The Stakeholder Engagement Process Management Essay

2526 words (10 pages) Essay

1st Jan 1970 Management Reference this

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A person, group of persons, or organization that has a direct or indirect stake in an organisation because it can affect or be affected by organizations action, objectives, polices. (Business dictionary, 2012)

Stakeholder engagement process:

The word stakeholder and engagement both have different meanings for different people therefore it is difficult to understand what people are trying to think and say about these words. These words are used together to define a procedure which is theoretical a transparent process

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Stakeholder is only defined in a reference to a particular issue e.g. as a local resident in a particular area you may be a stakeholder in a decision about what will be the opening and closing timing of the restaurant. But you will not be a stakeholder in a decision about what kind of restaurant/food they will serve but health and local authority might a stakeholder in both decisions.

Many authors described this phrase in different way.

According to (Glicken, 2000) ‘A stakeholder is an individual or group influenced by and with an ability to significantly impact (positively or negatively) the topical area of interest.’ However, according to (Slocum et al, 1995) ‘Active involvement of people in making decisions about the implementation of processes programmes and projects which affect them.’

Freeman (1984) explains that any person or group of people who can directly or indirectly affect or can be affected by the organisation’s actions, objectives and policies. Shareholders including investors, owners, partners, directors, people owning shares or stock, banks, anyone having a financial stake in the business purchasers, consumers and end users.

Stakeholder engagement is the process used by an organisation to engage significant stakeholders for a clear purpose to attain accepted results and stakeholder engagement is the process used by an organisation to engage relevant stakeholders for a purpose to achieve accepted outcomes. It is now also known as a fundamental accountability tool, since it obliges an organisation to involve stakeholders in classifying, understanding and answering to sustainability issues and concerns, and to report, explain and be accountable to stakeholders for decisions, actions and performance.

Quality stakeholder engagement process should include:

Clearly define the scope and have an agreed decision making process;

Focus on issues material to the organisation and/or its stakeholders;

We need to identify the important stakeholder and their interest relating to our restaurant.

We need to assess the power and influence of stakeholders in connection to our restaurant.

Define appropriate project to each stakeholder and we need to identify the stakeholder’s risk relating to our restaurant.

Create opportunities for dialogue and be integral to organisational governance;

Have a process appropriate to the stakeholders engaged

Be timely; be transparent, flexible and responsive.

Stakeholder engagement must be rooted in the culture and main functions of the organisation. To accomplish this, this requires an assurance to the principles and incorporation of stakeholder engagement with organisational governance, strategy and operations. Through this assurance and incorporation, the outputs of stakeholder engagement lead to strategic and operational outcomes.

Whenever we start a project or business it is very important for us to identify key stakeholders and their type and also identify their interest relating to our business or project.

Different kind of stakeholders:

Usually stakeholders have three types

Primary stakeholder

Secondary stakeholder

Key stakeholder

Primary stakeholder:

A primary stakeholder includes any group of people or an organisation which are eventually affected by the actions of the organisation both in positively or negatively way. In our restaurant business primary stakeholders are customers, lenders, suppliers and owner of the building.

Secondary stakeholder:

Secondary stakeholders are those who could be indirectly affected by the actions of the organisations. In our restaurant business secondary stakeholders are city council and environmental authorities.

Key stakeholder:

Key stakeholders can belong to first two groups and these peoples or organisations can have substantial impact upon within our restaurant.

Key stakeholder includes;

City council

Customers

Suppliers

Lenders

Owner of the building

Environmental authorities and trade authorities.

The Importance of Meaningful Stakeholder Engagement:

Stakeholder engagement is premised on the concept that ‘those groups who can affect or are affected by the succession of an organisation’s purpose’ should be given the opportunity to observe and input into the expansion of decisions that affect them. In today’s society, if they are not actively sought out, sooner or later they may claim to be consulted.

Situations could arise when organisations do not aggressively engage but are forced to do so by the demands of society as a result of a crisis situation. In response, organisations hire crisis management procedures, and are often forced into a defensive negotiation with stakeholders, leading to a substantial and long lasting loss of reputation. This type of interface is often opposed and damaging of trust.

Meaningful engagements take place in organizations as many organizations are well aware of current changes in the wider society and how they pass on to organisational performance. A relation with stakeholders is a mean to manage the impact as a result of those changes, many of which are shaped due to vast negative impact of global economic downturn. Organisations can either seek to diminish risk through the use of stakeholder management, or through the use of meaningful stakeholder engagement exploit new trends to identify and establish new opportunities; the latter is characterised by a readiness to be open to change.

