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Stakeholder Relations and

Corporate Social Responsibility


Wilson T.P. Siahaan
Corporate Communication
Strategic Public Relations Planning
e-Learning Program Batch 4
2016

Key Concepts
Stakeholders
Stakeholder Analysis
Communication Techniques
Stakeholder Relations
Corporate Reputation
Organizational Trust
Corporate Social Responsibility
CSR Reporting

What is Stakeholder?
Edward Freeman in his a book Strategic Management: A
Stakeholder Approach (1984): Stakeholder is any group or
individual who can affect or is affected by the achievements
of the organizations objectives.
Stakeholders can influence the environment of an
organization and then financial and operating performance.
Thus, effective management of stakeholder relations is
growing as a key focus of PR and organization activity.
Stakeholders may change overtime and their importance
can vary from issue to issue and from time to time (Mitchell,
Agle & Wood, 1997).
Stakeholder PUBLIC, but sometime the distinctions are
blurred and can be used interchangeably.

Typical Stakeholders

Employees, prospective employees and retired employees


Chairman, directors, CEO and various management levels
Local, provincial and national government institutions
Global, national, local news media & social media
Shareholders, investors, stockbrokers
Education institutions, experts, opinion-makers
Community members and leaders
Customers
Competitors
NGOs, interest groups, activists
Unions and related labor groups

Each stakeholder might


have different interests

Require Effective
Communication, incl.
Segmentation of
Messages

PR Challenge &
Opportunity

Stakeholder Analysis & Strategies


Some criteria to assess strategic value of
stakeholders (Scholes & James, 1997): (1)
Influence; (2) Impacts; (3) Alignment.
Mahon, 1997: Matrix to assess strategic value of
stakeholders a tool to evaluate the importance
of individual or groups of stakeholders to a
certain issue:
Develop list of criteria, critical to solve the
issue
Assign weights to the criteria to define the
strength of the stakeholder on that issue
Determine if the stakeholder is in favor of,
opposed to, or neutral towards, the
organizations position and act accordingly

Strategies to deal with different stakeholders


Potential Threat by Stakeholder

Stakeholder's
Potential for
Cooperation

High

Low

High
Stakeholder Type 4:
Mixed Strategy:
COLLABORATE
Stakeholder Type 3:
Unsupportive Strategy:
DEFEND

Low
Stakeholder Type 1:
Supportive Strategy:
INVOLVE
Stakeholder Type 2:
Marginal Strategy:
MONITOR

Communication Techniques
Face-to-face meetings or briefings
Newsletters and background information in brochures, reports, etc. targeted at
specific stakeholder groups
Invitations to attend events such as product launches, sponsored events, charity
activities, etc.
Site visits and open days
Discount offers to members or shareholders
Website pages containing relevant information ie. online newsroom for media
Email information updates
Social media ie. blogs, twitter, wikis, etc.

Stakeholder Relations Management Process


1. Identify all relevant
internal, interface and
external stakeholders

2. Identify key stakeholders

6. Evaluate the success or


failure of stakeholder
management strategies
and tactics

5. Implement generic
strategies

- Use a stakeholder management


report card

- Control over resources


- Ability to form coalitions
- Have relative market power ie.
potential threat or cooperation

- Develop specific implementation


tactics
- Assume responsibility for
managing key stakeholders

Feedback

3. Diagnose key stakeholders


-

Supportive
Non-Supportive
Mixed blessing
Marginal

4. Formulate generic
stakeholder mgt strategies:
-

Involve supporters
Defend against non-supporters
Collaborate with mixed-blessings
Monitor marginals

Corporate Reputation: Definition


Fombrun (1995): Overall estimation in which an organization is held by its internal and
external stakeholders based on the organizations past actions and probability of its
future behavior.
Collective representation of images and perceptions.
Watson (2007):
A reputation involves relationships with all stakeholders and is gained, maintained,
and enhanced or detracted from over time.
Reputation is the sum of predictable behaviors, relationships and two-way
communication undertaken by an organization, as judged affectively and cognitively
by its stakeholders over a period of time.
A good reputation can help business achieve its objectives sell more products, get
better credit arrangements, receive fiscal incentives, etc.

