The Stakeholder Strategy: Profiting from Collaborative Business Relationships - Couverture rigide

Svendsen, Ann

Couverture rigide

ISBN 10 : 1576750477 ISBN 13 : 9781576750476

Editeur : Berrett-Koehler Publishers, 1998

Synopsis

In today's networked, highly competitive, and global economy, value is created collaboratively between a company and its stakeholders -- employees, investors, customers, suppliers, and communities. "The Stakeholder Strategy" presents a new approach to management that is focused on collaboration. It addresses concernes aobut the bottom line (can collaboration increase profits?) and societal pressures to improve overall quality of life. It also includes a practical step-by-step guide, which companies can use to forge a network of powerful and profitable collaborative stakeholder relationships.

A propos du livre

Extrait :

Why Build Collaborative Stakeholder Relationships?

To the extent the firm is able to recognize its interdependence, reflect upon the ethical standards appropriate to the situation, and react in a timely and responsive manner, it possesses a valuable, rare and nonsubstitutable strategic resource.

—Reginald Litz, 1996

Companies across North America are taking seriously the notion that as paradoxical as it seems, one way to succeed in a highly competitive globalized economy is to cooperate. In an economy where companies need to persuade investors to hold their stock, employees to work cooperatively with others, customers to buy a broader array of their products and services, and contractors to maintain strong supply chains, collaborative stakeholder relationships are key.

Every company, whether large or small, has a unique set of stakeholders—most often including investors, employees, customers, suppliers, and communities. The term “stakeholders” refers to individuals or groups who can affect or are affected by a corporation’s activities.

For most companies today, stakeholder relationships can have a significant impact on the bottom line. While companies could once manufacture an image and reputation through advertising and other media-based campaigns, in today’s networked world, reputation depends on establishing the trust of key stakeholders. The pursuit of financial success at the expense of employees, the environment, local communities, or workers in a subcontractor’s factory halfway around the globe is not only socially irresponsible but can result in shareholder losses rather than gains.2

A growing number of business leaders are acknowledging the power of long-term, positive stakeholder relationships. One such business leader is John Browne, CEO of British Petroleum. In a recent Harvard Business Review article (September/October 1997), he talked about the importance of building mutually beneficial stakeholder relationships. He said, “You can’t create an enduring business by viewing relationships as a bazaar activity—in which I try to get the best of you and you of me—or in which you pass off as much risk as you can to the other guy. Rather, we must view relationships as a coming together that allows us to do something no other two parties could do—something that makes the pie bigger and is to your advantage and to my advantage.”1

This is not to say that building stronger relationships with employees, customers, investors, suppliers, and communities is a panacea for all situations or all companies. Nor is building a network of reciprocal relationships simple. In most companies, competitive pressures keep all eyes focused on the short term, making it extremely difficult to bring long-term issues to the forefront. Traditional accounting systems based on financial measures of performance make it difficult to assess the impact of intangibles like relationships or reputation. And collaboration means letting go of control, which is always difficult for corporate managers schooled in the art of competition. However, despite these barriers, for many companies, stakeholder relationships do offer enormous untapped potential. For some, stakeholder relationships may even be a source of competitive advantage.

Stakeholder Collaboration versus Stakeholder Management

The theory of stakeholder management taught in most business schools today focuses on the mechanisms by which organizations understand and respond to the demands of their stakeholders. Theorists have argued that stakeholder relationships can be managed using techniques such as issue analysis, consultation, strategic communications, and formal contracts or agreements. Managers are seen as having the power to direct and control interactions between a corporation and its stakeholders.

The main purpose of stakeholder management is seen to be buffering the organization from the negative impacts of stakeholder activities. The job of a public affairs or community relations manager, for instance, is to anticipate how the company’s activities will affect public stakeholders and minimize negative reactions by instituting “damage control.”3

Within this more traditional perspective, responsibilities for various stakeholder groups are assigned to separate divisions. The marketing department deals with customer relations, the human resource department deals with employees, the public affairs department deals with the media, the community relations department deals with local organizations, and the purchasing department handles contracts with suppliers. The relationships that develop between managers and stakeholders are shaped by the interests and values of the department managers rather than by the corporation’s values and goals.

This “stakeholder management” approach has arisen out of the belief that corporations need to take steps to defend themselves from the demands of stakeholders. Part of the role of managers has been to act as a referee, deftly and diplomatically mediating between stakeholder demands and expectations in order to preserve goodwill toward the company, avoid public relations fiascoes, and maintain cost competitiveness.
Building Stakeholder Relationships

A collaborative approach to building stakeholder relationships, on the other hand, sees stakeholder relationships as being reciprocal, evolving, and mutually defined. The manager is not separate from the stakeholder relationship but is part of it. Thus the idea of “managing” relationships is not only untenable but is viewed as being counterproductive for both the corporation and its stakeholders in the long run.2

A collaborative model also assumes that stakeholder relationships can be a source of opportunity and competitive advantage. Relationships can increase an organization’s stability in a turbulent environment, enhance its control over changing circumstances, and expand its capacity rather than diminish it.

