Stakeholder Relationships

1. Stakeholder Relationships Designers appear not have a deep enough conceptualization of their domains to identify intuitive relationships. It seems they need help in realizing the full scope and interconnections within their domains [Anderson 2000] Dr. Ibrahim Elbeltagi

2. Outline • Direct and Indirect Stakeholder • Stakeholder Objectives • Stakeholder Attributes • Client management issues. • Managing expectations. • Managing suppliers. • A Relationship-Building Process. • Stakeholders: Management versus collaboration Dr. Ibrahim Elbeltagi

3. Direct Stakeholders • Customers • Shareholders • Creditors • Employees • Suppliers Dr. Ibrahim Elbeltagi

4. Indirect Stakeholders • The Community • Competitors • Stock Markets • The Government • Pressure Groups • Supra-national bodies • European Union Dr. Ibrahim Elbeltagi

5. Stakeholder Interests • It is often the case that individual stakeholders have an interest in more than one category • E.g. some people may be employees, shareholders and customers of the same organisation • It is likely that conflicts of interest will occur between the different stakeholders, both within and between the two categories identified Dr. Ibrahim Elbeltagi

6. Internal Stakeholders Formal power Informal power Control over strategic resources Involvement in implementation Possession of knowledge and skills Control over the environment Sources of stakeholder power based on Pfeffer (1981) • External Stakeholders • Control over strategic resources • Involvement in strategic implementation • Possession of knowledge and skills • Internal links Dr. Ibrahim Elbeltagi

7. Direct Stakeholders in IS • A definition - Those parties who benefit or otherwise from the way IS is managed and whose views need to be reconciled in establishing IS management principles in the organisation • Business Partners • Shareholders and executive management • Line management and systems users • Internal IT specialists • External IT suppliers Dr. Ibrahim Elbeltagi

8. Stakeholder Objectives • Business partners • To become more directly involved in the information systems of the organisation as the new strategic systems span organisational boundaries Dr. Ibrahim Elbeltagi

9. Stakeholder Objectives • Shareholders and executive management • Want to be sure that IS/IT investments overall are delivering benefits to the organisation and enable business targets to be achieved. • Top management have a direct input to make in defining the needs for executive information which enables the business to be controlled effectively at all times Dr. Ibrahim Elbeltagi

10. Stakeholder Objectives • Line management and systems users • Must not only ensure that the systems do what they are supposed to and that the intended business benefits are realised but also must understand their functions and relationships in the business to identify where potential benefits from IS lie. Dr. Ibrahim Elbeltagi

11. Stakeholder Objectives • Internal IT specialists • Normally have 2 objectives • Satisfying the needs of the organisation • Further their IT careers • Can cause conflict of loyalties if not effectively reconciled. • Development of skills can increase value of the individual but may not coincide with the organisation’s needs. • Overall IT management’s main concern is ensuring that they have the resources and technology to deliver the systems to the business Dr. Ibrahim Elbeltagi

12. Stakeholder Objectives • External IT suppliers • Want their products to be used effectively so that the business becomes more successful and buys more. • Also have a lot of knowledge which can be used as a resource to help the organisation make appropriate uses of IS and deliver the systems more effectively. • No IT supplier wants to be associated with a major systems failure which will reduced the probability of repeat business and may jeopardise its ability to sell to others. Dr. Ibrahim Elbeltagi

13. Stakeholder Attributes • Power • “The ability of those who possess power to bring about the outcomes they desire” (Salancick & Pfeffer, 1974) • Legitimacy • 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 (Suchman, 1995) Dr. Ibrahim Elbeltagi

14. Stakeholder Attributes • Urgency • “calling for immediate attention” • Based on time sensitivity and criticality • Stakeholder attributes are • Variable - not steady state • Socially constructed - not objective reality • Consciousness and wilful exercise may or may not be present Dr. Ibrahim Elbeltagi

15. Latent Stakeholders • Dormant Stakeholders • Attribute – Power • Do not have a legitimate relationship or an urgent claim • Their power remains unused. • Often possible to predict which dormant stakeholders may become salient – employees who have been sacked or laid off from an organisation Dr. Ibrahim Elbeltagi

16. Latent Stakeholders • Discretionary stakeholders • Possess the attribute of legitimacy • Have no power to influence the firm and no urgent claims • No pressure on managers to engage in an active relationship although managers can choose to do so. Dr. Ibrahim Elbeltagi