As with any other business process, engagement process should be systematic, logical and should be applied thoroughly. A process is provided by stakeholder engagement which takes in to account organisation from the starting point of planning and identifying objectives through to post monitoring and evaluation. This process is represented as a circle as it is constant where lessons are learned from past experience and will then shape the future planning and engagement.

Stakeholder mapping and their importance:

Stakeholder mapping is process of listing the entire stakeholders according to their interest and power or influence on a particular organisation. (Bjorn Andersen, 2008) Each stakeholder is different from other in terms of their power and their interest. Some stakeholders have more power and more interest in an organisation and some stakeholders have more power with less interest in an organisation. Therefore, stakeholder mapping provides us a framework which helps organisation in term of stakeholder management. By using stakeholder mapping organisation categorise each stakeholder in different category and then spend more time and money on those stakeholders who have more interests and more power and organisation also saves time by spending less time on those stakeholders who have less power and less interest.

Stakeholder’s Mapping

http://open.jorum.ac.uk/xmlui/bitstream/handle/123456789/650/Items/B324_1_004i.jpg

http://open.jorum.ac.uk

Key players:

Key players are those stakeholders who have more power and more interest in our business or organisation. In key players’ stakeholder management process organisation need to actively involve these stakeholder in almost in every part of the project. Because these are the stakeholders who have more power, influence and interest in our organisation. In our project suppliers, lenders and property owner has high power and high interest therefore, these stakeholders are key player in our project.

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Keep satisfied:

These are the stakeholders who have less interest but more power in our organisation. Therefore, organisation always needs to try to keep these stakeholders satisfied at all the time and organisation always need to feed these stakeholders with the information which they need.

Keep informed:

These stakeholders have with high interests but low power. There is a very less chance that these stakeholders will create any trouble in our project, but these stakeholders have high interest in our project. Therefore, organisation always needs to try to spend relatively less time on this stakeholder and keep them satisfied. For example, local community and neighbourhood people who have most interests and low power and they cannot create any trouble but their interest’s level is quite high.

Minimal effort:

These are the peoples with less interests and low power. Organisation should need to spend less time and money on these stakeholders.

Understanding stakeholder:

Engagement process includes the understanding of the different stakeholders and also understanding their needs and demands. In this process we need to know how best we can engage all different stakeholders and how to communicate with them. We need to consider some key questions to find out how we can perform this process efficiently.

This key question includes;

What financial and non-financial interest they have?

We need to know if stakeholders go against our restaurant project then how we are going to manage their negative attitude towards our project?

What is their current judgment about our restaurant project?

What kind of information they require from us?

How we need to communicate with them?

To get the answer for all of the above questions we need to ask directly to the potential stakeholders. Stakeholders are quiet open about their opinion and they feel free to comment on an organisation’s policies and actions. By asking these questions and interacting with stakeholders helps organisations to build a strong relationship with the stakeholders which will help organisation in a long run. Being a project runner we need to ensure that stakeholders are aware that things will get better once the project is completed and there will be now extra financial cost or any other burden on them. If we don’t ensure them there will be resistance in future and this resistance could affect our project.

Stakeholder management:

Successful project requires a careful stakeholder management. Therefore, we need to ask questions who are the stakeholders? Stakeholder is any group/person or any organisation that has direct interest in our restaurant and they can be directly affected by the output of our restaurant. Therefore, it is necessary for us to understand the principles and issues which stakeholders have in order to address them and keep everyone on board for the duration of our restaurant project. (www.projectsmart.co.uk)

In stakeholder management process we need to identify our key stakeholders then we need to find out what’s their needs, demands, interest and power relating to our restaurant and then we need to know how to manage these stakeholders. Therefore, managing these stakeholders is different from managing other stakeholders. For example in our project of opening a restaurant on oxford road we have some stakeholder e.g. city council which could be directly affected by the output of our restaurant and if we affect this stakeholder our restaurant could be closed before it opens.

