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DEFINITION AND MEANING OF

STAKEHOLDERS MAP OF
ITS IMPORTANCE IN BUSINESS AND SOCIETY
IN LARGE
DEFINITION OF STAKEHOLDER
A Person, Group or Organization that has interest or concern in an
Organization.
Stakeholders can affect or be affected by
the Organization's Actions, Objectives and Policies. Some examples
of Key Stakeholders
are Creditors, Directors, Employees, Government (and
its agencies), Owners (Shareholders), Suppliers, Unions and
the community from which the business draws its resources.
Not all Stakeholders are equal.
A company's Customers are entitled to fair Trading Practices
but they are not entitled to the same consideration as the
Company's Employees. An example of a negative impact on
Stakeholders is when a company needs to cut costs and plans
a round of layoffs. This negatively affects the community
of workers in the area and, therefore, the local economy. Someone
owning shares in a business such as Microsoft is positively affected.
For example, when the company releases a new device and sees
their profit and therefore stock prices rise.

DEFINITION OF STAKEHOLDER MAPPING


A Stakeholder Map is a Business Tool that allows you to see a visual
representation of your company's various Stakeholders (individual
and groups), their level of interest in the Company and their
importance to the company. It usually looks like a chart. Different
Stakeholders or Groups of Stakeholders are categorized and listed
on a chart according to their level of interest and the power they
exert over a Company.

PURPOSE
Stakeholders have power over a Company. Some of those are people
who own shares in the Company. Other Stakeholders are the
Customers who buy the products or services the Company offers.

Yet other Stakeholders could be the Area Residents employed by the


Company. Some of these hold more power and influence over the
Company than others, and some of these have more personal
concern over the Company's actions than others. A Stakeholder map
helps you determine who has the most potential to impact the
Company.

CREATING A MAP
While the more Stakeholders or Stakeholder Groups a Company has,
the more complicated a Stakeholder map will be. A simple one can
help give you a general idea of how to create maps, as well as of
those stakeholders you need to be aware of. Make a chart with four
cells, two on the top row and two on the bottom row. The horizontal
line going through it represents and should be labeled "POWER"
Those below the line hold power over the company, whereas those
above do not. Above the chart, write "LEVEL OF INTEREST" and just
below that, above each of the two Rows, write "LOW" and "HIGH" To
the left of the chart, above "POWER" write "LOW" and then "HIGH"
below it. That still leaves you with four empty Cells. In row 1 cell 1,
write "MINIMAL EFFORT" In row 1 cell 2, write "KEEP INFORMED" In
Row 2 Cell 1, write "KEEP SATISFIED" and in Row 2 Cell 2, write "KEY
PLAYERS".

USING THE MAP


Now that you've got your blank map, all that's missing is your actual
Stakeholder or Stakeholder Groups. Think about the four Key
Groups of Stakeholders your company has. Label each Individual or
Group assigning a letter with A,B,C and D.
Your "A" stakeholder should be those requiring Minimal Effort and
go on Row 1, Cell 1.
In Row 1, Cell 2, place your "B" Stakeholders, or those that should
be kept informed of the Company's Actions.
In Row 2, Cell 1; place your "C" Stakeholders, or those who must be
Kept Satisfied.
In the last cell, place your Key Players. When you look at your map,
you should now clearly see your main Stakeholders, and what each
group means for you.

HOW TO CREATE STAKEHOLDER MAP

Stakeholders are anyone who has an interest, or stake, in the


outcome of a Project, Bosses, Co-workers, Customers, Spouses and
Family, and the Community. Stakeholder Maps are a way to show
who the Main Stakeholders in a Project are and where they fall in
influence or power, and in interest. Someone may be highly
interested in your Project, but not have the Power to help it along.
Another person may have the Power to help, but no interest in
helping. A Stakeholder Map is a visual way to place the Key People
in this Project and its success in a framework so that you know how
to handle them at a glance. There are several ways to map your
Stakeholders.

INSTRUCTIONS
1) Divide your main stakeholders into the basic categories of
INFLUENTIAL or not and
degree;

INTERESTED or not, and to what

2) Draw a Two Dimensional Graph with the Left Side being


INFLUENCE and the bottom being INTEREST. The more
influential, the higher the position and the more interested,
the farther to the right they should go. Plot your Stakeholders
on it;

3) Separate your graph results in three Diagonal Layers. The Top


Right layer is your A Group, the Middle layer is your B Group
and your Bottom Left Layer is your C Group;

4) Keep your A Group fully informed and involved in the Project,


no matter how much extra time and attention it takes. These
are the people who are ready, willing and able to help;

5) Contact your B Group with important details and to get


feedback. You will either have people who want to help but
cant, and can provide good feedback, or you will have
influential people who are not very interested in your Project

but could help you if they saw it was worthwhile. Both can be
useful if handled right.

