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2008

[MANAGEMENT CONSULTANCY- STAKEHOLDER ENGAGEMENT] Present by: Munazza Akhter Zakaria


Table of Contents Introduction ...................................................................................................................................... 2 Part 1: Literature review of Stakeholder ............................................................................................ 2 Concept of Stakeholder ................................................................................................................. 2 Stakeholders and their interest ...................................................................................................... 3 Why pay attention to stakeholders? .............................................................................................. 4 What is stakeholder analysis? ........................................................................................................ 4 How stakeholders can be influenced.............................................................................................. 4 What is a stakeholder mapping and how it’s related to influence? ................................................. 5 Part 2: Introduction of Charity Estate Case ........................................................................................ 8 Description of Estate Charity ......................................................................................................... 8 Goal and movement of a Charity Estate ......................................................................................... 8 Classification of Charity Estate ....................................................................................................... 8 Identifying the Key Stakeholder of the Charity Estate..................................................................... 9 Charity Estate Stakeholders mapping and influences ..................................................................... 9 Recommendation ............................................................................................................................ 10 Conclusion....................................................................................................................................... 11 References ...................................................................................................................................... 12 Bibliography .................................................................................................................................... 12

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Defining the meaning of Stakeholder Interest, Power Map, Legitimacy and Urgency Introduction In 1984, Freeman defines stakeholders as “any group or individual who can affect or is affected by the achievement of the organization objectives”. (Andrew L. Friedman and Samantha Miles (2006). Stakeholder engagements define as a relationship builder with internal and external stakeholder. It also wants to make sure their collaboration and alignment relationships between the concerned parties. In simply the way we say stakeholder its means risk owner. As I mention above that variety of individuals and groups have an interest in the organization and main interest own project outcome. For example; shareholders' interest owns their return on investment and risk, government in payment of taxes, lawful operation, managers own their salary, advancement extra. In this circumstance, we have to identify key stakeholder of any organization to analysis whole stakeholder portfolio. In this assignment, into part 1 we are going to explain the stakeholder theories, who are they, why we need them, how to identify them, why they called key players, how to analyze their interest and power mapping and defining the Power, Legitimacy and Urgency. In 2nd part we are going to analysis a project case by using all stakeholders’ tools

Part 1: Literature review of Stakeholder Concept of Stakeholder “A diversity of individuals and groups has an attention in the organization and the way in which it is administered and those individuals and groups are categorized as the stakeholder” Andrew L. Friedman and Samantha Miles (2006), “Stakeholders-theory and practice” in this book presents a summary of fifty-five definition of stakeholder. The earliest definition is often credited to an interesting memo produced in 1963 by the Stanford Research Institute “Those groups without whose support the organization would case to exist”. In 2003, Phillips defines stakeholders as – “normative stakeholders: for whose benefits the firm should be managed. Derivative stakeholders: potential to affect the organization and its normative stakeholders”. The most common and simple definition is Stakeholder: an individual or group who has a stake in what the organization does or how it performs. E.g.: Employers, managers, shareholders, Employees, STAKEHOLDER ENGAGEMENT


Unions, Investors, banks, Customers, suppliers, Local community, Local and national government etc.

Stakeholders and their interest The notion of stakeholder extends well beyond the shareholders, or owners of the company, to include mangoes, employees, customers, suppliers, creditors, the local community and the government. Each stakeholder has a different type of interest in the company, for instant shareholder concerned with the return on their investment and the safety of their capital and similar way customer concerned about the quality of the products and services. Table 1 represent the various outlines of stakeholders and their interest. Stakeholders and their interests Stakeholders Shareholders

Interests Return on investment Risk

Managers

Salary Advancement

Employees

Salary Advancement Security Fair treatment

Suppliers

Prompt payment Repeat orders Relative value for money Quality Availability

Customers

Creditors

Cash flow Financial stability

Local community

Lack of negative externalities Employment prospects Payment of taxes Lawful operation

Government

Table1: Stakeholders and their interest

The main important point of this classification is that the interests of the different stakeholders are completely different. This raises the possibility of conflicts of interest; therefore the issue of stakeholder influence needs to be practiced in more detail. Before analysis stakeholder interests and expectations there are two important points need to be addressed: Which interests are most important The influence which stakeholders have on the operation of the company

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Why pay attention to stakeholders? An individual judgement can be affected by whole groups, for these concerns each stakeholder’s priorities important for every organization. As we concerned those shareholders provide the capital for the company and if the company doesn’t not efficiently performing then shareholders will withdraw their funds. So far as the company needs to be recognized that shareholders that shareholders' interest are the highest priority stakeholders, and they are playing key role in organization with wealth power. Similarly managers, employees, suppliers, customers, creditors, local community, and government each sector has to provide their priorities on the basis of their importance. Shareholders and government interests for any project, or organization playing key major role with their highest priority interests.

