Stakeholders in Organisations - Essay Example

RUNNING HEAD: Stakeholders in Organisations Stakeholders in Organisations Client Inserts His/her Name Client Inserts Name of Institution INTRODUCTION; DEFINITION OF A STAKEHOLDER To well define what a stakeholder is becomes a difficult subject mainly because there many controversial and confusing factors to first address (Friedman & Miles, 2006). First, in a typical organization or if you need, a company, there emerge various types of stakeholders who occur in different levels and playing quite distinct roles (Savage et al, 1991). Secondly, the meaning of the term stakeholder when it comes to a particular point of view is bleached such that it considers only the major parties. A good example is the most governments’ view of the companies that thrive under their respective roofs where only the shareholders or well put, the owners, are considered as stakeholders regardless of whether or not there are other key participants in the overall management of these companies. Here, a stakeholder is considered as a person who has invested in the company or the (Friedman &Miles, 2006) organization in question by either contributing monetary support or as a co-founder of the organization. Such a person is involved in the making of major decisions for the organization. However, it is important to note that there are other role players of importance. Such include those people who are indirectly affected by the presence of an organization, for example, the end users or the receivers of the impacts of any decisions made. Some definitions have been in work, although some are quite narrow. Some say that stakeholders are those groups or individuals without whose support, an organization would die. Others say that stakeholders as any naturally occurring entity that is directly affected by the organizational performance (Roberts & Mahoney, 2004). The word ‘naturally’ denotes all natural phenomena affected are included, for example, the environment. To have an overview of all the parties affected by an organizational presence or its performance is generally the first step towards defining what a stakeholder is. A comprehensive definition of a stakeholder is one that encompasses both the directly and the indirectly affected parties. Identification as a stakeholder is crucial. A way of identifying an entity as a stakeholder is by including or considering it in decision making. Therefore, stakeholders are defined as all social and natural phenomena affected by a decision or action to be made by an organization. Be as it may, the social stakeholders are given much thought in this study because they are the ones that address both social and the natural phenomena dynamics. TYPES OF STAKEHOLDERS Owners These are the major stakeholders. They are those people who have invested financially in the organization, mostly regarded as the shareholders, and/or those who are the founders. These people form a major part of decision making personnel. In most organizations, the topmost leaders are often chosen from this category. Activists These are those stakeholders who attempt to bring about social changes or perceptions in an organization. These activists address mostly the issues related the workers’ rights, the environment and the political fitness of the actions or decisions made or about to be made. They are included in major decision making processes where they largely serve as opposers or agitators in a particular debate during various organizational meetings. Their presence has evidently influenced the behaviour trends of many organizations, especially on the subject of human rights and environmental well being. However, activist stakeholders are expected to pass their grievances in a peaceful way and through the stipulated relevant channels. Groups These are groups of people formed with common goals as those of the organization. Members of these groups’ aim are to help in conveying the organization’s products and/or services to the end users with a hope to generate income in the process. The organization is bound to use these kinds of groups as they appear to lend a helping hand and therefore, to the benefit of the organization in question, these groups are considered stakeholders. Political Stakeholders These occur in two dimensions. First, partnership with the local government is unavoidable. For any organization to operate it has to follow the set rules and regulations put across by the government around its ventures. In fact, most international organizations first establish ties with such a government before investing and it even becomes necessary to abide by the government policies in relation to the nature of the organization and these policies affect the decisions and the working conditions of the organization. The other dimension takes form of interested politicians and political parties who may lead to the success and effectiveness of the organization by acting as guides and advisors in the specific region of venture. Employees Employees are inevitably an integral part of any organization. They passively or sometimes actively play the vital role of advertising and creating a good reputation of the organization. As they are the ones to reach the end user many a time, they are also used as sources of actual information on the ground. They greatly add to the flexibility of the organization by serving as conveyors of services and representatives on the ground. Consumers These are the end users of the services and products offered by an organization. They are the receivers of