Stakeholders Involvement in the Organization - Literature review Example

Running head: Stakeholder Analysis Name Institution Abstract The purpose of this paper is to identify and analyze stakeholders’ involvement in the organization. The paper is comprised of four sections. These parts have been discussed in an essay format. The first part discusses the various definitions as well as the topologies of stakeholders as described by different researchers. The second part describes what accountability to stakeholder means in an organization and why should government consult different groups (stakeholders) before and during the process of accomplishment of goals and objectives. Poverty eradication, building democratic nation, discouraging crisis, environmental protection, health living in the case of HIV/AIDS positive individuals and mounting national knowledge are issues of particular interest that UNDP in collaboration with global governments and Assessment Development Results Groups are motivated to work on. Apparently, the organization (UNDP) has helped much in learning of stakeholders’ relationship and has been comprehensively discussed in the paper. Introduction Grant Savage et al (1991) states that for an organization to deal with the environmental instability, mangers should involve responsible stakeholders. Stakeholders are individuals, groups and organizations who are either linked directly or indirectly to the organization’s accomplishments and perhaps have the power to influence these achievements. However, this definition does not include those who are affected by company’s strategies during accomplishments of the objectives. Therefore, this may not be a comprehensive definition of a stakeholder. A stakeholder incorporates issues on organizational strategy, political environment of the organization, human resource management as well as social responsibility. Potential stakeholders corporate with managers of the organizations and provide supporting measures as well as diverse sanctions to enhance fresh perspectives of undertaking public issues in the competitive global world. Michelle Greenwood (2001) defined a stakeholder as any group of individuals or organizations that may affect or be affected during accomplishment of organizational objectives and goals. They are actually risk holders when it comes to either financial or human capital and thus they will have something to gain or lose when the goal of the organization is achieved in the long run. In categorizing the stakeholders, one should consider the following; 1) organization’s direction, 2) its behavior, 3) system and process and 3) the outcome (Freeman, 1994). Why should we need to focus on these parameters? There are those stakeholders that influence direction of the organization, for instance, those that enact policies that will impact on employees; there are also those who affect behavior, processes as well as the outcome in the organization. In describing the topology of stakeholders, we need to assess the normal attributes that the stakeholders usually have on organizational objectives. The three attributes that analyze their perception include power to manipulate, legality of their endorsement and the necessity of endorsement (Mitchell et al, 1997). This is clearly elaborated in the diagram below. Topologies of Stakeholders In any organization, we have three core stakeholders, dormant stakeholders, discretionary stakeholders and demanding stakeholders. According to Jacob Rendtorff (2009), dormant stakeholders have strong power and perhaps will affect the organization to work very urgently and legitimately. Dormant stakeholders include both expectant and definite stakeholders. They both have power to manipulate the accomplishments in legitimize way in the organization. The collaboration between dormant stakeholders and discretionary stakeholders will form a dominant partnership in the organization. Dominant stakeholders play a major role in maintaining the positions of boardroom as well as in the offices of public relationships in the organization. Some other departments that are directly influenced by dominant stakeholders include ethics committee department, accounting department, risk management, finance department and public relation department. Discretionary Stakeholders are those stakeholders that demand power from the authority concerned so as to manipulate the actions in the organizations. But they are also legally corporate party to the organization (Jacob Rendtorff, 2009). Discretionary Stakeholders may be are from corporate sponsorship thus they make the image of the organization more legitimate. They collude with demanding stakeholders to form dependent stakeholders. Dependent stakeholders are the subset of the two core stakeholders (demanding and discretionary) and have no power to manipulate but they possess an imperative and lawful claim on the organization. For instance, if an organization needs to damage the actions of responsibilities, they need to seek legitimate power from the authority. Demanding stakeholders neither have power nor legitimacy to manipulate the actions in the