Relationships with stakeholders

Relationships with stakeholders
See also
Quality management principles Quality policy Business risk management Conditions of strategy implementation Importance of communication Communication with stakeholders Strategic issues Marketing research Burke-Litwin model

Relationships with stakeholders are key success factors in strategic management, project management and other key areas of company activities. Most common relationships with stakeholders are:

• commercial, direct relationships (based on contract, legally binding)
• involvement in common goals (social development, environmental protection)
• relationships with authorities and government (taxes, tariffs, development projects)
• ownership relations (with stakeholders, owners)
• relationships with employees and their families
• local community (road building, cleaning, etc.)

Stakeholders represent a source of uncertainty for nonprofit organizations. Corporate responsibility in society continues to attract attention and is an important element of dialogue between companies and stakeholders. For a project manager, it is vital to build good relations with the stakeholders who are identified as being most crucial in the project process and in using the final results of the project. The aim of this is to investigate the relationship within the project environment and in particular to identify the factors that create a relationship between the project and stakeholders. The article examines three projects. The results showed five different relations (Karlsen, 2008):

• classicmarket
• through a third party
• open and direct
• integrated team
• partnership

These five different factors influence the formation of stakeholder relations in the project:

• trust
• uncertainty and control
• culture and language
• resources and knowledge
• consistency of objectives.

Responsiveness and Accountability

Non-profit organizations usually operate in complex environments with many different stakeholders. They are a source of uncertainty for NPOs because NPOs require resources and legitimacy from their stakeholders and these streams are not necessarily predictable or controllable (Bielefeld, 1992; Gronbjerg, 1991). These relationships need to be monitored and managed. Stakeholders assess the relationship with not-profit organizations on the basis of how their expectations are met and how they are treated (Herman and Renz, 2004).

Speed of response can be a problem, especially when many stakeholder groups have different and sometimes conflicting expectations of an organization. Stakeholders may want things that an organization cannot or should not provide. One of the cornerstones of accountability and responsiveness is the awareness that organizations not only react, but can be proactive to the environment (Kearns, 1996; Oliver, 1991; Romzek, 1996).

NPOs maintained the necessary social relationships to be perceived by stakeholders as responsible and legitimate. Non-profit organizations managers used a number of factors to facilitate communication between community members and the NPO, such as conferences, advisory committees, member surveys, newsletters and data sheets. These studies usually do not involve stakeholder management, but rather measures of organization an effectiveness. Unfortunately, we have limited information on how the activities of NPOs affect the effectiveness of attribution (Ospin, Diaz, O'Sullivan, 2002).

Strategic management of stakeholders entails not merely responding to stakeholders but guiding the stakeholders expectations and their evaluations of the NPO (Kearns, 1996; Oliver, 1991; Romzek, 1996).

Non-profit organizations are more likely to be seen as responsive to stakeholder needs in order to influence expectations that are in line with the values, mission and capacity of non-profit organizations (Balser, McClusky, 2005).

Examples of Relationships with stakeholders

• Building relationships with customers: Establishing relationships with customers is a key part of any successful business. Building relationships involves providing excellent customer service, responding to customer queries and complaints, staying in touch with customers, and creating loyalty programs.
• Engaging with employees: Engaging with employees is an important part of any successful business. Engaging with employees involves listening to their ideas, valuing their contributions, recognizing their achievements, and providing fair and equal opportunities for growth.
• Developing relationships with suppliers: Developing relationships with suppliers is essential for any business. Building relationships with suppliers involves finding reliable suppliers, negotiating contracts, establishing good communication, and maintaining a positive working relationship.
• Fostering relationships with investors: Fostering relationships with investors is important for any business. Developing relationships with investors involves providing detailed financial reports, responding to investor questions and concerns, and providing a clear vision for the future.
• Building relationships with the media: Building relationships with the media is essential for any business. Establishing relationships with the media involves providing press releases, communicating regularly with reporters, and creating content that engages and informs the public.