the impacts caused by the decision made by a particular organization. Most organizations take pleasing the consumers as their primary goals. However, these consumers may in the long run end up receiving adverse effects instead. Besides, some of the services or products offered may not be acceptable or pleasing to the local community. This uncertainty poses a two-way adversity threat (Elkington, 2002). That is, incurring organizational disorientation or the deterioration of the end user, a ‘lose-lose’ situation. An organization is hence forced and mostly required by the local jurisdiction to consult or consider the consumer. This way, the consumer (mostly the local community and sometimes the environment) becomes relevant and is included in decision making processes. Suppliers and Distributors Most organizations if not all require suppliers of raw materials and distributors (Donaldson & Preston, 1995) of their products. This is especially so when an organization deals with material things and when it lacks the capacity to distribute products or services to a wider region. Able suppliers and distributors thence hop in as new and extremely important stakeholders. The Media and Business Partners The role of the media in terms of marketing is not one to overlook. Most organizations largely use the most reliable media to advertise their visions, missions and products (Donaldson & Preston, 1995). In fact, some establish partnership relations with particular media houses. This is one way the media becomes a stakeholder in an organization. Various governmental departments also use the media to pass information to the public. The partnership relations in business world are also common. Academics These are people with residual knowledge specifically in the field that organization or a governmental department deals with. They are often used as advisors in various fields where they are used as points of reference for a particular decision or action. Some may occur in the form of advocates (Freeman, 1984). They therefore become relevant stakeholders in many organizations where they are included in the decision making panels. Past and Future Generations The roles played by the founders of any organization are not easily forgotten. Most organizations pay a lot of respect to the founders and mostly perform their duties in accordance with their wishes. Again, a lot of considerations about the welfare of the future generation have been prolific among various ventures in the world (Jones, 1995). The issue of sustainability particularly in the environment and natural resources context is everywhere in the world. Therefore, we always work alongside the past and the future generations. Financiers An organization or a government may ask for a helping hand, which mostly is the case, in terms of monetary aid for the smooth learning of the organization or a country respectively. Such aid always occurs with strings attached. However, in most cases, this becomes unavoidable where such financial support is needed. The financier initially requires a well described order of events on how the aid fund will be put into use. There follows a follow up session to ensure the funds are not misappropriated (Freeman, 1984). This kind of interaction basically means that the financier becomes part of the organizational proceedings and hence a stakeholder in this respect. Competitors The presence of competitors (threat) affects any organization’s activities. Competitors indirectly determine the pace at which an organization works. The fact that they ‘affect’ an organizational pace renders them ‘stakeholders in the backyard’ (Roberts & Mahoney, 2004). ACCOUNTABILITY TO THE STAKEHOLDERS The term accountability has been used quite severally to mean a high quality relationship in between one and those who depend on one. This measures to a substantial depth, the quality of service and respect one offers the recipients (Porter, 1980). In this context therefore, accountability to the stakeholder means the level of respect and recognition given by one to the other stakeholders. For example, does the organization respect the rights of its employees? Does it deliver quality products or services to those in the receiving end? Does it make decisions that cause political uproar? Does it break or follow the rule of law (Mitchel et al, 1997)? Does it alter the environmental status? In other words, we look at the ethical background of an organizational management. A good organization is one that establishes good ties with all the stakeholders described above. GOVERNMENT AND THE STAKEHOLDERS Rationale for Involving of Stakeholders A government is the main stakeholder in the overall running of a country. If at all the whole running of a country can be equated to running of an organization, it becomes safe to say that it equally needs to play the roles of a ‘good’ organization as explained above. The government has to identify and respect all the above named types of stakeholders. For example, the public takes the place of the consumers. The kind of services provided by the government must be in line with the public demands (Durlauf & Blume, 2010). However, like seen in the organization, the public dictates what quality of services they need. Therefore, it becomes vital for any country with democracy, to include the public in the overall decision making. As an example, during national elections, the public is given a chance to decide who controls the economy – who will give the kind of services they want (Mitchel et al, 1997). This process is funded by the