Purpose of the stakeholder management:

Purpose of stakeholder management is apparent however this idea has been ignored by most of the organisations. We need to consider all those stakeholders who can make an impact on our project in later period. In recent years we have noticed many examples that many organisation those who were ignoring their stakeholders now they are considering their stakeholders with more care and acting more responsibly towards their stakeholders. (www.triplepundit.com)

Fast-food giant Burger king and McDonald faced criticism for supporting the cutting of the Amazonian rain forest from beef suppliers. Now Burger king and McDonalds started to act responsibly by altering their policies and improving their CSR’s and they are reporting more carefully and they are taking care of their stakeholder’s relationship. (Buzz, 2012)

Advantages and disadvantages of stakeholder management:

An organisation can receive many advantages and disadvantages for managing the stakeholders carefully.

Stakeholder management reduces the risk of failure of a project.

Quality of a project can be improved by engaging the stakeholders.

Serious issues which can affect our project can be diminishing at early stage by engaging all the stakeholders.

Managing and identifying all the stakeholders is a costly process because every stakeholder has different demands and needs from other.

Managing all stakeholders is not easy it is really hard job to manage all stakeholders because every stokehold aspect something extra ordinary output from your project.

Conclusion:

After extensive study and research; researcher is able to draw a conclusion that stakeholders are important and integral part of an organisation and organisation cannot deny form carrying out stakeholder analyses in every stage of the project. Because organisation’s future depends on better stakeholder management if organisation fails to do so they will end up facing extreme pressure from stakeholders and they might lose their business too and project may fail and we have seen many examples in past.

Bjorn Andersen, T.F.L.E.O., 2008. Mapping work progress. 2nd ed. USA: Quality press.

Freeman, R.E (1984). “Strategic Management: A stakeholder Approach”. Boston,

MA: Pitman.

Glicken, J. (2000), Getting stakeholder participation ‘right’: a discussion of the participatory processes and possible pitfalls. Environmental Science and Policy, 3, 305-310.

Slocum, R., Wichhart, L., Rocheleau, D. and Thomas-Slayter, B. (eds) (1995) Power, Process and Participation. London: ITDG Publishing.

http://www.businessdictionary.com/definition/stakeholder.html [Accessed on 24th November 2012]

http://www.triplepundit.com/2009/04/purpose-vs-profit-stakeholder-management/ [Accessed on 24th November 2012]

http://www.projectsmart.co.uk/stakeholder-management.html [Accessed on 23rd November 2012]

http://www.triplepundit.com/2009/04/purpose-vs-profit-stakeholder-management/ [Accessed on 23rd November 2012]

A person, group of persons, or organization that has a direct or indirect stake in an organisation because it can affect or be affected by organizations action, objectives, polices. (Business dictionary, 2012)

Stakeholder engagement process:

The word stakeholder and engagement both have different meanings for different people therefore it is difficult to understand what people are trying to think and say about these words. These words are used together to define a procedure which is theoretical a transparent process

Stakeholder is only defined in a reference to a particular issue e.g. as a local resident in a particular area you may be a stakeholder in a decision about what will be the opening and closing timing of the restaurant. But you will not be a stakeholder in a decision about what kind of restaurant/food they will serve but health and local authority might a stakeholder in both decisions.

Many authors described this phrase in different way.

According to (Glicken, 2000) ‘A stakeholder is an individual or group influenced by and with an ability to significantly impact (positively or negatively) the topical area of interest.’ However, according to (Slocum et al, 1995) ‘Active involvement of people in making decisions about the implementation of processes programmes and projects which affect them.’

Freeman (1984) explains that any person or group of people who can directly or indirectly affect or can be affected by the organisation’s actions, objectives and policies. Shareholders including investors, owners, partners, directors, people owning shares or stock, banks, anyone having a financial stake in the business purchasers, consumers and end users.

Stakeholder engagement is the process used by an organisation to engage significant stakeholders for a clear purpose to attain accepted results and stakeholder engagement is the process used by an organisation to engage relevant stakeholders for a purpose to achieve accepted outcomes. It is now also known as a fundamental accountability tool, since it obliges an organisation to involve stakeholders in classifying, understanding and answering to sustainability issues and concerns, and to report, explain and be accountable to stakeholders for decisions, actions and performance.

Quality stakeholder engagement process should include:

Clearly define the scope and have an agreed decision making process;

Focus on issues material to the organisation and/or its stakeholders;

We need to identify the important stakeholder and their interest relating to our restaurant.

We need to assess the power and influence of stakeholders in connection to our restaurant.

Define appropriate project to each stakeholder and we need to identify the stakeholder’s risk relating to our restaurant.

Create opportunities for dialogue and be integral to organisational governance;

Have a process appropriate to the stakeholders engaged

Be timely; be transparent, flexible and responsive.

