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It is said that the value of a
business is all about how its
customers, suppliers, employees, financiers, communities, the
media, and managers interact and interface. And every business
must understand the importance of developing and nurturing
strong equations with customers. But increasingly, organizations
are moving beyond the traditional system of focusing and
managing only the customers. Increasingly, complex issues in the
business environment have started demanding the involvement of
all the stakeholders of an organization. Managing the expectations
of different stakeholders and maintaining a strong
relationship with them has become imperative for the success of any
organization. On the one hand, where customers expect innovative and
high-quality products with good services at attractive prices, on the other,
the regulatory authorities demand that their obligations must be fulfilled
in time. Similarly, when financial authorities claim taxes, levies
and fees, the general public demand environmentally friendly
policies and that the public welfare is taken into account. Organizations
today are working to satisfy all these stakeholders, who, at times,
have conflicting interests. It has become imperative to manage
the stakeholder network and the expectations of all the
stakeholders, sine negative or mismanaged stakeholder relationships can
lead to increased cost and lack of stakeholder acceptance or
buy-in, hampering the performance of the organization in the process.
The term, Stakeholder Relationship Management (SRM), is an
extension of the terms Customer Relationship Management (CRM) and
investor relationship management (shareholder relationship),
which concentrate only on the relationship of an enterprise with its
customers and shareholders. The ability to handle stakeholder relationships is
an essential part of managing a business, particularly when
different stakeholders have equal and opposite power, or when
the stakeholder has a significant power over the organization. The
process of stakeholder relationship management starts with
knowing the stakeholders and proceeds to analyzing them,
communicating with them, and managing their expectations.
A stakeholder can be defined as any person, group or organization
who has a claim on an organization's resources or output or is affected
by the output. Since the stakeholder has a stake in an organization,
he/it stands to lose or gain as a result of the organization's
activities. Knowing and understanding the stakeholders of the enterprise is
the first step in managing them. Stakeholders such as
customers, service users, media, politicians, pressure groups, partners,
suppliers, etc. may be external to the organization or internal,
which includes employees. The Exhibit shows how and to what extent
the stakeholders of an organization are associated with it. Table 1 depicts
the different categories of corporate stakeholders along with
their interest in the organization. |