government. When it comes to making crucial national decisions, the government will mostly consult external experts for advice. Such advice is given by expert from countries that have sailed through such a time in its economic history. Such experts become involved in the overall running of a country thus in the process. Again, the government, in times of crisis, it becomes unavoidable to seek for external aid (Durlauf & Blume, 2010). This is especially observable in the developing nations where most governments seek financial aid to combat problems like famine, political instability and for catering for health problems. These countries are given terms and conditions by the financiers (developed nations) to prevent misappropriation of the funds. These financiers are clearly new stakeholders for such a country (Durlauf & Blume, 2010). Currently, every country talk is about how they can attain sustainable development status. The term sustainable means that we want to use the available natural resources wisely enough to both serve our needs while leaving out some to cater for our future generations. It means that a government is forced to seek alternatives and strategies that will enhance sustainable development with the thoughts of the future generations in mind. A country’s economy is a business (Porter, 1980) in itself competing among the vast array of other world economies. A government will therefore become interested in studying the strategies that have been employed by the well established world economies. Often, activists rise up when the government makes policies that lead to deterioration of the public welfare, the civil servants or the environment (Durlauf & Blume, 2010). It is at this point that the government has no option but to consider their grievances by calling for dialogues so as to fix the situation. In general, a good government will certainly portray accountability to all the stakeholders who play a vital role in the growth of its economy (Jones, 1995). It will ensure that good ties remain all round while it grows. UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP) Throughout this study, the area of interest seems to lie on the accountability of the management of different organizations to the relevant stakeholders. To have a good view of this, the United Nations Development Programme management’s relations with its stakeholders is looked into as an example. UNDP is a global development organization that is well developed in over 177 countries. The program serves different people of different backgrounds and has a capacity to serve at local levels (Drexler, 2008). Key stakeholders UNDP is one of the United Nations programs that aim at ensuring development of mankind. The management of UNDP has taken both international and local dimensions. First, it has extended a helping hand especially in the developing nations. This is through collaboration with the developing countries governments. To achieve this, it has involved funds donated by various individuals, institutions and rich governments all over the world. Among these is the United Nations system. It has collected substantial amounts of donations in form of funds from international financial institutions such as the World Bank, the African Development Bank, the Asian Development Bank and the Inter-American Development Bank. Through participatory local programs, UNDP has tried to link local producers to the global network of markets in a call to improve their ventures (Drexler, 2008). This has been facilitated by collaboration with the Growing Inclusive Markets (GIM). UNDP officials worldwide have been advised to attract and endear local civil society organizations which include local social movements, volunteer organizations, indigenous people’s organizations, mass-based membership organizations, non-governmental organizations and community-based organizations as well as communities and citizens acting individually. UNDP’s Success Due to the UNDP’s well expressed transparency and accountability in delivering its services, it is one of the most welcomed international organizations by most countries in the world. Its officials are trained to provide and support local community with their utmost hospitality. This way, they provide services that are visible and which add to the development index of local communities. UNDP promises even better services what with its underway plans to adopt the International Public Sector Accounting Standards which will further enhance its transparency and accountability. It is also planning to implement transparency standard that was adopted by the International Aids Transparency Initiative (IATI) so as to provide high quality information to its partners. The Global Accountability Report scrutiny most recently ranked UNDP as the international organization with the highest accountability index out of the thirty transnational actors surveyed. CONCLUSION The large and multinational UNDP is multibillion dollar organization yet it finds it fruitful to establish close touch with even the smallest individual holdings and improving its relations with its partners. In this view, the question of accountability to the stakeholders undoubtedly calls for no bet (Beaver, 1999). Clearly, a wide array of stakeholders discussed above is not a liability but these should be appreciated as controllers of progress. Of great importance for any organization with ambitious plans is to first identify the number of stakeholder typologies to expect in the long run. 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