organizations. However, if the organization allows democracy, they usually air out their suggestions and opinions to the corporate strategy. Demanding stakeholders and dormant stakeholders join together and for dangerous stakeholders. Dangerous stakeholders normally are the group of stakeholders who have claims of power as well as urgency thus uses coerciveness to develop stakeholder claims (Mitchell et al, 1997). Why do the organizations measure corporate performance? This is a question that was well answered by Rasche and Esser, (2006) when he stated that the measure helps to identify firm’s strengths and weakness, and develop efficient strategies for improving these strengths and cure the weakness. While undertaking this process therefore (measurement of corporate performance), accountability of stakeholders are realized in accomplishment of organizational objectives and goals. Tracy Swift (2001) considered accountability to refer a validation of one’s power to perform a given duty legally. This takes route between two parties where a duty is created and the one who is liable justifies actions that need to be taken to accomplish the goal and the granted party is owed. Accountability is also concerned with how managers cover their actions to the stakeholders in the organization. Entrenched from accounting, morals and supremacy, accountability comprise of group governance and leadership (Solomon, 2007; Rasche and Esser, 2006). Apparently, there are three types of accountability that is experience at different levels of the organizations. In the management level, managers are required to meet the terms of societal customs by keeping their promise to external environment (customers and suppliers) fulfilled always. In the governance level, executives need to monitor and ensure that managerial responsibilities are completed in the rightorder (Solomon, 2007; Rasche and Esser, 2006). From this we can say that accountability will help in re-assignation of duties by managers and directors in the organization. Generally, accountability greatly influences managerial behavior in the organizations (Solomon, 2007). Most of non-profit organizations have multiple stakeholders rather than shareholders. The non-governmental organizations stakeholders include the government, benefactor (donor), recipient (beneficiary) and the voluntary group/s to the organization. There are three reasons of stakeholders’ accountability namely; stake-based, right-based and duty-based reasons as acknowledged by Werhane and Freeman (1997). Interest/stake-based examines the how the organization deals with the stakeholders, the right based explores how equity in terms of resources and opportunities are dealt with in the organization while duty-based measures and accommodate accountability portions of stakeholders in the organization. Therefore, the management should critically reconsider the stakeholders’’ interest and be conventional in managing the changes. Every organization needs meaningful ideas so as to provide the required standards of productivity. Good guidance of setting a social environment indeed requires these standards. Therefore, the government should talk with the stakeholders of any other organization before the affect of be affected by the accomplishments. Brynne and Mallet (2005) elaborated that consultation of stakeholders by the government is an obvious requirement that will enhance good conduct in the organization. Before we ask ourselves, ‘Why do the government need to consult the stakeholders,’ let focus first on factors to consider during consultation process. First, the government should assess what undertakings are imperative for and essential for legitimization of organization processes. Secondly, the government should analyze the responsible parties for the organization that are already set in place and can be utilized during consultation process. Thirdly, procedures and process that needs to be set up should be assessed too to enhance successful implementation of legitimized values. Also, the funds for consultation should be put in place. Setting also the parameters for consultation process is very important. According to Brynne and Mallet (2005), if an organization set good parameters during consultation process, apparently this will result to development of high standards and these standards, and those who are involved (stakeholders) are accountable. Therefore, if clear parameters are set, then the government will be in position to set a good timeline and agenda for the accomplishments (goals and objectives). Most importantly, the government should identify the potential stakeholders before consultation. This will help in clear identification and understanding of objectives of consultation in order to give legitimate outcomes that will affect the organization’s accomplishments. If the government visibly understands the point of the consultation, then it will be very easy to identify the range of stakeholders that needs to be incorporated in order to attain a reasonable result. Credibility of the organization is well maintained when the precise range of stakeholders are consent to the organization’s