Corporate Social Responsibility

Key stakeholders of CSR & their roles

 What is a stakeholder
• A stakeholder is any party, whether an
individual or group, who has an interest in
what a company is doing because they'll feel
the effects of its actions.
• Not all stakeholders have an interest for the
same reasons; it's common for stakeholders to
have different motivations, needs and
expectations.
• Many companies define their stakeholders
and keep them in consideration when they
develop programs and decide on projects.
• Stakeholders are important because their
satisfaction with the business or a particular
project or offering can make a big difference in
the success of the company.
• Corporate social responsibility includes the
responsible business organizations with
respect to stakeholders:
 Stakeholder vs. shareholder
• There is a distinct difference between a
stakeholder and a shareholder.
• A stakeholder is any individual, business or
entity that has a unique interest in the
business.
• A shareholder is someone who owns stock in a
company, which comes with part ownership
and most times, decision-making authority.
• Stakeholders usually don't have to invest any
money into the company to be stakeholders,
whereas shareholders do or they are individuals
who formed the business and gave themselves
shares in the company as its founders.
• It's important to note that an individual may be
both a stakeholder and a shareholder, like in the
case of an investor, but both terms are usually
dependent of each other.
 Stakeholders
• “Stakeholders are persons or groups that
have, or claim, ownership, rights, or interests
in a corporation and in its activities, past,
present, or future”.
 Types of stakeholders
• Stakeholders are divided into:
1. “primary stakeholders”
2. “secondary stakeholders”.
• The first group is the one fundamental for the
company, without its participation the
company cannot live;
• there is a strong interconnection between the
company and this group of stakeholders.
 Types of stakeholders…..
• The second group of stakeholders is defined as
“those who influence or affect, or are
influenced or affected by, the corporation, but
are not engaged in the transactions with the
corporation and are not essential for its
survival”.
• The corporation is independent from this
group.
 Types of stakeholders…..
• The company may adopt programmes to meet
primary stakeholders’ needs, but this might be
opposite to the ones of secondary
stakeholders (Clarkson, 1995).
Stakeholders identification theory
• According to Mitchell, Agle and Wood (1997),
Stakeholder Identification Theory focuses on
three attributes through which we can define
the saliency of stakeholders.
 Stakeholder attributes
• 1. Power:
• “ the ability of those who possess power to
bring about the outcomes they desire”
(Salancik and Pfeffer,1974: 3).
• Power is transitory, so it can be obtained and
then can be lost.
 Kinds of power
• Etzioni (1964) identifies three types of power
according to the resources used to exercise it:
1) Coercive power (based on physical resources),
2) Utilitarian power (based on material resources)
3) Normative power (based on symbolic
resources, as social symbols).
 Attributes…..
• 2. Legitimacy:
• Authors accept Schuman’s definition (1995)
as, “a generalized perception or assumption
that the actions of an entity are desirable,
proper, or appropriate within some socially
constructed system of norms, values, beliefs,
and definitions”.
• Legitimacy is seen as a “desirable social good”.
 Attributes….
• 3. Urgency:
• This attributes contributes to the dynamicity
of the model, which is static when considering
only power and legitimacy.
• According to Merriam-Webster dictionary is
defined as “ calling for immediate attention”
or “pressing”.
 Attributes …..
• Authors believe that urgency is present only
when two attributes are present:
– time sensitivity (the degree to which managerial
delay responding to the claim is unacceptable to
stakeholders)
– criticality (importance of the claim).
 Attributes…..
• These attributes are variable and can change
for any relationship between firm and
stakeholder;
• the presence of the attributes is not objective,
it’s a perception that multiple individuals
have;
• consciousness of possessing the attributes is
not always the case.
 Attributes …..
• “Power gains authority through legitimacy,
and it gains exercise through urgency”;
• power itself doesn’t guarantee a decisive role
in the relationship between firm and
stakeholder.
• “Legitimacy gains rights through power and
voice through urgency”, so it’s dependent on
the other two attributes.
 Attributes ….
• “Urgency” alone is not enough to assure high
consideration, while “in combination with
legitimacy, it promotes access to decision making
channels, and in combination with power, it
encourages one-sided stakeholder action.
• In combination with both, urgency triggers
reciprocal acknowledgement and action between
stakeholders and managers” (M., A., W., 1997)
Attributes
 Stakeholders
– shareholders,
– employees,
– customers, and
– suppliers),
– the state (local and national) institutions and
standards,
– the business as a responsible member of society in
which it operates
Key stakeholders in a business organisation

