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Reputation Management – The role of Stakeholders

The term “stakeholder” may be an overused epitaph used in corporate brocReputation Management - The role of Stakeholders dec12 tn business 2hures, but what does it really mean writes, Deon Binneman.

I recently received an e-mail asking me for a modern definition of the word stakeholder. Immediately my ‘humour’ side kicked in, and I thought of vampires  `a-la Edward. This is a question that I ask at conferences and in my workshops, and inevitably I will get words such as someone or a group that has an interest, or position, or impact on an organisation. But being a stakeholder is so much more. So this was my response to my client’s request.

My definition: An Organisation derives its reputation from the way its performance, actions and behaviour is perceived by stakeholders. A Stakeholder is any group or individual that can affect or is affected by the performance, behaviour and actions of an organization.

These perceptions are influenced by the relationship building, communication and engagement practices of the organisation.  In the King 3 Code on Corporate Governance specific mention is made of the importance of stakeholder inclusivity (,i.e. that the legitimate interests and expectations of stakeholders are considered when deciding in the best interests of the company), stakeholder identification and determination of expectations and needs, the proactive management of stakeholder relationships, and that management should develop a strategy and formulate policies for the management of relationships with each stakeholder grouping.

What You Should Be Asking

Here are some typical questions that leaders should be asking about stakeholder and reputation management processes in their organisations:

  • Who are our stakeholders?
  • What are our stakeholders’ stakes?
  • What opportunities and challenges do stakeholders present?
  • What economic, legal, ethical, and social responsibilities does our organisation have towards our various stakeholders?
  • What strategies or actions should we take to best manage stakeholder challenges and opportunities?
  • Do you have a system for managing relationships with stakeholders?
  • How do you measure results? What metrics do you use to assess and gauge stakeholder relationships?
  • In a crisis how quickly can you communicate with your relevant stakeholders?
  • Do you know the various methods to engage with stakeholders and when not to use it?
  • Can you state how much you are spending on each stakeholder group and what your ROI is?
  • Have you developed a set of rules and practices on how best to manage the process of building stakeholder reputation with each stakeholder group?

A Different Definition

Another definition says that the term ‘stakeholder management’ refers to the development and implementation of organisational policies and practices (example decision-making) that take into account the goals and concerns of all relevant stakeholders.

Example: If you have employees in wheel-chairs, surely you should have wheelchair ramps. In SA, the Chinese community went to the highest Court to be included as part of Black Economic Empowerment legislation.

The  keywords here are ‘relevant’ (to the outcome or issue on hand) and the word ‘stake’.

The word ‘stake’ can mean an interest, a legal or economic position (example shareholding or ownership), moral (I do my best even though I am just a salaried employee), it could mean a public interest stake (Media – The public has a right to know) or it can even be emotional in nature (example – I cannot relocate, because my forefathers are buried here – symbolising an emotional connection with the land – often seen at Land Claims Court).

Inclusiveness means to ensure the inclusion of the full range of different stakeholders, including marginalised and vulnerable groups.

Relevance – Include only relevant stakeholders – those who have a significant stake in the process (i.e., not everyone is included).

Remember gender sensitivity. Both women and men should have equal access within the participatory decision making process (and never forget transsexuals as well…real inclusiveness).

If you want to unpack it further:

  • A stakeholder is any group or individual who can affect or is affected by an organisation’s impact or behaviour – I saw this on a Body Shop delivery truck in Singapore. Definition based on Friedman’s work
  • Those who are affected by a particular issue, incident or programme;
  • Those who have information, knowledge, resources or positions which are relevant to the issue;
  • Those who have some control over the outcome of the issue.

OK, so what does the above teach us:

  1. A Stakeholder can be a group or individual (example – a blogger)
  2. Stakeholder Profiling is contextual and has to be done EVERY TIME, a situation or issue change. Example – I may decide to become active over certain issues but stay dormant on others. THUS stakeholders can change positions.

Read this article for more clarity: http://deonbinneman.com/2012/05/21/understanding-analysing-stakeholder-positions/.