Chapter 2

Managing Public
Issues and
Stakeholder
Relationships
McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Ch. 2: Key Learning Objectives

Evaluating public issues and their significance to the
modern corporation
Applying available tools or techniques to scan an
organizations multiple environments
Describing the steps in the issue management process
and determining how to make the process most effective
Identifying who is responsible for managing public issues
and the skills required to do so effectively
Understanding how business can build collaborative
relationships with stakeholders through engagement,
dialogue, and network-building
Identifying the benefits of stakeholder engagement to the
business firm
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Public Issues
Public issue
Any issue that is of mutual concern to an organization
and one or more of its stakeholders
Stakeholder expectations
A mixture of peoples opinions, attitudes, and beliefs
about what constitutes reasonable business behavior

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Public Issues: Performance-Expectations Gap

Discrepancy between what stakeholders expect and
what an organization is actually doing
Important to identify emergent expectations as early
as possible
Doing so can gain the company competitive advantage

Failure to understand stakeholder concerns and to

respond appropriately will:
Cause the performanceexpectations gap to grow
The larger the gap, the greater the risk of stakeholder
backlash or missing a major business opportunity
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Figure 2.1 The Performance-Expectations Gap

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Environmental Analysis and Intelligence

Environmental analysis
A method managers use to gather information about external
issues and trends, so they can develop an organizational
strategy that minimizes threats and takes advantage of new
opportunities

Environmental intelligence
The acquisition of information gained from analyzing the multiple
environments affecting organizations

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Figure 2.2

Eight Strategic Radar Screens

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Competitive Intelligence
The systematic and continuous process of gathering,
analyzing, and managing external information about the
organizations competitors that can affect the organizations
plans, decisions and operations
Numerous ethical issues arise in acquisition and use of
information gathered through competitive intelligence,
public affairs managers must be keenly aware of these
issues

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The Issue Management Process

1. Identify Issue

Anticipating emerging concerns, or horizon issues

2. Analyze Issue

Evaluating the issue; coming to an understanding of how it will evolve and

how it will affect the organization

3. Generate Options

Evaluating action options, involves complex judgments that take into account
non-quantifiable factors like the companys reputation

4. Take Action

Once option is chosen, must design and implement it

5. Evaluate Results

Must assess results of the program and made adjustments as needed

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Organizing for Effective Issue Management

Which part of the organization is mobilized to address a
particular emerging issue often depends on the nature
of the issue itself

A corporations issue management activities are usually linked to

both the board of directors and to top management levels

Effective global leadership on public issues requires

three basic capabilities:

Understanding of the changing business context

Ability to lead in the face of complexity
Connectedness The ability to engage with external
stakeholders in dialogue and partnership
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Stages in the Business-Stakeholder Relationship

Over time, the nature of businesss relationship with its
stakeholders often evolve through a series of stages
Inactive Companies ignore stakeholder concerns
Reactive companies act only when forced to do so, and then in a
defensive manner
Proactive Companies try to anticipate stakeholder concerns
Interactive Companies actively engage stakeholders in an
ongoing relationship of mutual respect, openness, and trust
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Drivers of Stakeholder Engagement

Stakeholder engagement is, at its core, a relationship
The participation of a business organization and at least
one stakeholder organization is necessary, by definition,
to constitute engagement
Engagement is most likely when both the company and
its stakeholders both have an urgent and important goal,
the motivation to participate, and the organizational
capacity to engage with one another
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Making Engagement Work Effectively

In stakeholder dialogue, a business and its stakeholders
come together for face-to-face conversations about issues
of common concern
Corporations sometimes encounter public issues that they
can address effectively only by working collaboratively with
other businesses and concerned persons and
organizations in stakeholder networks
Engaging with stakeholders benefits businesses by
bringing in expertise, enhancing legitimacy, and generating
creative solutions to common problems
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