objectives (Freeman, 1984). We have five reasons why the government should communicate or consult the stakeholders in an organization. First is for protection; protection is achieved when clear and quality information that pertains the organization is communicated to the audience. As stated by Brynne and Mallet (2005), information is power, and when it is utilized in the organization, it usually leads to effective decisions. Sub-sequent, consultation creates awareness about the role of the regulators of power in the organization. It is very essential to have a framework between the watchdogs (government) and the all the other concerned parties in the environment. Consultation improves the relationship with stakeholders (Regional Conference Report 2010). Harmonized framework will enhance confidentiality and reciprocated agreements that will maintain and improve the cohesion between the stakeholders. Sometimes the decentralized processes in an organization may be costly and may burden the resources from stakeholders and donors (Macdonald, 2008). This is the case of NGOs where it depends on government and other multiple parties for its empowerment. Therefore, most of the NGOs’ stakeholders will be needed to take part in consultative process in order to downturn these difficulties. That is where the government comes in to develop a wide system for consulting the stakeholders. United Nation Development Program (UNDP) is a key origination that supports global nations to explore their own development goals internationally. The organization is accountable of providing oversight objectives that focuses on stakeholders’ efficiency and effectiveness of their operations. It focus on the main areas of development like poverty eradication, building democratic nation, discouraging crisis, environmental protection, health living in the case of HIV/AIDS positive individuals and mounting national knowledge. The organization works with more than 150 nations from diverse regions of the world including Africa, United Arabs State, Asia-Pacific, Europe, and Latin America. Apparently, UNDP partner with quite a number of global nations to attain its goals and the focus remains to be on building knowledge, experience as well as efficient use of resources. UNDP has been partnering with groups at different levels in the society to come up with strategies that will help in endure crisis and sustain growth that will enhance improvement of quality life to everyone in the society. The organization (UNDP) has an executive body that is made of representative from 36 counties of the world. They are responsive in maintaining the objectives of the programmed countries. The organization has three categories of stakeholders namely donors, technical assistance, beneficiaries and team/community members. Before we analyze the relationship amongst the stakeholders, it is very important to identify the stakeholders of a defined project that needs to be accomplished at the moment. Therefore, in discussing these relationships, we will consider Resco Manager Project. United Nations Development Programme (UNDP) organization’s system is guided by Multi-Stakeholder Engagement Processes (MSEPs). This is a kind of relationship which aims at ensuring involvement, equity, accountability as well as transparency. The relationship therefore is called shareholders involvement. With the case of UNDP, multi-stakeholders engagement is applied at the international (Global) level, national level and local level where it addresses the specific needs of the community. At the international level, UNDP stakeholders have four specific objectives that guide the accomplishment of the project. One is to have a dialogue among the responsible parties, two is to build a consensus that will harmonize the procedures during the process, three is to inform the organization about the policy process and lastly, is to influence the decision making process. World Commission on Dams (WCDs), Community Dialogue Spaces and Global Call Against Poverty are the international stakeholders that are responsible for the above objectives in the development of Resco manager project. In this case therefore, dialogue and networking are vital participatory elements. Inclusiveness will thus bring the relationship so that the stakeholders surely participate in the processes. At the national level, mutli-stakeholders’ objectives are more likely the same as those at the international level. Apart from dialogue, consensus and decision making, Multi-stakeholders at national level need to plan, implement, monitor and evaluate the procedures. UNDP has literacy campaigns supported by National Development Visions (NDV), democratic Dialogue from the community and Government in elaboration of the sustainable development plan. For instance, in attaining millennium development goals there should be an integral linkage among the stakeholders of the organization. During campaigns, the organization (UNDP) should identify those policies that are communally synergetic that will help in achieving various goals with limited costs. The stakeholders therefore will share the common objectives grounded