• Key stakeholders in a business organisation

include creditors, customers, directors,
employees, government (and its agencies),
owners (shareholders), suppliers, unions, and
the community from which the business
draws its resources
 Key stakeholders….
1. Customers
• Customers are some of the largest
stakeholders of a business because they are
directly impacted by the quality and
availability of a company's products or
services.
• If customers are unhappy with a company's
offerings, or their general customer service
abilities, it can directly affect sales.
 Customers …..
• Customers may care about how a company's
offerings improve their life or provide them
with something they want or need.
• Every business, whether they operate as
business-to-business or business-to-consumer,
has customers that they must work on
meeting expectations for.
 Customers …..
• One other group of customers to consider is
internal customers.
• These are the individuals who work for the
company but who are also going to benefit
from a particular project's success.
 Internal customers
• For example, a marketing team that is working on
a project to acquire more plots buying customers
can make a difference in the plots selling
department's goals based on their marketing
efforts.
• The employees in a plots selling department, who
may have certain goals to reach of their own,
might be particularly interested in the activities of
the marketing department as they work on this
specific project.
 Key stakeholders….
2. Investors
• Investors are especially interested in a
business because their investment relies on
the company's success.
• Investors are hoping for financial returns on
their investments, and most only invest their
money when they feel comfortable that they
will realize a return over a certain period of
time.
 Key stakeholders….
• They expect their invested capital to grow so they
can make money on their investment decision.
• Some investors are shareholders, in that the
money they put forth into the company secures
them a certain percentage share of the company
ownership.
• Other investors can include lenders, who may
loan money to the company if the business needs
it for expansion or to improve operations.
 Key stakeholders…..
3. Employees
• Employees are stakeholders in the company
because they rely on sound business decisions
from their executive team to have job security,
earn a fair salary, take advantage of helpful
benefits and go to work in a safe environment.
 Key stakeholders….
• If a business isn't doing well, this can impact
how an employee feels about a company, how
loyal they can remain to their employer and
their productivity level.
• It's also important to remember that top
executives of the company are also
stakeholders.
 Key stakeholders….
• They typically make key business decisions,
including how the business will expand and
which projects it'll take on.
• Their decisions can greatly impact current
business operations and the future of the
company.
• Plus, how they succeed at running the company
can make a difference in their reputation and
ability to secure additional opportunities.
 Key stakeholders….
4. Local community
• A community is a stakeholder on its own
because a company's actions can improve the
local community it operates within.
• A company's impact on a community can be
widespread because a business can bring with
it new jobs and more economic development.
 Key stakeholders….
• It's common for businesses that enter a
community to attract individuals who want to
work for the company and will plan a move to
the community if they get hired in a position,
which will naturally increase spending in the
community.
• A business that leaves a community where
they have previously established can affect the
community in the opposite way.
 Key stakeholders….
• Unemployment can increase if employees
choose not to work at another location within
the company, and this employment status can
also affect the economic development and
stability of a community.
 Key stakeholders….
5. Suppliers and partners
• Suppliers, partners, like contractors, and
vendors are stakeholders because they may
rely on the partnership with the company to
succeed as their own business.
• These stakeholders may be responsible for
business loans, employees' salaries and
operational costs.
 Key stakeholders …..
6. Government
• State and federal governments are also
company stakeholders.
• These entities collect different taxes from
businesses and benefit from their success.
 Key stakeholders…..
• Governments may collect sales tax, payroll tax
and income tax from the company based on
its profits.
• Governments may also have certain
regulations in place that a business must
follow, so government entities keep track of a
company's operations in that way.
 Stakeholder management tips
• Consider expectations
• It's important to know what each stakeholder
expects from the company or from an
individual project or program.
• It's only by understanding expectations that
you can find success in pleasing the
stakeholders and becoming successful in what
you're doing and trying to accomplish.
 Stakeholder management tips….
• If some expectations are unclear, ask the questions
you need to make sure you have complete
clarification.
• Know that each type of stakeholder may have
different expectations, so considering each is
crucial.
• For example, investors will probably expect a
certain level of financial return, while external
customers may expect a finished product or service
that helps a certain part of their lives.
 Stakeholder management tips….
• Manage expectations
• Once you understand expectations, then you
can work on managing them.
• Managing expectations involves informing
stakeholders of how a project will go and
continuing to keep them updated when a
situation occurs that relates to their
expectations.
 Stakeholders mgt tips….
• For example, if you have to expand a project's
timeline, it's important to communicate that
to stakeholders who may have expected
certain deliverables at specific times.
 Stakeholder management tips….
• Prioritize
• If there are some stakeholders whose role is
more important to the company's success than
others, prioritize your relationships with them.
• That may mean you're communicating with
them more, providing something extra to them
as a thank you for their role in the business or
project and acknowledging their contributions
to the success of the organization and its goals.
 Stakeholders management tips….
• Understand stakeholders
• Each stakeholder is different in their
motivations, needs, wants and how a business
or project affects them.
• Learn more about your stakeholders, including
their interests and personality characteristics.
• You should also understand how much each
stakeholder will participate in the business or
project and if any conflicts of interest exist.
 Stakeholders management tips….
• Establish goals
• Each project has certain goals that become
one way to measure success.
• It's important to establish goals at the
beginning of a project or regularly as a
business to make sure all stakeholders
understand the needs of the company and can
contribute as they will to its success.
 Stakeholders management tips….
• Ask for assistance
• Part of being familiar with your stakeholders is
being able to ask them for assistance in
reaching your business goals and, ultimately,
being able to deliver something to them that
they want or need.
 Stakeholders management tips….
• You can ask for assistance by conducting
surveys where you can learn more about your
customers, ask for feedback on a demo of a
product or listening to focus groups comprised
of people who are willing to share their
thoughts.
• Rather than just give updates to stakeholders,
involve them in your process as much as
you're able.
 Roles of stakeholders
• Taking a stakeholder approach to CSR means
that the main focus is on
– integration across stakeholders
and on
– practical managerial solutions that create value for
customers, employees, suppliers, communities,
and financiers.