Know your stakeholders and know how to handle them

Organisations rely on government and public opinion, and they need to be seen as ‘legitimate’ by stakeholders if they hope to survive. But how do you make sure you are communicating with these different groups in the right way?

But why bother communicating with stakeholders?

Corporate communications is all about protecting your organisation’s reputation. You do this by communicating with stakeholders and engaging in stakeholder management. There are two broad reasons for doing this:

  • Instrumental – to improve profits, reduce risks. For example, adopting environmentally friendly business practices may make customers choose your products over those of a non-environmentally friendly company, thus increasing your profits.
  • Normative – the interests of the stakeholders have intrinsic value, regardless of any effect they have on the organisation’s performance. For example, it is morally wrong to pay workers extremely low wages, even though by doing so you would boost the company’s profits.

These reasons are not mutually exclusive. For example, you might want to pay suppliers more for normative reasons, but your ethical business practices may attract more customers and boost profitability as a result.

So there are plenty of reasons for taking an interest in your stakeholders, but how do you go about doing it?

Step 1: Categorise your stakeholders

You need to know who you’re dealing with. Sort your stakeholders by the amount of power they hold over your business and the level of interest they take in it. The needs of stakeholders become more urgent to the organisation the more power and interest they have, because then they have potential to become more damaging to the business than a stakeholder with less power and interest.

Stakeholders can be sorted into four broad groups:

  • High power, high interest. For example, powerful shareholders demanding organisation change
  • High power, low interest. For example, government organisations (although their interest could quickly change to high if your company breaks the law!)
  • Low power, high interest. For example, a lone protester
  • Low power, low interest. For example, residents from the community where the organisation operates, provided they don’t have any issues with the organisation. Their interest could quickly be piqued if a scandal breaks.

Stakeholders from these different groups need to be treated in different ways. But which approach should you take for each kind of stakeholder?

Step 2: Use the right communication strategy for each group

Once you have sorted out your stakeholders and know who you’re dealing with, give them the information they are interested in through a means appropriate for their level of power and interest.

High power, high interest

Strategy: Dialogue

How: Involving stakeholders from an early stage in the organisation’s plans, solving problems together through consultation and debate.

Why: To share opinions and reach an understanding that is beneficial on both sides.

High power, low interest

Strategy: Keep satisfied

How: Provide these stakeholders with just enough information to keep them happy, without bombarding them with details irrelevant to them.

Why: To ensure that these stakeholders do not become unhappy with the organisation’s operations and become a high power, high interest stakeholder that could jeopardise the organisation’s reputation.

Low power, high interest

Strategy: Information (if interest is positive) or persuade (if interest is negative)

How: Press releases, reports, newsletters, corporate advertising (advertising that focuses on the organisation, rather than particular products)

Why: These stakeholders need the information that they are interested in, but they don’t have the power to justify a more consultative approach. This strategy can also go some way towards helping the stakeholders understand the decisions the organisation has made.

Low power, low interest

Strategy: Monitor

How: Keep an eye on press and media, but don’t spend too much energy on these stakeholders.

Why: These stakeholders are unlikely to affect the organisation in their present state, but they could soon take a greater interest in the organisation if scandal breaks!

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