Stress-testing Stakeholders Models in terms of Social Media

Virtually all businesses and organisations operate within a complex system of interests and influences. It is therefore paramount for management to assess and evaluate these external forces in order to adjust them with corporate objectives. Individuals and groups who depend on the organization to fulfill their own goals and on whom, in turn, the organization depends, are called stakeholders, or publics, as others may like to call them.

But much as the words are used interchangeably, they are, to an extent, different.  Authors Grunig and Repper (1992) describe the difference by saying ‘People are stakeholders because they are in a category affected by decisions of an organisation or if their decision affects the organisation. Many people in a category of stakeholders – such as employees or residents of a community – are passive. The stakeholders who are or become more aware and active can be described as publics.’

The PR gurus go on to say that ‘Publics form when stakeholders recognise one or more of the consequences (of the behaviour of the organisation) as a problem and organise to do something about it or them’.  Davis (2004) points out that ‘publics sound more important than stakeholders’.

He goes on to say that some groups, for example pressure and cause-related groups, do not form out of a stakeholder mass: they exist as publics immediately because, by definition, they are active.

In other words, he is saying publics have an importance attached to them because of their specific interest and power, current and potential, while for stakeholders the levels of interest and influence are relatively lower and more generalised.

However, in as far as making corporate decisions is concerned, it is necessary to know about the an influence. The advent of social media means that when identifying stakeholders it is necessary to have a look at informal and indirect relationships too, and not just to focus on the formal structure of the organization.

A useful model for this purpose is to visualize the stakeholder environment as a set of inner and outer circles below. The inner circles stand for the most important stakeholders who have the highest influence.

The stakeholder environment

On top of analyzing stakeholder power in terms of their ability to influence people and developments, it is also necessary to evaluate the extent to which stakeholders exert their power. The power/interest matrix therefore, is a useful tool for evaluation the expectations and the impact of particular stakeholders.

The matrix generally measures  the interests stakeholder groups have to impress and if they have the means and power to do so.

Stakeholders in sector A neither do not have a high own interest in corporate plans nor do they have to power to exert much impact. Organizations should keep these groups informed to a lesser extent, but should not invest too much effort into them.

Stakeholders in Sector B do have a high interest in the corporation and its actions. However, they have limited means to influence things. Despite their low power, such stakeholders could be valuable and it is advisable to keep them informed about the issues they are interested in.

The relationship with stakeholders in Sector C could be difficult. Institutional investors or legislative bodies are normally in this sector. They behave passively most of the time and show a low interest in corporate affairs. Despite that, they can exert an enormous impact on the organization, and it is necessary to involve them according to their interests.

The most important stakeholders are those with high interests and high power, to be found in sector D. They have to be involved in all relevant developments.

However, the coming in of social media brings levels the playing field and hence gives an opportunity to for everyone to follow what is happening and hence to access similar information. Eventually, the less interested become more interested and hence acquire some power. Thus, such a strategy allows to form new alliances and to shift power

This on the other hand could be a threat because apart from easily opening up to opponents, some stakeholders still hold the power and ought to be treated as such. They need to have access to some not-for-public-consumption information.  

Nevertheless, all organisations need is to be proactive; engage with key players through an open dialogue (through social media) and keep them satisfied by providing them relevant information and taking into account their feedback on various issues.  

Moreover, this type of analysis can provides opportunity to sub-divide larger stakeholder groups into smaller groups. These sub-groups could be treated differently in order to meet their individual needs and to get their support.

References:

The manager.org

Tench, R. & Yeomans, L. (2006). Exploring Public Relations. England: Pearson Education Limited