standpoints:

1- Stakeholders Influence Identification

Managing influence starts with a clear and a through definition of who are the company’s stakeholders. In the 1970s, management performance was exclusively associated with shareholder value (Stockholders / Shareholders) as emphasised by Milton Friedman. However, this emphasis has reached its limits when the concepts of sustainable/ethical developments and corporate social responsibility were developed in the United States to ensure business sustainability by considering stakeholders who have a direct or indirect interest in the success of the company, namely Executives, Employees, Unions, Investors, Customers, Suppliers, NGOs, local Communities. This awareness was formalized by the work of Edward Freeman (1984) who is the founder of the stakeholder theory. Later on, this theory was complemented by Ronald K. Mitchell (1997) with a very interesting modelling of how each company should weight the power of its stakeholders in terms of measuring (1) the influence on organizational decisions, (2) the degree of legitimacy in relation with the company, and (3) the urgency of the rights that stakeholders can claim to exercise.

2- Stakeholders Influence Propagation

Stakeholders Influence is intriguing when we see how it propagates and disseminate in companies and businesses. It is in fact interesting to see how corporate decision-making processes can be dramatically impacted either positively or negatively through stakeholders’ influence especially when it comes to rumors and any information that may harm the company’s reputation. It is also valuable to relate the stakeholders’ behaviour to how the flow of ideas ends up shaping the norms, productivity and creativity of each company. There is a particular research framework initiated by Alex Pentland (MIT), and called the Social Physics, which tries to identify statistical regularities related to human movement and communication, as well as interesting correlations with economic indicators. While there are no exhaustive literatures relating Social Physics to key findings that may impact the Stakeholders Theory, it is certainly one of the very interesting research topics that may evolve in the coming years.

3- Stakeholders Manipulation Management

When analysing stakeholders influence we need to pinpoint the circumstances where it is rather transformed to negative manipulation. As individuals and also as organizations, we all went into experiences during which we were naïve and were manipulated while we were thinking that we are in front of rational arguments, tangible proofs, or a recommendation of a stakeholder that we trust. In such situations, we generally feel, after we are manipulated, that we did not have enough information in the right time to know the agenda of third parties and their hidden intentions. Robert Cialdini’s theory of influence and manipulation gives very rich insights through which we can understand and avoid negative impact of manipulation on decision-making in the cases of reciprocity, consistency, social proof, authority, liking, and scarcity.

4- HR Contribution in Managing Stakeholders Influence

Stakeholder management is not only the responsibility of top management but also a challenge for middle managers in charge of projects and programs. Indeed, the example of the transformation projects is very relevant of the impact and the importance of how stakeholders need to be managed. Given the scale and complexity of such projects, the expectations of internal and external stakeholders of the organization need to be carefully addressed. Essential questions need to be asked by each project manager: What is the impact of each project on creating value for customers? How each project is contributing to personal or political agendas of each of the company’s executive board members? Therefore, successful transformation project managers should have outstanding communication and political skills which will allow them to demonstrate the value of projects in financial terms (sales, profitability…) when talking to shareholders, and speak business development language to Senior Management, while arguing properly through a social responsibility language when it comes to talking with user rights protection associations.

5- Stakeholders Influence contribution to Emerging Change

Emerging changes emanate from a collective or individual reflection within the ecosystem of stakeholders. Such changes are different from the ones we already know or the ones we decide with a defined outcome or a result. The emerging changes created/caused by stakeholders are the most critical and dangerous to the survival and the sustainability of organizations as they are unknown and unpredictable. The criticality of these changes is important to understand because they deserve a true radical transformation of the vision and the business process of the company as well as how fast and how innovative the decision making-processes are.

An example of the emerging changes that a majority of companies coped with during the previous few years is the use of social media or tablets by employees and customers. Initially, companies simply ignored these tools, platforms that remained, according to their interpretation in the private sphere. However, these platforms have transformed the behaviour of employees and customers by generating and strengthening social and professional interactions while generating communities and pressure groups that are outside the scope of control of corporations. Subsequently, and after a long delay, companies began to catch up and have adapted to this emerging change through digital reputation, warroom initiatives for social media management or internal usage guidelines and security platforms to administrate personal tablets being used by employees.

 

Article published at Morocco World News: http://www.moroccoworldnews.com/2014/12/147501/analysing-stakeholders-influence/

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