What is stakeholder analysis? Stakeholder Analysis identifies the ways in which stakeholders may influence the organization or may be influenced by its activities, as well as their attitude towards the organization and its targets. (12 manage.com [Online]) To identify a key project stakeholder, an assessment of their interest, and the ways in which these interests affect project riskiness and possibility. We also have to identify the key and primary stakeholders of the project.

who "influence" or has an interest in the issue? Who's livelihoods are indirectly affected? Who's livelihoods are directly affected? Core Issue Stakeholder

Stakeholder

Stakeholder

Figure 1: Identifying Stakeholders Circle

However primary stakeholders are those ultimately affected, either positively (beneficiaries) or negatively (for example, those involuntarily resettled). Secondary stakeholders are the intermediaries in the aid delivery process. This definition of stakeholders includes both winners and losers, and those involved or excluded from decision-making processes. Key stakeholders are those who can significantly influence, or are important to the success of the project (Euforic.org [Online]).

How stakeholders can be influenced By means of description, Stakeholders have influence, both positive and negative. In this purpose Organization needs to be aware of each steps and able to mange their influence effectively. In theory some stakeholders should have a little interest in the company; the subsistence of legislative, STAKEHOLDER ENGAGEMENT


institutional and historical factors can permeate stakeholders with s significant degree of influence. For example, a strong trade union can result in employees having a significant impact on major company decisions (Rappaprt A (1986) creating shareholder value, the free press).

What is a stakeholder mapping and how it’s related to influence? To understand the organization's operations and its potential changes, the influence of the individual stakeholders needs to be identified and prioritized. For this instant, to identify the stakeholder influence a Stakeholder Mapping mapping tool is used for Stakeholder Influence Priority doing examine and analysis Shareholders (Family) High High the relative influence that Managers Low High different individuals and Employees High Low Low High groups have over decision- Existing Customers Suppliers Low High making. Table 2: The stakeholder map

Supposed that a corporation which is family owned and they family maintains a close control of business, uses mostly unionized labor and supplies a single customer, one of the owners is currently considering moving into new markets, the stakeholder map relating to the potential track of action might appear as follows: In table 2 we identify that the potential move into new markets can then be considered in the light of the priorities attributed to and the influence wielded by stakeholders, this form of mapping makes it possible to focus on those stakeholders who are likely to have a major influence on successful change. For example, in this case while employees have a low priority they have a potentially high influence on the outcome.

Power/Dynamism Matrix Dynamism Low

High

Low A Fewer problem

B Unpredictable

Power High

C Power full but predictable

D Greatest Danger or opportunity

Figure 2: Power/Dynamism Matrix Map Garder et al (1986)

However, there is another model of stakeholder maps which is called the Power/Dynamism matrix. This stakeholder map categorizes stakeholders in relation to the power that they hold and the STAKEHOLDER ENGAGEMENT


vitality of their attitude. The Power / Dynamism Map can be used to determine where political efforts should be focused during the development of new strategies. Above figure 2 The Power/Dynamism Matrix Map researcher analysis that the stakeholders in group A and B are the easiest to deal with. The stakeholders in group C are important, because they are powerful. However their dynamism is low, so their stance is predictable and their expectations can often be met in a relatively easy manner. Stakeholders in group D should have the most management attention, because they are powerful and their stance is difficult to predict. They can sometimes be dealt with by testing out new strategies with them before final decisions are made. (12 manage.com [Online]) Another example is the Power / Interest Matrix. It also classifies stakeholders in relation to the power that they hold and the extent to which they are likely to show interest in the strategies of the organization. The Power / Interest Map can be used to point out what type of affiliation the organization should have with each of the groups.

Power/Interest Matrix Interest Low

High

Low A Key Player

B Keep Satisfied

Power

High

C

D

keep informed

Minimal Effort

Figure 3: Power/Interest Matrix Map Garder et al (1986)

In figure 3 we can see the clear vision that the stakeholders in group A require only minimal effort and monitoring, in group B should be kept informed. They can be important to influence the more powerful stakeholders, in group C are powerful, but their level of interest in the strategies of the organization is low. They are generally relatively passive, but may suddenly emerge as a result of certain events, moving to group D on that issue. They should be kept satisfied and in group D are both powerful and highly interested in the strategies of the organization. The acceptability of strategies to these key players should be an important consideration in the evaluation of new strategies. (12 manage.com [Online]) An additional there is another Stakeholder map which represents the target appropriate action.

