Class 3: Stakeholder Management

Dr. Satish M.K

Email: satish.kajjer@nmims.edu
Mid Term Group Assignment
Marks 20

Instructions
 This is a group presentation/assignment which has to be presented in the
11th Lecture
 Each Group should select one distinct topic and the same should not be
repeated by other groups
 All the presentations/assignments should reach the faculty before the
commencement of the 11th Lecture
 Each group will get 12 minutes for the presentation followed by viva of 8-
10 minutes
 Presentation/Assignment will carry weightage of 12 marks and Individual
viva will be for 8 marks
Assignment Topic

Select any one Sustainable Development Goal and

discuss the following:
 What are the targets and indicators of the Goal (1 mark)
 How is Government of India addressing the Goal ( What are the schemes,
policies or projects) (3 marks)
 What are the challenges faced by the Government in implementing the
Goals (2 marks)
 How are Corporations addressing the Goal internally ( through their business
operations) and externally (through CSR route) (3 marks)
 Identify which stakeholders they are responding through the implementation
of the Goal and what is the business case for implementing the SDG?
(Marks 3)
Who is a Stakeholder?
Source Stake

Stanford memo, 1963 “those groups without whose support the organization would cease to exist”

Rhenman, 1964 “are depending on the firm in order to achieve their personal goals and on
whom the firm is depending for its existence”

Freeman and Reed, 1983 “can affect the achievement of the organization’s objectives or who is affected
by the achievement of an organization’s objectives”
Drivers for CSR
Rationales for Stakeholder Identification
 A relationship exists
 The firm and stakeholders are in relationship
 Power Dependence: Stakeholder dominant
 The firm is dependent on the stakeholder
 The stakeholder has power over the firm
 Power Dependence: Firm Dominant
 The stakeholder is dependent on the firm
 The firm has power over the stakeholder
 Mutual Power-Dependence Relationship
 The firm and stakeholder are mutually dependent
 Basis for Legitimacy of Relationship
 The firm and stakeholder are in contractual relationship
 The stakeholder has a claim on the firm
 The stakeholder has something at risk
 The stakeholder has a moral claim on the firm
 Stakeholder Interests-Legitimacy not implied
 The stakeholder has an interest in the firm
Stakeholder classes
POWER
 A relationship among actors, in
which actor A can get actor B
to do something that B would
not have done otherwise
Power Legitimacy
LEGITIMACY
 A generalized perception that
the actions of an entity are
desirable, proper within some
socially constructed system of
norms, values, beliefs and
definition
URGENCY
 The degree to which
Urgency stakeholder claims call for
immediate action
 Stakeholder Typology
Power Legitimacy
LATENT STAKEHOLDER
1. Dormant Stakeholder- Power
2. Discretionary Stakeholder-Legitimacy 1. Dormant
Stakeholder
3. Demanding Stakeholder-Urgency
4. Dominant
Stakeholder

EXPECTANT STAKEHOLDER 2. Discretionary

4. Dominant Stakeholder- Power & Legitimacy Stakeholder
5. Dangerous Stakeholder- Power & Urgency
6. Dependent Stakeholder- Legitimacy & Urgency 7. Definitive
Stakeholder
5. Dangerous 6. Dependent
DEFINITIVE STAKEHOLDER Stakeholder Stakeholder
7. Definitive Stakeholder- Power, Urgency &
Legitimacy

3. Demanding 8. Non
Stakeholder Stakeholder

Urgency
Stakeholder Power Analysis
Stakeholder Power Analysis
 Stakeholders are the people who matter to a system
 Stakeholder power analysis is a tool which helps understanding of how people
affect policies and institutions and how polices and institutions affect people

KEY QUESTIONS
 Who they are
 What they think
 What influence they have
 How to engage them
 How to inform
 How to stay in touch
 If things change
Stakeholder Power analysis
6 Steps
 Develop purpose and procedures of analysis and initial understanding of
the system
 Identify key stakeholders
 Investigate stakeholders interests, characteristics and circumstances
 Identify patterns and contexts of interaction between stakeholders
 Assess stakeholders power and potential roles
 Assess options and use the findings to make progress
Step 1. Develop purpose and procedures of analysis and
initial understanding of the system

 A clear understanding of the goals and boundaries of the analysis is needed

 The scope of the issues to be included, clarity on what is to be left out, and
identification of what can be achieved and delivered
Step 2. Identify key stakeholders

 Identification by staff of key agencies, and other knowledgeable individuals

 Identification through written records and population data
 Stakeholder self-selection.
 Announcements in meetings, in newspapers, local radio or other local means of spreading
information, can elicit stakeholders coming forward.
 Identification and verification by other stakeholders
 Early discussions with those stakeholders who are identified first can reveal their views on the
other key stakeholders who matter to them.
Step 2. Identify key stakeholders
Step 2. Identify key stakeholders
Step 3. Investigate stakeholders’ interests, characteristics
and circumstances

A checklist of questions for each stakeholder group might include:

 What are the stakeholder's experiences or expectations of the policy/
institution?
 What benefits and costs have their been, or are there likely to be, for the
stakeholder?
 What stakeholder interests conflict with the goals of the policy/ institution?
 What resources has the stakeholder mobilised, or is willing to mobilise?
Step 4 Identify patterns and contexts of
interaction between stakeholders

This step aims to understand the relationships between stakeholders, to

investigate factors in conflict and cooperation, e.g. authority relationships,
ethnic, religious or cultural divisions, historical contexts and legal institutions.
Two methodologies are particularly useful at this stage:
 The Four Rs
 This is a tool for unpacking stakeholder roles. This is used to assess stakeholders’
Rights, Responsibilities, Rewards (or revenues or returns) and Relationships with
other groups
 Narrative Interviews
 This is an approach to getting the best out of key informants, allowing
stakeholders to put forward information in their own way
Step 5: Assess stakeholder power and potential