on the difficulty at the moment. At this point, good governance is needed to ensure that there is an effective participation, implementation as well as evaluation transversely from the government, community to non-government sector. Both at the local and community level, ensuring good dialogue, planning, implementation and evaluation are emphasized by stakeholders. Local community is greatly influenced at this level while Assessment of Development Results (ADR) sanctioned by government analyzes the procedures till maturity (outcome). The report of Capacity Development Group of UNDP organization (2006) concluded that a well dialoging among stakeholders in an organization, that emphasis on unities will in turn convey cohesiveness of stakeholders. However, the dialogue does not encourage differences but rather promotes commonalities and reduce the situation of conflicts during accomplishment of organizational goals and objectives. In this case, the results from Assessment of Development Results (ADR) are not only evaluated by the UNDP’s offices alone, but also parties like the government in the countries, relevant UNDP Regional Bureau or Sovereign Evaluation Team are accountable for these results as well (UNDP evaluation office, 2007). ADR organization does not limit its boundaries only to development results, but also it focuses on responsiveness of stakeholders, comparative advantage as well as operative efficacy. Carmen Malena (2004) on the other side pointed out clearly that if an organization needs to develop a multi-stakeholder partnership that is goal oriented and drives towards achieving Millennium Development goals (MDGs), then UNDP should set targets for the global approved priorities. For instance, the organization should explicitly communicate the purpose of implementing various agendas and the declaration of the goals. This will make stakeholders be inclusive in the processes being carried out in a corporate way. Generally, analysis of stakeholders in an organization is very important when it comes to understanding the relationship in social and political arena of the organization. For instance, the results from ADR group would show the impact of changing of public concern on the objectives of the organization (UNDP) on environmental issues. Therefore, the organization may embrace institutionalize the stakeholder perspectives in order to maintain its processes and avoid compromised situations. Seemingly, UNDP is extending its operations while engaging mostly in diverse utilities with numerous individuals in the course of accomplishment of its goals and objectives beneath from the community level to international level. In conclusion, the paper has defined various meanings of stakeholder of an organization. Topologies of these stakeholders have extensively discussed focusing on their power to influence, legitimacy and urgency of the operations. Since every stakeholder have a responsibility in an organization, their accountability has been examined at different levels of management that is at the management level and at the governance level. The paper also discusses the relationship of stakeholders grounding its examples from UNDP stakeholders during the accomplishment of Resco Manager Project. Assessment Development Result (ADR) group highly structured a clear scenario of these relationships in the organization. Reference Capacity Development Group, Bureau for Development Policy, United Nations Development Programme. (2006). Multi-Stakeholder Engagement Processes A UNDP Capacity Development Resource. Turkey: Capacity Development Group. Freeman R.E. (1984). Strategic management. A stakeholder approach. Boston: Pitman. Greenwood, R. M. (2001). Community as a Stakeholder: Focusing on Corporate Social and Environmental Reporting. Australia: Monash University Press. Maani, E. K. & Cavana, Y. R. (2000). Systems Thinking and Modelling: Understanding Change and Complexity, Auckland: Prentice Hall. Macdonald, T. (2008). Global Stakeholder Democracy: Power and Representation Beyond Liberal States. London: Oxford University Press. Mitchell, R., Agle, B. and Wood, D. (1997). Towards a theory of stakeholder identification: defining the principle of who and what really counts. Academy of Management Review, 22(4). Rasche, A. and Esser, D. E. (2006). From Stakeholder Management to Stakeholder Accountability. Journal of Business Ethics, vol. 65, pp. 251-267. Rendtorff, D. J. (2009). Responsibility, Ethics and Legitimacy of Corporations. Copenhagen Business School: Copenhagen Business School Press. Savage, T, G. Nix, W, T. Whitehead, C. J. and Blair, D.J. (1991). Strategies for Assessing and Managing Organizational Stakeholders. Montreal: Academy of Management Press. Solomon, J. (2007). Corporate Governance and Accountability, 2nd ed., Chichester, John Wiley and Sons. UNDP Evaluation Office. (2007). Guidelines for an Assessment of Development Results (ADR). UNDP Evaluation Office. Retrieved from: http://rescomanager.org/stakeholders/stakeholder/undp/ Werhane, P. and Freeman, R.E. (1997).The Blackwell Encyclopedic Dictionary of Business Ethics, Oxford: Blackwell Publishing Ltd. Read More