6) Place Group C on the Back Burner, making them aware of what


affects them in
general e-mails and giving them minimal
time and attention. Do not, however, ignore or alienate them-they could change places on the graph in the future. These are
people who are neither interested nor influential, but have the
ability to drain your time and effort.

7) Add a third category, active or passive, if you wish to take the


map further into a 3-D presentation using nine or more cubes
in a cube format. Separate your stakeholders accordingly and
place actives in the front and passives toward the back.
Actives are
motivated people who will take charge and
move things forward. Passives are people who need the
groundwork done for them and who will only help if made or
shown how to.

8) Use colors to suggest the different qualities to make the 3-D


presentation easier to understand.

Examples of a company's stakeholders

Stakehol
ders
Governm
ent

Taxation, VAT, Legislation, Low un-employment, Truthful


Reporting.

Employe
es

Rates of Pay, Job Security, Compensation, Respect,


Truthful Communication.

Customer
s

Value, Quality, Customer Care, Ethical Products.

Suppliers

Providers of Products and Services used in the end


product for the Customer, Equitable Business
Opportunities.

Creditors

Credit Score, New Contracts, Liquidity.

Communi
ty

Jobs, Involvement, Environmental Protection, Shares,


Truthful Communication.

Trade
Unions

Quality, Staff Protection, Jobs.

Owner(s)

Have interest of the Success of his/her Business.

Investors

Have interest earning income from investment.

TYPES OF STAKEHOLDERS
1) People who will be affected by an endeavor and can influence
it but who are not directly involved with doing the work.
2) In the private sector, people who are (or might be) affected by
any action taken by an organization or group. Examples are
parents, children, customers, owners, employees, associates,
partners, contractors, and suppliers, people that are related or
located nearby. Any group or individual who can affect or who
is affected by achievement of a group's objectives.
3) An individual or group with an interest in a group's or an
organization's success in delivering intended results and in
maintaining the viability of the group or the organization's
product and/or service. Stakeholders influence programs,
products, and services.
4) Any organization, governmental entity, or individual that has a
stake in or may be impacted by a given approach to

environmental regulation, pollution prevention, energy


conservation, etc.
5) A participant in a community mobilization effort, representing
a particular segment of society. School board members,
environmental organizations, elected officials, chamber of
commerce representatives, neighborhood advisory council
members, and religious leaders are all examples of local
stakeholders.

Market (or Primary) Stakeholders - usually Internal Stakeholders,


are those that engage in Economic Transactions with the Business.
(For example Stockholders, Customers, Suppliers, Creditors and
Employees)
Non-Market (or Secondary) Stakeholders - usually External
Stakeholders, are those who - although they do not engage in direct
Economic Exchange with the Business - are affected by or can affect
its actions. (For example the General Public, Communities, Activist
Groups, Business Support Groups and the Media)

COMPANY STAKEHOLDER MAPPING


A narrow mapping of a company's stakeholders might identify the
following stakeholders:

Employees
Communities

Shareholders

Creditors

Investors

Government

Customers

A broader mapping of a company's stakeholders may also include:

Suppliers

Labor Unions

Government Regulatory Agencies

Government Legislative Bodies

Government Tax-collecting Agencies

Industry Trade Groups

Professional Associations

NGOs and other Advocacy Groups

Prospective Employees

Prospective Customers

Local communities

National Communities

Public at Large (Global Community)

Competitors

Schools

Future Generations

Analysts and Media

Alumni (Ex-employees)

Research Centers

Each Person

IMPORTANCE OF STAKEHOLDERS IN BUSINESS


A stakeholder in a business setting is responsible for the outcomes
(positive or negative) of the business. A stakeholder may also have
made an investment in the business, which also causes her to have
an interest in the business's success or failure. Stakeholders have
different roles within a business, and it depends on the rules, titles
and responsibilities laid out either when the business was initially
established or as the business grows and changes

VOTING AND DECISION-MAKING


Stakeholders may be responsible for voting on significant changes
in the business. Voting can take place annually based on the
corporate structure of the business or during any meeting.
Stakeholders such as board of directors may vote to elect
management that will be entrusted to make all the major decisions
on his own. Stakeholders may intervene if the business is
performing unsatisfactory.

MANAGEMENT
Stakeholders can hold significant management positions where they
may report directly to the president, CEO or chief financial officer.
Within certain departments, the manager may be a stakeholder
because his decisions may cause the success or failure of that
department's performance, Management may be responsible for
hiring personnel within that department, providing training and
informing the department of any updates or changes in the
business's policies and procedures.

