StakeholderRelationManagement JudithDipodiputro.

Stakeholders Relationship

Management

The state of things.

Stakeholder approach has been almost on everyone’s argument in Indonesia since the

1998 Reformasi.A phenomenal rise in interest although relatively few academic treatments of the subject.

Recent events, most notably those related to natural resources management partnerships between the Indonesian Government and private entities or to State Owned Enterprises, have created a watershed in discourse of business ethics.

Widely publicized debates more often than not put forward the stakeholder theory as

EVOLUTION

The traditional view

•

In the traditional view of the firm, which is the shareholder view, the

Stanford Research Institute (1963)

•

A stakeholder or stakeholders, as defined in its first usage in a 1963 internal memorandum, are “those groups without whose support the

R. Edward Freeman (1984)

•

A corporate stakeholder

can affect or be affected

by the actions of a business as a whole. The term has been broadened to include anyone who has an interest in a matter : employees, customers, suppliers, financiers,

communities, governmental bodies, political groups, trade associations, and trade unions.

•

Even

competitors are counted as stakeholders

, their status being derived from their capacity to affect the firm and its other morally

Grimble and Wellard (1996).

Post, Preston, Sachs (2002)

•

A person, group or organization that has interest or concdern in an organization. Stakeholders can affect or be affected by the organization’s actions, objectives and policies. Examples of key stakeholders are creditors, directors, employees, government (and its agencies), owners

(shareholders), suppliers, unions, and the community from which the business draws its resources.

•

Not all stakeholders are equal. A company’s customers are entitled to fair trading

practices but they are not entitled to the same consideration as the company’s employees.

Robert Allen Phillips (2003)

•

Moral foundation.

•

The principle of stakeholder fairness (Theory of Justice, John Rawls 1971) and distinction between normatively and derivatively legitimate stakeholders.

•

Real stakeholders, labelled stake-owners:

genuine stakeholders with a

legitimate stake

. The loyal partners for mutual benefits. Stake-owners

(Last decades of the 20

th

_century)

First decades of the 21

st

Century Indonesia

•

The word "stakeholder" has become more commonly used to mean a person or organization that has a

legitimate interest

in a project or

entity. In discussing the decision-making process for institutions—including large business corporations, government agencies, and non-profit

To Listen or Not To Hede

Key Assertion 1

•

Value can be best created by

trying to maximize joint outcomes

. Programs that satisfy both employees needs and stockholders needs are doubly valuable because they satisfy two legitimate sets of stakeholders.

Key Assertion 2

•

Supporters also take issue with the preeminent role given to stockholders by many business thinkers, especially in the past. The argument is that debt holders, employees, and suppliers also make contributions and take

risks

Key assertion 3

•

These normative arguments would matter little if stockholders had

Key Assertion 4

•

The

greatest value of a company is its image and brand

. By attempting to fulfill the needs and wants of many different people ranging from the local population and customers to their own employees and owners,

companies can prevent damage to their image and brand, prevent losing large amounts of sales and disgruntled customers, and prevent costly legal expenses.

•

While the stakeholder view has an increased cost, many firms have decided that the concept improves their image, increases sales, reduces the risks of liability for corporate negligence, and makes them less likely to be targeted by pressure

License to Operate:

The Context.

ODA (1995)

Primary Stakeholders

(Pemangku-kepentingan Utama)

Usually internal stakeholders, those that

engage in economic

transactions

with the business.

For example stockholders, customers, suppliers, creditors, and employees.

Secondary Stakeholders

(Pemangku-kepentingan Sekunder)

•

Usually external stakeholders, are those who - although they

do not

Excluded Stakeholders

(Pemangku-kepentingan Kontekstual)

Those such as children or the disinterested public, originally as they had no economic impact on business.

Anthropocentric perspective: general public may be recognized as stakeholders, others remain excluded.

Meanwhile plants, animals or even geology is not given a voice as stakeholders but often have an instrumental value in relation to human groups of

The pressure game of

“Stakeholder Interest”

Legitimate Stakeholder

Legitimacy Tools

•

AMDAL: Government Regulation No. 27/2012 replacing GR 27/1999. AMDAL has been applicable in Indonesia since 1982.

•

SO 26000 SR: “An individual or organization that has interest or concern on a decision related to the activity of the organization.”

•

AA1000 Stakeholder Engagement Standards:Stakeholder Management standards are

”A group that can influence and/or be influenced by the activities, products or services and the performance of the organization.”

•

UN Global Compact

•

The Triple Bottom-line

•

Local, Regional, National, International Laws and regulations

•

Jurisprudences

•

Signed documents (conventions, agreements, charters, Etc.)

Traps

•

Anything that is abstract and/or not written, whether cultural, anthropological, traditional, customary.

•

Politics related stakeholders is the big trap.

In a Nutshell

The Bottomline

•

In order to effectively engage with a community of stakeholders, the organization's

management needs to be aware of the stakeholders, understand their wants and expectations, understand their attitude (supportive, neutral or opposed), and be able to prioritize the

members of the overall community to focus the organization's scarce resources on the most significant stakeholders.

•

The holders of each separate kind of interest in the entity's affairs are called a constituency,so there may be a constituency of stockholders, a constituency of adjoining property owners, a constituency of banks the entity owns money to.

•

Stakeholder reciprocity could be an innovative criterion in the corporate governance debate as to who should be accorded representation on the board.

The state of mind

•

Communication is the key to the resolution of all problems

•

The Heart is the key in identifying core problems and rightful stakeholders.

•

Knowledge, data and logic is the key to finding the right solutions

•

Wisdom and commitment is the key to implementing those solutions by engaging

the rightful stakeholders.

Exercise

•

Government regulatory agencies

•

Government legislative bodies

•

Government tax-collecting agencies

•

Industry trade groups

•

Professional

associations

•

Prospective employees

•

Prospective customers

•

NGOs and other advocacy groups

•

Local communities

•

National communities

•

Public at Large (Global

Community)

•

Competitors

•

Schools

The Government is

always right,

because upon

them depends the

sustainability of

human beings on

earth.

Therefore the

Government

should always be

One can not know

what one has

never been, but

we know what we

Clash of

Civilizations

(Samuel Hunttington)

due to

lack of

recording and

dissemination

Compassion

.

Prejudice,

Arrogance,

A construction of thinking started in

400 BC (Socrates, Plato, Aristotle), currently (probably)

misunderstood

by many at this 21st

century, due to the

Terima Kasih