Answer to Question #240030 in Management for Khwisti

Question

Assuming that you are a stakeholder management consultant to a new mine which has been established in Mpumalanga province and you need to engage with stakeholders so that a community development project you are planning can be successfully initatiated and completed. Provide detailed answers to the following questions:

1.    Define a “stake” and a “stakeholder” and describe the strategic, multifiduciary and synthesis approaches. (25)

2.    Identify and categorise your key stakeholders in terms of primary and secondary, as well as social and non-social stakeholders. (25)

3.    Why are stakeholder relationships important, and what challenges and opportunities are presented by stakeholders? (25)

4.    Explain the “Clarkson Principles” of stakeholder management and how these impact on an organisation. (25)

Answer 1

Stakeholders

Stakes demonstrate the association between a business venture where they are the existence of stakes and the stakeholders. The stakeholder invests his capital in a particular organization putting his investment at risk. Therefore, the stake is a portion of the interest the stakeholder is given by risking their investment to keep it in the business. On the other hand, a stakeholder is a party that possesses a particular interest in a business venture where the organization can affect it. The main stakeholders in a general business organization are its employees, suppliers, customers, and investors.

 

The Clarkson Principles of Stakeholder Management

Principle 1: Managers should acknowledge and actively monitor the concerns of all legitimate stakeholders, and should take their interests appropriately into account in decision-making and operations.

Principle 2: Managers should listen to and openly communicate with stakeholders about their respective concerns and contributions, and about the risks that they assume because of their involvement with the corporation.

 Principle 3: Managers should adopt processes and modes of behavior that are sensitive to the concerns and capabilities of each stakeholder constituency.

Principle 4: Managers should recognize the interdependence of efforts and rewards among stakeholders, and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity among them, taking into account their respective risks and vulnerabilities.

 Principle 5: Managers should work cooperatively with other entities, both public and private, to insure that risks and harms arising from corporate activities are minimized and, where they cannot be avoided, appropriately compensated.

 Principle 6: Managers should avoid altogether activities that might jeopardize inalienable human rights (e.g., the right to life) or give rise to risks which, if clearly understood, would be patently unacceptable to relevant stakeholders.

 Principle 7: Managers should acknowledge the potential conflicts between (a) their own role as corporate stakeholders, and (b) their legal and moral responsibilities for the interests of all stakeholders, and should address such conflicts through open communication, appropriate reporting and incentive systems and, where necessary, third party review.