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In this figure: 4 X-axis represents a rating of the stakeholders’ support for the initiative A scale of -5 to +5 usually works well, Strength of relationship: where 0 represents Involvem neutrality and the Y-axis Strong ent represents a rating of the Weak stakeholder involvement Size of bubble= degree of influence with the initiative. A scale of Y A 0 to 5 usually works well, where 0 represents neutrality.

Stakeholder here is strongly against the change, highly involved and influential

Stakeholder here is moderately in favour of change, but not very involved or influential

The bubble size corresponds B to the relative influence the stakeholder has in the organization; high, medium -5 Against the change -5 Against the change and low are sufficient and Lines are used to link stakeholders together to reflect Figure: 4 A stakeholders Map their relationships The thickness of the line represents the strength of the relationship (thick=strong). A more recent Stakeholder Mapping model is the Power, Legitimacy and Urgency Model described by Mitchell, Agle and Wood (1997, 1999). This model maps stakeholder behavior into 7 types, depending on the combination of three characteristics: The power of the stakeholder to influence the organization Legitimacy of the relationship and actions of the stakeholder with the organization in terms of desirability, properness or

Figure 5: Power, Legitimacy and Urgency

appropriateness.

The urgency of the requirements being set for the organization by a stakeholder in terms of criticality and time-sensitivity for the stakeholder.

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Part 2: Introduction of Charity Estate Case Description of Estate Charity Currently in the UK a large scale of non-profitable organization, involve in ecotourism or estate development business. In this case each charity or estate of non government organizations has their own strategy plan with different organizational structure and its reflective of their own community’s view of tourism, its promotion and ongoing development. The support the organization receives from visitor-related businesses and the degree to which the local authority chooses to support and invest in the generic promotion of the region to attract visitor spend. The charity is based on locality, are overall participator are linked into the wider local areas.

Goal and movement of a Charity Estate Key goals of Charity tourism or ecotourism are: To grow international and domestic visitor expenditure in the local areas, to provide sustainable, economic, environmental, social, energy conservation, recycling, volunteering, and collaborating with other organizations in the locality and cultural benefits to the local community. Preservation and promotion of local cultural and traditional elements To increase visitor numbers, length of stay and visitor spending by working with local Tourism to raise the profile To recognize the needs and desire of visitors, ensure that these expectations are satisfied, and marketing promises delivered

Classification of Charity Estate The charity managed the estate with a team of 12 staff and an increasing number of volunteers. The latter are not employees as such but they do they work together with full time staff. The charity has an estate manager, four administrative staff, and seven wardens responsible for the maintenance of access routes and the upkeep of the countryside. The wardens work in cooperation with the local

Charity State Manager

Finance Manager

Volunteers

Human resource manager

7 Wardens work in co-operation

Implementation and Development/IT manager

Marketing /Promotional Manager

Volunteers

Volunteers Volunteers

Local farmers and Enforcement Agencies

Figure 5: Organizational Structure Chart of Charity Estate

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farmers and the enforcement agencies. All additional services are contracted out or bought in from the regional HQ of the charity.

Identifying the Key Stakeholder of the Charity Estate

Horse Riders

The purpose of this strategy is understood stakeholder groups and their key interests and powers, issues, objective and strategies to implement by Charity Estate.

Members of the Charity

Walkers Local Hoteliers

Heath Users

Residents of towns

Beach Users

The Charity Estate

As we know that each stakeholders playing an important key role in the institutional development of the Charity Estate, and contributing its performances to serve excellent services to the final consumer.

Local Farmers

Inhabitants

Tourists

Government Local Residents

Charity Estate Stakeholders mapping and influences Power/Interest Matrix

Fundraising Media

Figure 6: Key Stakeholder of Charity Estate

Interest

Low

High

Key Player

Low

Charity Estate Managment Estate Resources Owner

Keep Satisfied Local Resident Local Farmer Local Hotelies

Governmnet

Power High

keep informed Local metorpolis Local Market Government

Minimal Effort Charity Estate Staff Small User Customers

Figure 4: Power/Interest Matrix Map of Charity Estate Stakeholders

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SWOT Analysis Strengths

Weaknesses

Cooperative skill and expertise of Charity staff and managers

Lack of quality management systems in charity

Strength of competitiveness driving modernization and best practice by many Stakeholders

Uneven financial support base with closeminded influences

Strong local community connection and good communication relation ship which make strong bond

