Research / Research Summaries

Learning to classify your stakeholders

Today’s organization has to manage a lot of different stakeholder relationships. Stakeholders are those groups and/ or individuals who can affect or be affected by a focal organization . These groups form because of an awareness that the focal organization’s activities are relevant to and perhaps changeable by the group.

But, not all stakeholders are created equal. Not all stakeholders need the same types of messages. And not all stakeholders can affect or be affected by the organization in the same ways. So, how do you go about prioritizing or classifying your stakeholders? My purpose in this post is to offer a straight-forward way to classify your stakeholders based on about 15-20 years of research on the topic. My full review of literature developing the  SMOCC Model Proposal is available and if you’re interested, feel free to read it. The work has been presented at conference and is in the “to do” list to prepare for publication. However, it is based on a large body of already published works from well-recognized researchers, scholars, and practitioners from around the world.

In identifying stakeholder groups, much of the work in stakeholder theory incorporates dimensions of interorganizational relationships such as: (a) relational valence or the emotional affect an organization feels towards a stakeholder group ; (b) a history of interaction with stakeholders that affords organizations the ability to build structures and rituals of interaction; (c) a stakeholder group’s legitimacy—or the recognizeability, reputation, or expertise; (d) the power that a stakeholder has to influence the organization; and (e) the urgency or extent to which a stakeholder’s interest or influence is time sensitive and critical to the organization.

The easiest way to classify your stakeholders is to simply map them. Below is the way that I’ve come up with that makes the most sense to map your stakeholders.

ClassifyingStakeholders

Types of Stakeholder Groups

Based on the combination of the elements discussed (i.e., relational valence, history, legitimacy, power, and urgency), four stakeholder groups emerge: strategic stakeholders; moral stakeholders; desirable stakeholders; and dangerous stakeholders. These four groups are defined based on a focal organization’s perspective. Thus, in a web of relationships, identification and placement of stakeholder groups is dependent on the organization’s perspective and the negotiation of that perspective over time.

Strategic stakeholders. Strategic stakeholders are groups denoted in that they have a relational history, are powerful, the relational quality can be either adversarial or cooperative, and are considered legitimate. Strategic stakeholders demand an organization’s attention because they can directly affect the organization and the relationship is likely to be highly interdependent. An example of a strategic stakeholder relationship is found in a joint venture, where two or more organizations pool their resources to create a separately owned organization with the potential for a broad range of objectives. However, these relationships are not limited to joint ventures for example, the U.S. wine industry’s collaboration to improve their market share is also an example of a strategic set of stakeholders.

Moral stakeholders. Moral stakeholders are denoted in that they are unlikely to have a distinctive relationship history, are not powerful, can have either an adversarial or cooperative relational quality, but an organization does not view their claims as legitimate. Thus, these stakeholders are not explicitly recognized and obligations to them might only be of an ethical or moral nature—something broadly defined under the auspices of ‘public interest’.

Desirable stakeholders. Desirable stakeholders refers to those with legitimate claims, but do not necessarily have a relational history with an organization, lack power, and are perceived as having a positive relational valence. The relationship itself between an organization and its desirable stakeholders may be largely symbolic and may be maintained for the purposes of image or the organization’s legitimacy with its other stakeholders. However, this is not a trivial relationship, as desirable stakeholders often include social and political stakeholders facilitating the maintenance of public affairs facilitating both the organization’s legitimacy and survival.

Dangerous stakeholders. Dangerous stakeholders may have a relational history, are powerful, are not considered legitimate, and are only considered adversarial. The barrier for an organization to be able to seek a strategic alliance with these stakeholders might lie in fundamental ideological incompatibility. Additionally, the organization’s perception that these stakeholders can exercise influence is critical, so that threats of withholding resources or even attaching strings to resources are likely to be taken as credible, but are also predictive of the dangerous stakeholder relationship. Milliman et al.’s finding that the relationships between some environmental groups and businesses were only adversarial and cooperation was unlikely demonstrates the propensity for such stakeholder relationships to exist.

Practical Considerations

It’s worth the effort to come up with as comprehensive of a stakeholder list as possible and then to classify them. If your organization does this, not only can you identify critical differences between the groups more readily, identify the groups that fit together best, and also make more reasoned communicative choices when managing the relationship with those stakeholders. So, some practical considerations about this process:

  • This is more than an ‘academic exercise’ — this gives you a way to evaluate your relationships with your stakeholders. 
  • This is a snapshot of your stakeholder network at a particular point in time.
  • You can measure changes in the relationship between your organization and its stakeholders by repeating this exercise periodically.
  • Work to identify what relationships exist between your stakeholders — that can change the priority you place on different stakeholder groups. Remember — it’s a small world and groups are likely to know each other.
  • Visually, place those stakeholders closer to your organization whose issues/ concerns are more urgent.
  • Track the channels you use to target communications with stakeholders. Do those channels meet their needs?
  • Try to figure out how your stakeholders would classify you — that’s going to tell you a lot about the relationship from their perspective.

In the end, if we can start to have a reason to classify stakeholders in one way or another, we can start to make better decisions about how, why, and when to reach out to them.

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