 Stakeholders have very different degrees of power to control decisions that have
effects on policies and institutions, and they have different degrees of ‘potential’ to
contribute, or ‘importance’, to achieving a particular objective
 Power to influence policies or institutions stems from the control of decisions with
positive or negative effects
 Stakeholder power can be understood as the extent to which stakeholders are able
to persuade or coerce others into making decisions, and following certain courses
of action
 Potential to affect, or to be affected by, policies and institutions resides in particular
characteristics specific to context and location – such as knowledge and rights
Step 5: Assess stakeholder power and
potential
Four General Strategies for stakeholder relations management

Stakeholder High Potential Low Potential

Power/Potential
High Power Collaborate with Mitigate impacts, defend
against
Low Power Involve, build capacity and Monitor or ignore
secure interests

Engagement
Step 6 Assess options and use the findings to
make progress
To be useful, the analysis of the first five steps needs to be summarised in a form where
everyone’s interests and issues can be seen together.
Stakeholder relationships with the main problem and each other
Stake holder How affected by the Capacity/motivation Relationship with
problem to participate in other stakeholders
addressing the (e.g. partnership or
problem conflict_

Expected impacts of proposed project/programme

Stake holder Main objectives Positive Negative Net impact
of stakeholder impacts/benefits impacts/costs

Stakeholder power analysis of a particular policy or institution

Stakeholder Main interest Power Potential Relationships Net impact Options/ways
with others forward
CSR in India
Background of CSR
 In pre-industrial era mercantile traders took care of their members, the poor and
the needy communities

 During Industrialization, the advent of corporations with the objective of profit

maximization rejected the proposition that business was responsible for social
welfare

 The post-liberalization period expects the business to adopt the triple bottom line
approach as an inseparable part of their strategy to attain both shareholder value
and social value
History of CSR in India: Pre-British Era
 Philanthropy of Indian businesses is deeply rooted in religious beliefs

 Merchants charity in ancient India took various forms- treasury chests for the
needy, providing relief in times of famine and floods, provision of drinking water,
building temples, water tanks, wells, supporting schools etc

 Merchants contributed to charity both individually and collectively

 At an individual level they gave alms and food to the poor and needy, set up
traditional schools (pathshalas), constructed night shelters for poor and travellers,
built water tanks, commissioned artists to prepare religious texts, marriage
expenses of poor etc

 There was a strong tradition of charity in almost all the business communities in
India

 Philanthropy has often best been used by merchants to gain political power,
economic advantage, personal status and honour
Pre-Independence Period
 The period between 1850 and early 1900 witnessed business setting up trusts and
endowment funds

 Most important event in this period is the emergence of Mahatma Gandhi as a

political and social leader

 Gandhiji reinterpreted the traditional concept of charity- dana

 Many business families followed Gandhijis footsteps

 Merchant charity began to change from largely being religious-within community to

more secular and inclusive in terms of caste, creed and community

 Philanthropy also oriented towards bringing progress to society through Western

style modern institutions
Post-independence India
 Industries were termed as Temples of Modern India and industrialists participated in nation
building programmes by setting up scientific and technical learning institutes

 The emphasis was on vocational and technical training, public health, power and water supply
and the Gandhian social reform movements

 The credit for integrating social responsibility with the conscience of business goes principally
to business leaders such as JRD Tata, Ramakrishna Bajaj, Arvind Mafatlal and Kasturbhai Lalbhai

 As champions of free enterprise, they feared that irresponsible behaviour by the business
community would lead the government to encroach on their freedom

 The felt that business community was an essential ingredient of the democratic society and it
had a duty not only to create wealth but also to promote the ethical and social goals of the
community
Post-independence India
 In 1965, the Seminar on Social responsibilities of business highlighted the concept of social
responsibility. It specified that business responsibilities comprised:
 Responsibility towards consumers
 Responsibility towards the community
 Responsibility towards employees
 Responsibility towards shareholders and other businesses
 Responsibility towards the state
Post-independence India
 The last decades of the twentieth century witnessed a swing from charity and
traditional philanthropy towards designing interventions in the area of ecology,
consumer education, developing rural markets etc

 Many old multinationals like ITC, Hindustan Unilever became indianized and began
to feel the same responsibility as the indigenous businesses
Post-independence India
 Individual companies define CSR in their own limited ways and contexts,
with the end result that all activities undertaken in the name of CSR are
merely philanthropy or an extension of philanthropy

 Creating trusts and foundations seems to be a favourite route of CSR

practice of Indian firms

 Trusts and foundations work at arms length from the company, preventing
CSR from entering the mainstream and core business processes
Post-independence India
Four models of CSR coexist in India

 The ËTHICAL MODEL as suggested by Mahatma Gandhi where

companies voluntarily commit to public welfare and participate in nation
building

 The STATIST MODEL propounded by Nehru, which calls for adopting

responsible practices by State Intervention in economic activities and
protecting stakeholders through legislation

 The LIBERAL MODEL by Milton Friedman, which discusses CSR being

limited to private owners or shareholders

 The STAKEHOLDER MODEL championed by Edward Freeman which

calls for companies to respond to all stakeholder needs
Stakeholder Engagement
Stakeholder Engagement Process
Engagement with Stakeholders
Engagement with Stakeholders
Engagement with Stakeholders
Engagement with Stakeholders
Thank You