INVESTING
Stakeholders are commonly responsible for maintaining or achieving
a return on investment. Sometimes, the investment can be made on
a consistent basis over time. For example, consistently investing in
stocks through one company is an example of a stakeholder that is
continuously increasing her stake in the company. Stakeholders are
responsible for reviewing the financial data of the company to
ensure that the business is performing well and that they are not
losing their investment. They may also be responsible for voting on
allocation of certain funds.

SOCIAL AND ENVIRONMENTAL RESPONSIBILITES


Stakeholders must continuously ensure that decisions they are
making for the business are doing little to harm society and the
environment. They may choose to use an alternate resource if they
realize that current resources are becoming scarce. Stakeholders
can donate money to a country that is in need or they may choose
to limit their depletion of resources or exploitation of the workers in
a certain location (such as a third-world country). They continuously
monitor the decisions the company is making to ensure that the
public interest is always first and foremost before profit.

CORPORATE CONSCIENCE
Large stakeholders are generally high profile investors, and would
like to steer clear of companies that trample human rights and
environmental laws. They monitor your companys outsourcing
activities and globalization initiatives, and may vote against your
business decisions if they are deemed harmful to the companys
long-term goals.

OTHER RESPONSIBILITIES
Of course, this is only a broad description of stakeholder
responsibilities. Ideally, youll have stakeholders who care about
these four issues, but more often than not, short-term profits take
precedence over long-term sustainability. While stakeholders may
own your company, its easier to control your investors when your
company is privately held than publicly traded. Often times, the
large influx of cash from a successful IPO turns out to be a deal with
the devil when your company is suddenly taken over by a board of
directors that ousts you. On the flip side, however, stakeholders can
keep your company grounded and focused on its most profitable
products and sustain your companys earnings growth.

IMPORTANCE OF STAKEHOLDERS IN SOCIETY


The classic view of social responsibility in business values
maximizing profits as the top priority of management. However, in
1984, R. Edward Freeman pioneered the concept of a socioeconomic
view of social responsibility, which considers the welfare of society
as a whole. In 1986, W.C. Frederick further elaborated on four
stages a business transitions through until the organization values a
global perspective. Arguments against social responsibility include
that this is not the main function of a company and dilutes the
overall purpose of a business.

FOUR STAGES OF SOCIAL RESPONSIBILTIY FOR


STAKEHOLDERS
1) STOCKHOLDERS
Robbins and Coulter break down the concept of corporate social
responsibility into four stages. Stage 1 states that the company is
only responsible to the stakeholders, no matter if there are two or
200,000 individuals. These interested parties are the only ones with

a direct financial interest in the company, so the organization does


not owe anyone else anything except the stakeholders. This stage
holds that if the stakeholders are satisfied, the company has
fulfilled its purpose.

2) EMPLOYEES
As stakeholders move toward Stage 2 and involve employees in
social responsibility, employees begin to buy into the bigger picture.
The organization involves them in decision making. Management
considers team spirit and overall company morale. The company
focuses on employee ethics but recognizes that ethical issues may
not be hard and fast. For this reason, most companies operate
according to specific ethical standards. When management abides
by the same standards, communicates expectations clearly and
offers training, the company can present a united front in the area
of ethics.

3) CUSTOMERS AND SUPPLIES


Stage 3 states that after the stockholders and employees are happy,
the customers and suppliers should be satisfied. Traditionally,
restaurants and retail stores have pursued this philosophy with their
view that "the customer is always right." Happy customers and
suppliers tell others, who then patronize the business. Most businesses
recognize the value of excellent customer service.

4)

SOCIETY

In Stage 4, the corporation is responsible not only to stakeholders,


but also to society as a whole. Firms have an obligation to "do the
right thing." This goes beyond the fair and equitable treatment of
stockholders, employees and customers. It includes legal, moral and
political involvement. Other benefits include government
deregulation and overall environmental betterment. The company's
public image improves as society sees the value the business
provides as a whole.

COMMON CHARACTERISTICS OF SOCIAL ECONOMNY


They contribute to a more efficient market competition and
encourage solidarity and cohesion.

Their primary purpose is not to obtain a return on capital. They


are, by nature, parts of a stakeholder economy, whose
enterprises are created by and for those with common needs,
and accountable to those they are meant to serve.
They are run generally in accordance with the principle
of solidarity and mutuality and managed by the members on
the basis of the rule of "one man, one vote".
They are flexible and innovative (they meet changing social
and economic circumstances).
They are based on active membership and commitment and
very frequently on voluntary participation.

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