Stakeholder engagement must be rooted in the culture and main functions of the organisation. To accomplish this, this requires an assurance to the principles and incorporation of stakeholder engagement with organisational governance, strategy and operations. Through this assurance and incorporation, the outputs of stakeholder engagement lead to strategic and operational outcomes.

Whenever we start a project or business it is very important for us to identify key stakeholders and their type and also identify their interest relating to our business or project.

Different kind of stakeholders:

Usually stakeholders have three types

Primary stakeholder

Secondary stakeholder

Key stakeholder

Primary stakeholder:

A primary stakeholder includes any group of people or an organisation which are eventually affected by the actions of the organisation both in positively or negatively way. In our restaurant business primary stakeholders are customers, lenders, suppliers and owner of the building.

Secondary stakeholder:

Secondary stakeholders are those who could be indirectly affected by the actions of the organisations. In our restaurant business secondary stakeholders are city council and environmental authorities.

Key stakeholder:

Key stakeholders can belong to first two groups and these peoples or organisations can have substantial impact upon within our restaurant.

Key stakeholder includes;

City council

Customers

Suppliers

Lenders

Owner of the building

Environmental authorities and trade authorities.

The Importance of Meaningful Stakeholder Engagement:

Stakeholder engagement is premised on the concept that ‘those groups who can affect or are affected by the succession of an organisation’s purpose’ should be given the opportunity to observe and input into the expansion of decisions that affect them. In today’s society, if they are not actively sought out, sooner or later they may claim to be consulted.

Situations could arise when organisations do not aggressively engage but are forced to do so by the demands of society as a result of a crisis situation. In response, organisations hire crisis management procedures, and are often forced into a defensive negotiation with stakeholders, leading to a substantial and long lasting loss of reputation. This type of interface is often opposed and damaging of trust.

Meaningful engagements take place in organizations as many organizations are well aware of current changes in the wider society and how they pass on to organisational performance. A relation with stakeholders is a mean to manage the impact as a result of those changes, many of which are shaped due to vast negative impact of global economic downturn. Organisations can either seek to diminish risk through the use of stakeholder management, or through the use of meaningful stakeholder engagement exploit new trends to identify and establish new opportunities; the latter is characterised by a readiness to be open to change.

As with any other business process, engagement process should be systematic, logical and should be applied thoroughly. A process is provided by stakeholder engagement which takes in to account organisation from the starting point of planning and identifying objectives through to post monitoring and evaluation. This process is represented as a circle as it is constant where lessons are learned from past experience and will then shape the future planning and engagement.

Stakeholder mapping and their importance:

Stakeholder mapping is process of listing the entire stakeholders according to their interest and power or influence on a particular organisation. (Bjorn Andersen, 2008) Each stakeholder is different from other in terms of their power and their interest. Some stakeholders have more power and more interest in an organisation and some stakeholders have more power with less interest in an organisation. Therefore, stakeholder mapping provides us a framework which helps organisation in term of stakeholder management. By using stakeholder mapping organisation categorise each stakeholder in different category and then spend more time and money on those stakeholders who have more interests and more power and organisation also saves time by spending less time on those stakeholders who have less power and less interest.

Stakeholder’s Mapping

http://open.jorum.ac.uk/xmlui/bitstream/handle/123456789/650/Items/B324_1_004i.jpg

http://open.jorum.ac.uk

Key players:

Key players are those stakeholders who have more power and more interest in our business or organisation. In key players’ stakeholder management process organisation need to actively involve these stakeholder in almost in every part of the project. Because these are the stakeholders who have more power, influence and interest in our organisation. In our project suppliers, lenders and property owner has high power and high interest therefore, these stakeholders are key player in our project.

Keep satisfied:

These are the stakeholders who have less interest but more power in our organisation. Therefore, organisation always needs to try to keep these stakeholders satisfied at all the time and organisation always need to feed these stakeholders with the information which they need.

Keep informed:

These stakeholders have with high interests but low power. There is a very less chance that these stakeholders will create any trouble in our project, but these stakeholders have high interest in our project. Therefore, organisation always needs to try to spend relatively less time on this stakeholder and keep them satisfied. For example, local community and neighbourhood people who have most interests and low power and they cannot create any trouble but their interest’s level is quite high.

Minimal effort:

These are the peoples with less interests and low power. Organisation should need to spend less time and money on these stakeholders.

