Stakeholders and Stakeholder Mapping

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