There are significant advantages to taking a more integrated, company-wide approach to identifying and building strategically important stakeholder relationships. In addition to increasing organizational effectiveness and consistency of response, this kind of holistic approach also allows an organization to build on the synergies that occur when positive relationships with one stakeholder group, such as a local community, start to have a beneficial impact on another stakeholder group, such as customers.4

This book presents an integrated strategy for building a network of collaborative stakeholder relationships based on a fundamental shift in management philosophy and attention. A singular focus on the needs and interests of stockholders is replaced by a focus on understanding and balancing the interests of all of a company’s key stakeholders. Through positive long-term relationships, companies identify “win-win-win” opportunities that serve the corporation as well as stakeholders and society.

The stakeholder strategy is based on the view that companies and society are interdependent. Therefore, business prosperity is linked to the well-being of local and global communities and all of a corporation’s other key stakeholders, including employees, suppliers, and the natural environment. Within this context, relationships with stakeholders are as essential to a company’s survival as air or water is to a human being’s survival.

A company’s relationship-building strategy is therefore seen as being inextricably linked to its mission, values, and goals. Given the strategic value assigned to the relationship-building function, employees are expected to act in concert with the corporation’s social mission and goals and to identify opportunities that serve the corporation, its stakeholders, and society.5
Stakeholder Collaboration on the Ground

Some corporations are already living a “new reality” of collaborative stakeholder relationships. They recognize that positive relationships with stakeholders can pay off. Stakeholder-responsive companies treat their employees and suppliers well, develop innovative products and services, take care of the environment, and contribute to causes that are important to the community. Many find that these stronger stakeholder relationships produce benefits ranging from increased customer loyalty to an improved reputation and a more motivated and committed work force.

However, for most companies, the attention of management has been focused on one stakeholder group at a time. Collaborative approaches are often confined to specific parts of an organization. For example, some companies have a participative and democratic approach to employee relations. Others have developed trust-based, highly interdependent relationships with their suppliers and customers. Rare is the company that adopts a comprehensive and strategic approach to relationship building that is governed both by deep social values and by a recognition of the importance of the bottom line.

A number of companies across North America are experimenting with collaboration in some parts of their businesses. If successful, many of these “test cases” will become prototypes for collaborative processes in other areas of these companies.

Case Study: The Body Shop Suffers from Poor Relationships

The Body Shop is another example of a company that has suffered from the lack of solid stakeholder relationships. The Body Shop, one of the world’s leading beauty- and bath-products companies, was enormously successful in the early 1990s, riding a wave of public support for its fair-trade and environmental policies. Its success was severely tested several years ago when a media article exposed inaccuracies in the company’s environmental and social responsibility claims.4 The article and the tide of negative consumer and public opinion that followed had a drastic, if short-lived, impact on The Body Shop’s stock prices.
When The Body Shop carried out its first social and environment audit in 1995, partly in response to mounting consumer pressure, poor relationships with franchisees and employees also surfaced. Anita Roddick, the founder of The Body Shop, has said in the company’s most recent audit report that these relationship problems must be addressed for the company to continue to grow. “We learned in our first social audit process that the overwhelming majority of people associated with our business believe firmly in The Body Shop ideals and our aspirations. We also discovered that a number of improvements were needed in our relationships with stakeholders.”5 Dissatisfied staff and franchise owners, coupled with disenchanted consumers, can put a quick stop to growth and financial prosperity.

Opportunities and Challenges

COMPETITIVENESS PRESSURES

Despite the obvious advantages, in these tough economic times, the idea of stakeholder collaboration can seem a little far-fetched. Many companies face intense pressure to cut costs to the bone just to survive. Global trade, which increased twelve-fold between 1950 and 1995, has intensified competition and the relentless focus of corporate executives on short-term financial performance.6

Managers today, for instance, must keep their eyes focused on the bottom line to prevent hostile takeovers. Companies that suffer from declining or even stable stock prices are under threat to be taken over by corporate raiders, stripped of assets, and sold off in pieces. This may mean there is less room for socially responsible corporate initiatives, more centralization of power, less focus on long-term investment, and more attention to the short-term demands of capital markets. Companies are clearly watching the bottom line more closely than ever and are very skittish about the sentiment that they should respond to the interests of nonstockholders.9

Global competition also means that corporations are more footloose than ever before. Globalization has increased the size and reach of many corporations and has diminished corporate ties to local communities and even nation-states. Companies that moved from North America to Taiwan or Thailand several years ago are now moving on to Indonesia and China to take advantage of even lower labor costs and environmental standards. This is possible because the Global Agreement on Tariffs and Trade (GATT), which now covers over 90 percent of the world’s trade, does not include standards governing workers’ rights and environmental protection.7 Many would argue that the global playing field is no longer level and therefore companies have less incentive to consider other than bottom-line issues.
PUBLIC PRESSURE FOR GREATER CORPORATE SOCIAL RESPONSIBILITY

Corporations do face enormous public pressure to find a balance between the bottom-line interests of their stockholders and broader social responsibilities. Public values are changing. Various studies point to changes in values that have a bearing on what stakeholders want and expect from corporations.

