Lesson of October 24 th 2014 STAKEHOLDER APPROCH STAKEHOLDER - - PDF document

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Lesson of

October 24th 2014

STAKEHOLDER APPROCH

• STAKEHOLDER MANAGEMENT:

MANAGING FOR STAKEHOLDERS = PRODUCE VALUE FOR STAKEHOLDERS

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INTRODUCTION

• OVER THE PAST THIRTY YEARS

SCHOLARS OF VARIOUS DISCIPLINES (finance, management, accounting , philosophy and so on) ARE ELABORATING STAKEHOLDER THEORY/IES)

INTRODUCTION

• PAY ATTENTION TO HOW

RELATIONSHIPS WITH VARIOUS CONSTITUENTS (NAMED STAKEHOLDERS AND NOT STOCKHOLDERS) ARE MANAGED IN ORDER TO CREATE VALUE FOR ALL STAKEHOLDERS

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INTRODUCTION

• ACCORDING TO THE SO CALLED

“DOMINANT” MODEL (CREATE VALUE FOR SHAREHOLDERS) A MANAGER HAS TO PURSUE A BENEFIT ONLY FOR SHAREHOLDERS, BENEFITS FOR OTHERS ARE INCIDENTAL LIMITS OF THE DOMINANT MODEL IN THE WORLD OF 21th Century

• 1) RESISTANT TO CHANGE
• 2) NOT CONSISTENT WITH LAW
• 3) FATAL IN BUSINESS WORLD OF

THE 21ST CENTURY

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IDEAS OF MANAGING FOR STAKEHOLDERS TO SOLVE SOME OF THE PROBLEMS OF THE DOMINANT MODEL

• 1) MORE DIFFICULT TO IGNORE MATTER OF

IDEAS

• 2) EXECUTIVE HAS TO CREATE VALUE FOR

STAKEHOLDER AS POSSIBLE

• 3) NO STAKEHOLDER INTEREST IS VIABLE IN

ISOLATION OF THE OTHER STAKEHOLDERS

“STAKEHOLDER CAPITALISM”

• “CAPITALISM IS ON THIS VIEW [NDA:

STAKEHOLDER CAPITALISM] A SYSTEM OF SOCIAL COOPERATION AND COLLABORATION, RATHER THAN PRIMARILY A SYSTEM OF COMPETITION”

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THE DOMINANT STORY

• A VERY SHORT HISTORY OF CAPITALISM :
• 1) LITTLE FAMILY BUSINESS
• 2) MANAGERIAL (LAISSEZ FAIRE) CAPITALISM
• 3) SHAREHOLDER CAPITALISM
• 4) BUREAUCRACY IN THE BIG CORPORATIONS
• INCREASE SHAREHOLDERS VALUE
• PROBLEMS: (stock option, shortermism (quarter over

quarter increase): PUSH TO “INCREASE SHAREHOLDERS VALUE, SOMETIMES IN OPPOSITION TO ACCOUTING RULES AND LAW”

RESISTANT TO CHANGE

• 1) DO NOT TAKING ACCOUNT OF OTHER

STAKEHOLDERS’ INTERESTS [NDA: ONLY INTEREST?] “AS IF THESE INTERESTS MUST CONFLICT WITH EACH OTHER”

• 2) IF YOU HAVE BETTER FINANCIAL RESULT

NO PROBLEM AT ALL

• 3) THE ONLY REQUESTED CHANGE IS THAT

ORIENTED TOWARDS SHAREHOLDERS VALUE

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RESISTANT TO CHANGE

• IN TO-DAY’S WORLD THERE IS JUST TOO

MUCH UNCERTAINTY AND COMPLEXITY TO RELY ON SUCH A SINGLE CRITERION

• “SHAREHOLDER VALUE MAY NOT CAPTURE”

THE GLOBAL DYNAMISM OF 21TH CENTURY”

RESISTANT TO CHANGE

• THE DOMINANT MODEL IS ABOUT THE STRICT

AND NARROW ECONOMIC LOGIC OF MARKETS, AND THE “MANAGING FOR STAKEHOLDERS MODEL IS ABOUT HOW HUMAN BEINGS CREATE VALUE FOR EACH OTHER”

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NOT CONSISTENT WITH LAW

• “THE LAW [USA, OF CORPORATIONS] HAS EVOLVED OVER

THE YEARS TO GIVE DE FACTO STRANDING TO THE CLAIMS OF GROUPS OTHER THAN STOCKHOLDERS”

• EXAMPLES:
• Caveat emptor in part to caveat vendor
• Employees: Equal pay Act (1963), age discrimination

employment act 1967

• Pollution ‘s laws
• Different regulations in various countries (India, China, US

law)

NOT CONSISTENT WITH BASIC ETHICS AND REFUSING OF SEPARATION THESIS

• Dominant model could force not to respect the

law (false accounting, not prudent managing of finance,…)

• THE SEPARATION FALLACY: business decisions

could be separated from ethics

• Stakeholder is supporting this, on the contrary:
• “any business decision has some ethical bases”

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REFUSING SEPARATION THESIS

• ACCORDING TO STAKEHOLDER

MANAGEMENT, BUSINESS AND ETHICS ARE “WITHIN A COMPLEX SET OF STAKEHOLDER RELATIONSHIPS RATHER THAN TREATING ETHICS AS A SIDE CONSTRAINT ON MAKING PROFITS” (like in Friedman and others).

MANAGING for STAKEHOLDERS

• STAKEHOLDERS= GROUPS WHICH HAVE A STAKE

IN THE ACTIVITIES THAT MAKE UP THE BUSINESS

• TO UNDERSTAND BUSINESS IS TO KNOW HOW

THESE RELATIONSHIPS WORK AND TO MANAGE THESE RELATIONS IN ORDER TO HAVE MORE VALUE FOR STAKEHOLDERS

• [NDA]WHAT IS THIS VALUE? Only financial? And
• ther, what is stake’ only interest?

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STAKEHOLDERS DEFINITION

• FIGURE 1 AND READ PAGES 12

TILL 15

• Various definitions; we use:
• EVERY GROUP THAT CAN BE

CONDITIONED AND CAN CONDITION AN ORGANIZATION