Understanding stakeholder:

Engagement process includes the understanding of the different stakeholders and also understanding their needs and demands. In this process we need to know how best we can engage all different stakeholders and how to communicate with them. We need to consider some key questions to find out how we can perform this process efficiently.

This key question includes;

What financial and non-financial interest they have?

We need to know if stakeholders go against our restaurant project then how we are going to manage their negative attitude towards our project?

What is their current judgment about our restaurant project?

What kind of information they require from us?

How we need to communicate with them?

To get the answer for all of the above questions we need to ask directly to the potential stakeholders. Stakeholders are quiet open about their opinion and they feel free to comment on an organisation’s policies and actions. By asking these questions and interacting with stakeholders helps organisations to build a strong relationship with the stakeholders which will help organisation in a long run. Being a project runner we need to ensure that stakeholders are aware that things will get better once the project is completed and there will be now extra financial cost or any other burden on them. If we don’t ensure them there will be resistance in future and this resistance could affect our project.

Stakeholder management:

Successful project requires a careful stakeholder management. Therefore, we need to ask questions who are the stakeholders? Stakeholder is any group/person or any organisation that has direct interest in our restaurant and they can be directly affected by the output of our restaurant. Therefore, it is necessary for us to understand the principles and issues which stakeholders have in order to address them and keep everyone on board for the duration of our restaurant project. (www.projectsmart.co.uk)

In stakeholder management process we need to identify our key stakeholders then we need to find out what’s their needs, demands, interest and power relating to our restaurant and then we need to know how to manage these stakeholders. Therefore, managing these stakeholders is different from managing other stakeholders. For example in our project of opening a restaurant on oxford road we have some stakeholder e.g. city council which could be directly affected by the output of our restaurant and if we affect this stakeholder our restaurant could be closed before it opens.

Purpose of the stakeholder management:

Purpose of stakeholder management is apparent however this idea has been ignored by most of the organisations. We need to consider all those stakeholders who can make an impact on our project in later period. In recent years we have noticed many examples that many organisation those who were ignoring their stakeholders now they are considering their stakeholders with more care and acting more responsibly towards their stakeholders. (www.triplepundit.com)

Fast-food giant Burger king and McDonald faced criticism for supporting the cutting of the Amazonian rain forest from beef suppliers. Now Burger king and McDonalds started to act responsibly by altering their policies and improving their CSR’s and they are reporting more carefully and they are taking care of their stakeholder’s relationship. (Buzz, 2012)

Advantages and disadvantages of stakeholder management:

An organisation can receive many advantages and disadvantages for managing the stakeholders carefully.

Stakeholder management reduces the risk of failure of a project.

Quality of a project can be improved by engaging the stakeholders.

Serious issues which can affect our project can be diminishing at early stage by engaging all the stakeholders.

Managing and identifying all the stakeholders is a costly process because every stakeholder has different demands and needs from other.

Managing all stakeholders is not easy it is really hard job to manage all stakeholders because every stokehold aspect something extra ordinary output from your project.

Conclusion:

After extensive study and research; researcher is able to draw a conclusion that stakeholders are important and integral part of an organisation and organisation cannot deny form carrying out stakeholder analyses in every stage of the project. Because organisation’s future depends on better stakeholder management if organisation fails to do so they will end up facing extreme pressure from stakeholders and they might lose their business too and project may fail and we have seen many examples in past.

Bjorn Andersen, T.F.L.E.O., 2008. Mapping work progress. 2nd ed. USA: Quality press.

Freeman, R.E (1984). “Strategic Management: A stakeholder Approach”. Boston,

MA: Pitman.

Glicken, J. (2000), Getting stakeholder participation ‘right’: a discussion of the participatory processes and possible pitfalls. Environmental Science and Policy, 3, 305-310.

Slocum, R., Wichhart, L., Rocheleau, D. and Thomas-Slayter, B. (eds) (1995) Power, Process and Participation. London: ITDG Publishing.

http://www.businessdictionary.com/definition/stakeholder.html [Accessed on 24th November 2012]

http://www.triplepundit.com/2009/04/purpose-vs-profit-stakeholder-management/ [Accessed on 24th November 2012]

http://www.projectsmart.co.uk/stakeholder-management.html [Accessed on 23rd November 2012]

http://www.triplepundit.com/2009/04/purpose-vs-profit-stakeholder-management/ [Accessed on 23rd November 2012]

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