Advantages of Relationships with stakeholders

Relationships with stakeholders are essential for successful management as they help organizations to cultivate trust, build collaboration, and create a sense of shared responsibility. The following are some of the key advantages of building these relationships:

• Improved Communication: Stakeholders can provide valuable insight into the organization’s operations, allowing for better communication between management and employees. This can help create a more open, collaborative environment, resulting in better problem solving and improved decision-making.
• Increased Accountability: By engaging stakeholders, organizations can be held accountable for their decisions, helping to ensure that the organization’s activities are in line with its mission and goals.
• Improved Performance: Relationships with stakeholders can also drive improved performance, as organizations receive direct feedback from those affected by their decisions. This can help ensure that operations are efficient, effective, and high-quality.
• Increased Customer Satisfaction: Engaging stakeholders can also help improve customer satisfaction, as customers feel more connected to the organization, and have more trust and confidence in its products and services.
• Improved Reputation: By building relationships with stakeholders, organizations can also benefit from an improved reputation in the marketplace. This can help organizations attract new customers and build loyalty among existing customers.

Limitations of Relationships with stakeholders

Relationships with stakeholders are key success factors in strategic management, project management and other key areas of company activities. However, there are a number of limitations that can hinder the effectiveness of these relationships:

• Misunderstandings: Misunderstandings can arise between stakeholders and management, leading to a lack of trust and miscommunication which can hinder progress.
• Short-term Focus: Stakeholders may be focused on short-term goals, which may not match the long-term goals of the organization.
• Conflict of Interest: Stakeholders often have competing interests, and this can lead to conflicts of interests and disagreements about what is best for the organization.
• Lack of Commitment: Stakeholders may not be committed to the long-term success of the organization, which can lead to a lack of accountability and delays in decision-making.
• Limited Resources: Stakeholders may be limited in their resources, making it difficult to support the organization in the way that it needs.
• Regulatory Requirements: Regulatory requirements can restrict the activities of stakeholders and limit their ability to support the organization.
• Cultural Differences: Cultural differences can lead to misunderstandings and disagreements between stakeholders and management, making it difficult to reach consensus.

Other approaches related to Relationships with stakeholders

Relationships with stakeholders are key success factors in strategic management, project management and other key areas of company activities. Other approaches related to Relationships with stakeholders include:

• Developing and nurturing trust – trust is an essential factor in successful relationships between stakeholders. Companies should focus on building strong relationships with stakeholders, as trust is the cornerstone of these relationships.
• Effective communication – communication is an important part of any successful relationship. Companies should ensure that they have effective communication between stakeholders, as this will help foster understanding and create mutually beneficial relationships.
• Being open and transparent – companies should strive to be open and transparent with their stakeholders, as this will build trust and increase the overall effectiveness of the relationship.
• Establishing clear goals and objectives – companies should establish clear goals and objectives for their relationships with stakeholders, as this will help ensure that all parties are working towards the same objectives.
• Active listening – companies should actively listen to their stakeholders, as this will help them understand their needs and goals.
• Proactive problem-solving – companies should be proactive in solving any issues that arise in their relationships with stakeholders, as this will help ensure that the relationship remains positive.

In summary, relationships with stakeholders are key to success in strategic management and other areas of company activities. Companies should focus on building trust, effective communication, transparency, clear goals and objectives, active listening, and proactive problem-solving to ensure successful relationships with their stakeholders.

References

• Balser, D., & McClusky, J. (2005). Managing stakeholder relationships and nonprofit organization effectiveness. Nonprofit Management and Leadership, 15(3), 295-315.
• Bhattacharya, C. B., Korschun, D., & Sen, S. (2009). Strengthening stakeholder–company relationships through mutually beneficial corporate social responsibility initiatives. Journal of Business ethics, 85(2), 257-272.
• Karlsen J. T. (2008). Forming relationships with stakeholders in engineering projects, Inderscience Enterprises Ltd, 35-49.

Author: Karina Obiegła