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

Chapter 2

Managing Public Issues and Stakeholder Relationships

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Ch. 2: Key Learning Objectives

Evaluating public issues and their significance to the modern corporation

Applying available tools or techniques to scan an organization’s 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 IssuesPublic issue

Any issue that is of mutual concern to an organization and one or more of its stakeholders

Stakeholder expectations

A mixture of people’s 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 performance–expectations 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 intelligenceThe acquisition of information gained from analyzing the multiple

environments affecting organizations

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Eight Strategic Radar ScreensFigure 2.2

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Competitive Intelligence

The systematic and continuous process of gathering, analyzing, and managing external information about the organization’s competitors that can affect the organization’s 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 Process1. 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 company’s 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 corporation’s 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 business’s 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