Stakeholders

ACCA - F1   ACCOUNTANT  IN  BUSINESS

Identification of stakeholders: Stakeholders are parties connected to organisation's success/failure. It includes every biological factors of eco-system, which provides resource to organisation and consumes its goods and services. Generally, stakeholders are classified as Internal Stakeholders (employees, managers and directors), Connected Stakeholders (shareholders, customers and suppliers) and External Stakeholders (community, green groups, government and trade union).

The Performance Prism is a second-generation performance management framework, which highlights on the importance of stakeholder in an organisation. It simplifies the concept of organisation's 'give and take' relationship with stakeholders.

The level of stakeholder's contributions and satisfactions is Important to map stakeholder's position. Stakeholder group who contribute most may not have same level of influence (power) to the organisation because of poor interest and/or barriers present within and outside the organisation.

Relationship with stakeholders define future prospect of an organisation. The bond of an organisation with its stakeholders helps to control stakeholders' desire or to drive organisation to match stakeholders' needs. It creates understanding environment and reduces the likelihood of conflict.

Monitor performance and relationship helps identify the changing position (re-mapping) of all connected stakeholders. Stakeholder who once was key for organisation's success may no longer be so powerful and important for organisation.

Company needs to review performance periodically to appraise its stakeholder mapping process, which also affects organisational strategy, process and capabilities. Change in any element exerts pull through effect to all other elements. Performance evaluates effectiveness of mutual relationship and the changes focused for defined period.

Stakeholder mapping (Mendelow power-interest matrix) is based on stakeholders' power and their willingness to use it.  Powerful stakeholders with high level of interest are grouped as key player and those with little/no interest are grouped as keep satisfied. Less powerful stakeholders but with high interest are placed in keep informed group and with little/no interest are classed under 'minimal effort.' Two major problem using this matrix are (1) the qualitative nature of the power and interest and (2) the shift of power (e.g. shareholder holding highest share may sell most of his share and sift to another location in the grid/matrix.  

Conflict between stakeholders occurs, when they fight for same resource or when interest of one stakeholder's overrides interest of other stakeholder.