17. Latent Stakeholders • Demanding Stakeholders • Attribute – urgency • Have neither power nor legitimacy • Bothersome but not warranting more than passing management attention if any at all Dr. Ibrahim Elbeltagi

18. Expectant Stakeholders • Dominant stakeholders • Have power and legitimacy • Form the “dominant coalition” in the enterprise • Have some formal mechanism in place that acknowledges the importance of their relationship with the firm – e.g. corporate boards of directors generally include representatives of owners, significant creditors and community leaders. Dr. Ibrahim Elbeltagi

19. Expectant Stakeholders • Dependent stakeholders • Lack power but have urgent legitimate claims as “dependent” • Depend on others for the power necessary to carry out their will Dr. Ibrahim Elbeltagi

20. Expectant Stakeholders • Dangerous Stakeholders • Urgency and Power but lacking legitimacy • Likely to be coercive and possibly violent • Try to advance stakeholder claims using unlawful methods – e.g. wildcat strikes, employee sabotage, terrorism Dr. Ibrahim Elbeltagi

21. Stakeholder Influence Strategies • How do stakeholders try to act to influence the firm’s decision making and the firm’s behaviour? • Resource dependency theory • Withholding strategies (Direct/Indirect) • A stakeholder chooses not to allocate its resource • Usage strategies (Direct/Indirect • The stakeholder continues to supply a resource but with strings attached Dr. Ibrahim Elbeltagi

22. Firm-Stakeholder Relationships • Firm power • High Interdependence • Low Interdependence • Stakeholder power • Frooman suggests mapping the types of influence strategies onto the types of relationships – type of relationship is then a determinant of the choice of influence strategy Dr. Ibrahim Elbeltagi

23. Propositions • When a relationship is one of low interdependence, the stakeholder will choose an indirect withholding strategy to influence the firm • When the relationship is marked by firm power, the stakeholder will choose an indirect usage strategy to influence the firm Dr. Ibrahim Elbeltagi

24. Propositions • When the relationship is marked by stakeholder power, the stakeholder will choose a direct withholding strategy to influence the firm • When the relationship is one of high interdependence, the stakeholder will choose a direct usage strategy to influence the firm Dr. Ibrahim Elbeltagi

25. A Relationship-Building Process • The acronym "FOSTER" is used to represent the six stages of a relationship-building process. "F" is for establishing a solid foundation, "O" is for organizational alignment, "S" is for stakeholder strategy, "T" is for the process of building trust, "E" is for evaluation and "R" is for repeat, recognizing that the process of relationship-building is continuous. Dr. Ibrahim Elbeltagi

26. A Relationship-Building Process • Creating a Foundation: Social Mission, Values and Ethical Principles: clarifying what we think is important in life, our values, and our ethical beliefs, is a necessary prerequisite for building strong relationships with others. Dr. Ibrahim Elbeltagi

27. A Relationship-Building Process • Organizational Alignment: The alignment begins with a review of existing internal systems and structures to identify areas where changes are needed. • Essential systems to support collaboration include rewards and recognition; information systems to promote and support dialogue; 360 degree communication to foster cross-functional, multi-level internal partnerships; and training and mentoring to ensure staff have the necessary mindset and skill sets. Dr. Ibrahim Elbeltagi

28. A Relationship-Building Process • Develop a Stakeholder StrategyA stakeholder strategy is much like a plan for finding a mate. We assess our current relationships, decide on our priorities, "play the field" to narrow down prospects, and then hatch a plan for getting to know those prospective partners. • companies first inventory and assess their organization's network of stakeholder relationships, define gaps and identify future needs. Dr. Ibrahim Elbeltagi

29. A Relationship-Building Process • Build Trusting RelationshipsPartners must communicate effectively and resolve conflicts, especially about sensitive issues like distribution of rewards and the involvement of host organizations - the "in laws". • Evaluate and Improve RelationshipsEvery once in a while, it is a good idea to ask these questions, Are their needs being met? Are there problems that have been brewing but never talked about or resolved? Dr. Ibrahim Elbeltagi

30. Stakeholders: Management VersusCollaboration Dr. Ibrahim Elbeltagi

31. Summary • “Knowing how stakeholders may try to influence a firm is critical knowledge for any manager. After all, for managers to act strategically and plan the actions they intend their firm to take presupposes that they have some idea of how others in their environment will act.” (Frooman, 1999) Dr. Ibrahim Elbeltagi