Corporate Reputation is an Outcome of Processes


Reputation is an outcome of processes.
Grunig (2006): Company can only influence the outcomes by managing the
processes.
Murray & White (2005): Driver of reputation is the day-to-day experience
of the company by any stakeholders.
Stakeholder attitudes can be influenced by relationship management
activities incl. providing positive publicity.
Reputation is a soft, intangible and abstract concept.
The benefits of good reputation can be as increased financial value and
profitability.

Main Components of Corporate Reputation


According to Jeffries-Fox Associates (2000):
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Ethical
Employees/Workplace
Financial Performance
Leadership
Management
Social Responsibility
Customer Focus
Quality
Reliability
Emotional Appeal

CEO can play a crucial role to corporate reputation

Building and Shifts of Corporate Reputation


(McCoy, 2000): Six steps to build corporate reputation through stakeholder relations
program:
1. Conduct a research of your stakeholders.
2. Assess their strength and weaknesses, focus on the gap between internal realities and stakeholder
perceptions.
3. Define main factors of corporate reputation aligned with internal policies, systems and programs.
4. Set plans to exceed stakeholder expectations.
5. Involve the CEO as a champion.
6. Measure regularly against targets and act to improve the results.

Several ways to shift a reputation under pressure:


(1) Discard; (2) Conceal; (3) Redefine; (4) Transfer; (5) Create.
Online Reputation: increasing importance nowadays
Loss of corporate reputation: issue management and risk analysis relating to reputation.

Organizational Trust
Trust depends on history of interactions between a company and its
stakeholders, and it is developed when behavior matches expectations.
Trust is related to reputation and ethics.
Being trustworthy generates positive benefits for company.
What is TRUST? Trust is willingness to accept vulnerability based upon
positive expectations about anothers behavior.
Rawlin (2007): For organizations, trust is necessary for cooperation and
communication, and the foundation for productive relationships.
Trust is essential for stakeholder relations; fostering good relationships is
the key function of PR. So then, trust is central to effective PR.

How can companies rebuild trust?


Rawlins (2007): How can companies rebuild trust?
1. Be open and honest in business practices
2. Communicate more clearly, effectively and straightforwardly
3. Visibly demonstrate concern and consideration for employees
4. Be involved with community
Communicate the whole truth vs substantial completeness a
reasonable[persons requirements for information are satisfied
(Klaidman & Beacuchamp, cited in Martinson, 1996].

Corporate Social Responsibility: Concept


Companies are increasingly demanded by stakeholders to be more socially responsible.
There is no single widely accepted definition of CSR.
European Union (2001): CSR is a concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with
stakeholders on a voluntary basis.
Business for Social Responsibility: CSR as business decision making linked to ethical
values, compliance with legal requirements, and respect for people, communities and
the environment around the world.
Herman (2004): Specific value which can emerge from companies embracing CSR:
Managing risks
Protecting and enhancing reputation and brand equity
Building trust and license to operate
Responding to or pre-empting regulations
Building future market opportunities.

CSR & Public Relations


Heath & Ni (2008): CSR and Public Relations are not identical, but must be
interdependent to be effective: being a good organization is a prerequisite for good
communication.
Devin & Bartlett (2009): Main elements in communicating CSR activities:
1. The vehicle (communication devise used to communicate legitimacy)
2. Claim (what was actually said)
3. Justification (how claim was justified in order to demonstrate legitimacy)
4. Intent (what the organization intended to say through the claim)
Greenwash behavior: inaccurate, unqualified, or overstated justification that affects
an organizations ability to create a legitimate environmental claim.
CSR activities & communication messages need to be perceived as genuine.
Sustainability is a concept of development in a way that integrate social, economic and
environmental factors to meet the needs of present without compromising the ability to
meet the need of the future.

CSR Reporting
Formal reporting:
CSR as part of Annual Report
Sustainability Report, Corporate Responsibility Report and Environmental Overview
Mostly consist of combination of texts and plenty of visual element
Website Reporting

Triple Bottom Line Reporting: (1) Economic measures; (2) Social measures; (3) Environmental measures
Global Reporting Initiative (GRI): (1) Economic indicators; (2) Social indicators; (3) Environmental
indicators

CSR Evaluation:
Hard to measure.
Most common measures: feedback from projects, employee attitudes, community stakeholder
attitudes, internal customer satisfaction, 3rd party advocacy support, government attitudes, external
customer attitudes and benchmarking (Center for Corporate Public Affairs, 2007).
None of these are hard measures that enable companies to directly relate CSR outcomes to revenue
or profitability.

Thank You