CONFLICT AND STRESS IN ORGANIZATIONS Pertemuan 25 – 26 By: Dr. Drs. Dominikus Tulasi, MM. Mata kuliah: CRISIS COMMUNICATION AND PUBLIC RELATION Tahun : 2010

Bina Nusantara University 3 Learning Objectives  Understanding the importance of stakeholders  List the key components of stakeholder relations  Understand the diversity and typical stakeholders  Start to build balancing the interests of different stakeholders  Understand management responsibilities as stakeholders

Bina Nusantara University 4 MANAGING STAKEHLDER RELATIONS  The term ‘stakeholder’ originated in the physical act of miners staking a claim: in the past, miners marked each boundary of their territory by hammering a stake into the ground. The term is now commonly used to describe individuals and organizations who affect, or can be affected by, the organizations actions. Another way to describe a stakeholder is any person, group or organization that can place a claim on an organization’s attention, resources or output, or is affected by that output. The have a stake in the organization, something at risk, and therefore something to gain or lose as a result of corporate activity.

Bina Nusantara University 5 MANAGING STAKEHLDER RELATIONS (1)  The management of relations with stakeholders is crucial to the resolution of issues facing organizations. By using their influence, stakeholders hold the key to the environment in which organizations operate and the organizations’ subsequent financial and operating performance. Thus the effective management of stakeholder relations is growing as a key focus of PR and organizational activity.

Bina Nusantara University 6  The aim of stakeholder relations management is to influence stakeholder attitudes, decisions, and actions for mutual benefit. The stakeholders need to gain from the relationship or they may not be sufficiently motivated to cooperate.

Bina Nusantara University 7 THE GROWING IMPORTANCE OF STAKEHOLDERS  Globalization—most organizations need to compete more strongly for customers, capital and employees as more of the world opens up to international trading markets.  The rise of professional investor—more than ever before, companies are subject to the influence of professional fund managers.  The rise of the sophisticated customer — customer expectations are higher than ever before. The rise of the empowered employee.

Bina Nusantara University 8  The information revolution—electronic information technology equips stakeholders with information almost instantly.  Rising awareness of the influence of business on society—ethics and corporate integrity are high on society’s agenda today.

Bina Nusantara University 9 MANAGEMENT OF STAKEHOLDER RELATIONS  Identifies those people or groups/organizations who have a stake in the issue/s affecting the organization;  Assesses the potential of stakeholders for cooperation or competition in the policy process;  Involves planning and implementing a strategy for dealing with each stakeholder.

Bina Nusantara University 10 MANAGEMENT OF STAKEHOLDER RELATIONS (1)  Aligns corporate objectives and stakeholder expectations;  Informs stakeholders on corporate policies and procedures;  Identifies problems with stakeholders before they become major issues or crisis. The stakeholder relations activity basically:

Bina Nusantara University 11 TYPICAL STAKEHOLDERS  Employee, prospective employees and retired employees;  Chairman, directors, chief executive, various management levels;  Local, national, government,  Global, national, media  Individual investors, institutional, advisers;  industry, educational institutions; community members and leaders; corporate office; landlords; suppliers; creditors; retailers; customers; competitors; environmental interest group;  Unions and related labor groups; Typical stakeholders of a large organization include:

Bina Nusantara University 12 ASSESSING THE STRATEGIC VALUE OF STAKEHOLDERS  To what extent will the strategy affect each group, positively or negatively?  How far does the strategy align with their existing beliefs about the organization’s values and purpose?  How far do they share the organization’s values and purpose in this area?  What potential do hey have to influence the business directly or indirectly, positively or negatively?

Bina Nusantara University 13  How robust is the existing relationship with them?  How likely will actions towards one stakeholder group influence the attitudes of other stakeholder groups?  What are the consequences of this?

Bina Nusantara University 14 EFFECTIVE COMMUNICATION WITH STAKEHOLDERS  Face-to-face meetings and briefings;  Newsletters and background information targeted at specific stakeholders groups;  information updates;  Privileged access to Web information, is on extranets;  Invitations to attend events such product launches; boardroom lunches; VIP dinner & presentations.  Corporate hospitality activities;  Discount offers to members or shareholders;  Privilege offers to cardholders & members of group

Bina Nusantara University 15 BENEFITS OF A GOOD REPUTATION  Increased productivity and morale;  Increased stakeholder confidence in the organization;  More investors and lower cost of capital;  Easier formation of alliances;  Positive influencing of brand selection and loyalty, is increased market share;  Lower marketing and distribution costs;

Bina Nusantara University 16  Less hostility from regulators, minimizing over- regulation;  Enhanced attitudes of customers to sale staff and products during the buying process;  Higher perceptions of product quality;  Deterrence of competitor entry into the market.

Bina Nusantara University 17 BENEFITS OF A GOOD REPUTATION (1)  Enhanced competitive ability of the firm;  Stronger employee support and recruitment of talented staff;  Fewer risks of crises, and when crisis do occur;  Stakeholders give the organization greater latitude to act in resolving issues;  More believability in the organization;  More favorable media coverage;  Greater access to new global markets.

Bina Nusantara University 18 MAIN COMPONENTS OF CORPORATE REPUTATION  Ethical: behaves ethically, is admirable, is worthy of respect;  Employee/workplace: has talented employees, financial performance: is financially strong, has a record of profitability,  Leadership: is a leader rather than a follower, is innovative.  Management: is well managed, has high quality management, has a clear vision for the future.

Bina Nusantara University 19  Social responsibility  Customer focus  Quality  Reliability: provide consistent services;  Emotional appeal: I feel good about;

Bina Nusantara University 20 STEPS TO BUILD REPUTATION  Conduct more research to know key stakeholders better.  Assess stakeholder strengths & weaknesses, & focus on the gap between internal realities & stakeholder perceptions.  Research the main factors comprising the reputation of the organization and align them with policies, systems & programs;  Set plans to exceed stakeholder expectations.  Involve the CEO as the greatest ally or champion of a reputation program;  Measure regularly against targets and act to improve the results.