Non payment benefit responsibilities for stress levels

Providing huge job place for local, national and countryside people

Low performance Stakeholders personal interests and powers interruption

Charging rates is similar as like commercial rate SWOT Threat Opportunities Positive early stakeholder’s feedbacks on recent development strategy initiatives Metropolis support for Charity Estate initiatives contribution of 3000 citizens and 12 market towns for develop national strategy implementation DRecreation and monitoring public playground and parks plan

Increasing stakeholder expectations of Charity Estate role and function scope, unmatched by resources

Incompatible capability and quality of citizen worker Lack of understanding of tourism in local government aggravate by local government election cycle Increasing competition for the drive market Threat of terrorism in UK

Increasing number new job placement and voluntaries work help to develop key skills peoples in a particular sector. Figure 4: SWOT analysis of Charity Estate

Recommendation Create and tribute documented partnership mechanisms with Local Government Keep good communicate relationship with local and Nationwide government Operate as a planner of research projects, including securing and administering funding for these. Provide basic information to investors and stakeholders on the requirement legislation act STAKEHOLDER ENGAGEMENT


Set up and preserve a record of Charity Estate information including structure, governance, funding, resource allocation, human resources and activity areas. Establish relationships with relevant overseas organizations to maintain a knowledge and contact database of global best practice. Develop best practice resources for Charity estate ecotourism operations. Work with Local Government UK on best practice resources for Charity estate ecotourism governance. Maintain national destination marketing strategy Facilitate joint marketing initiatives for stakeholders Develop operational partnership protocols with Tourism stakeholders Maintain a resource of regional identity and positioning information to facilitate informed decisions on regional differentiation to increase the appeal for international and domestic visitors to explore the regions more widely.

Conclusion Tourism is the world’s biggest industry. It accounts for more than 10% of total employment, 11% of global GDP. (Ramsar.org [Online] (Cite June 29, 2008) Available from <URL: http://www.ramsar.org>). Economist had expected that in the year 2020 total tourist trips are predicted to increase to 1.6 billion. Introducing “Ecotourism” as a national charitable estate for local government it is a quite difficult and risk task. To cover up their financial resource for charity cost they convert their estate resource as an investment portfolio. The national management of the charity is creating a new vision for its organization based upon moving from “transactions that are financial “to “transactions that are emotional”. The basis expectation for charitable estate is simple to gain money to running paddle cycle of charity tasks, Main key point we have to remember that development of countryside increase the economic growth of whole nations and provide excellent profitable feedback results for stakeholders and local people’s benefits by getting new employment facilities. However, stakeholder includes everyone with a vital interest in a project, in this reason they are the heart of a successful project and the heart of successful project management involves satisfaction and expectation of each stakeholder. There are priorities and influence and power and interest make a possible to run and rebuild a new project. So when we going to do any new project first work should have to find out the key stakeholder of the project by using the analytical tools of stakeholders.

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References Andrew L. Friedman and Samantha Miles (2006), “Stakeholders-theory and practice” published by Oxford University press Inc, New York, page 4). 12 manage.com [Online] (Cite June 30, 2008) Available from <URL: http://12manage.com> Educ.queensu.ca[Online] (Cite June 30, 2008) Available from <URL:http://educ.queensu.ca/~russellt/howteach/schon87.htm>. Ramsar.org [Online] (Cite June 230 2008) Available from <URL: http://www.ramsar.org>)

Bibliography Bob Grarrat (1995),” Developing Strategic Thought- Rediscovering the art of directiongiving”, published by McGraw Hill Book Company Eric Verzuh (2008), “The fast forward MBA in Project Management”, edition 3rd, John Wiley & Son, Inc. Andrew Holmes (2002), “The Chameleon Consultant- culturally intelligent consultancy, published by Gower publishing limited Richard S. Handscombe, Philip A. Norman (1993), “Strategic Leadership- Managing the Missing Links” 2nd edition, published by McGraw Hill Book Company Schendel, D (1992)”Introduction to the summer 19994 special issue- Strategy: search for new paradigms” Strategic Management Journal, Volume: 15 (special issue) pp 15 Gerry Johnson and Kevan Scholes (2002), “ Exploring Corporate Strategy”, 5th edition, Financial Times, Prentice Hall Imprint, page 10) Peter Cockman, Bill Evan and Peter Reynolds (1999), “Consulting for real people- a clientcentered approach for change agents and leaders”, edition 2nd, published by McGraw-Hill publishing company

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Defining the meaning of Stakeholder Interest, Power Map, Legitimacy and Urgency