For example, the World Values Survey, a rigorous international study dating back to the 1970s, shows a gradual but significant shift in public opinion. People today are moving away from a concern with material well-being and physical security. In this post-materialist period, quality of life and having input into important decisions are more valued. More people these days also have less confidence in big business. They are less deferential to and more skeptical of authority figures, including business leaders.8

Laws have changed in the past two decades in ways that reflect changing public attitudes toward corporate behavior. Since the mid-1980s, for example, laws have been changed in more than thirty states to provide legal protection for boards of directors who resist takeovers that are not in the best interests of employees, suppliers, and community stakeholders. Previously, corporate boards of directors were prohibited from doing other than what was good for stockholders.10

A recent review of legal trends in corporate governance indicates that the move toward stakeholder law is not just a United States phenomenon.9 Germany’s recently adopted codetermination laws require employee representation on second-tier boards of directors. Other countries have similarly extended the role of nonstockholders in the governance of corporations. In Denmark, for example, more than fifty large companies have initiated ethical accounting processes where stakeholders are involved in reviewing and rating corporate performance.10 Through ongoing dialogue, companies aim to align their values and their actions with the values of their stakeholders.
NEW ORGANIZATIONS REQUIRE NEW RELATIONSHIPS

Companies that have been delayered, downsized, hollowed out, and globalized are more dependent on relationships and alliances. Restructured companies depend more on their supply-chain relationships as they outsource noncore functions and create tighter supply relationships. Formerly short-term, arms-length transactions between independent parties are being replaced by long-term partnerships.

Employee relationships are also of growing importance in a knowledge-based economy. Employees must learn from each other and be able and willing to share ideas, even if they come from different backgrounds and cultures. Managers must use stronger relationships with their staff to motivate and inspire rather than use the old chain of command.

While companies today depend on new forms of relationships and partnerships, economic restructuring is making relationship building more difficult. In the post-downsizing era, many employees are tired and overworked. They are doing the jobs of several of their laid-off colleagues in addition to their own and are les...

Présentation de l'éditeur :

In today's highly networked and competitive global economy, mounting social and environmental problems are forcing corporations to focus on more than just their stockholders' interest in meeting bottom line profitability. More and more companies are recognizing the value of identifying and building relationships with all of their organization's stakeholders-employees, customers, suppliers, and even communities. In fact, recent research has shown that companies that treat their employees well, create jobs in the local economy, develop innovative products and services, take care of the environment, and contribute to the community, are often more profitable.

In The Stakeholder Strategy, sociologist Ann Svendsen presents an effective and practical step-by-step guide that companies can use to forge a network of powerful and profitable collaborative stakeholder relationships.

While some forward-thinking corporations have tried limited collaborative approaches-focusing on one stakeholder group at a time-few have taken a comprehensive and strategic approach to building relationships with all of their stakeholders, notes Svendsen. And, while considerable commitment to the idea of stakeholder collaboration exists, there is a lack of knowledge and understanding about how to develop these relationships. The Stakeholder Strategy is the first book to show business leaders and managers how to establish and maintain positive, mutually beneficial stakeholder relationships. Based on a synthesis of ideas from community relations, corporate philanthropy, stakeholder management, organizational change, sustainability, and the corporate social responsibility literature, it offers an integrated framework, as well as the practical tools for developing new kinds of collaborative relationships.

Svendsen uses easy-to-grasp concepts from everyday life, such as the process we go through in finding a mate or developing a long-term friendship, to illustrate these relationship-building strategies. She lays out the steps a company should take to create a collaboration-friendly organization: establishing a social mission, values, and ethical guidelines; assessing corporate readiness for collaboration; and making changes in communication, information and reward systems to support internal and external collaboration. Featuring case study examples from companies in North America and Europe who are working to build collaborative relationships with their stakeholders, The Stakeholder Strategy is the first book to provide a detailed explanation of how to conduct stakeholder audits and social audits so that companines can evaluate their relationship-building success and keep on track.

À propos de cette édition

• Éditeur: Berrett-Koehler Publishers
• Date d'édition: 1998
• ISBN 10: 1576750477
• ISBN 13: 9781576750476
• Reliure: Relié
• Nombre de pages: 224