Stakeholder Mapping: What is it for?
Within an amazingly short time the term “stakeholder” and the narrative surrounding it became a staple in academic discourse and management practice after Edward Freeman discussed this concept in his book, Strategic Management, published in 1984. The translation of the term to “Pemangku Kepentingan” in Bahasa Indonesia was readily accepted without much fuss as a principle worthy to be applied in running businesses and organizations. Government officials and company executives alike began using this term in the early 2000s.
With all its popularity a major challenge is faced in implementing the stakeholder theory principles into corporate practice. It goes without saying that no practical benefit will accrue to corporations from the noblest principles or theories that are not capable to be put into operational use. Consequently, much thinking and research have gone into translating stakeholder theory principles into concrete steps in practice.
The basic tenet of the stakeholder theory is that stakeholders are fundamentally diverse, and it is necessary to classify them before any meaningful engagement activities can be undertaken. One of the most-used sorting methods is based on salience. To my knowledge, no word in Bahasa Indonesia exists that adequately conveys the meaning of this term in one word. Suffice it to say that salience refers explicitly to the relevancy of stakeholders to companies, for which specific criteria need to be established.
The most widely quoted and implemented determination of salience or relevancy of stakeholders to date is as provided in the graphic reproduced above that is created by Ronald K. Mitchell et al. There are specific attributes that one group must possess to be considered a stakeholder. Seven categories emerge from this method of classification that will not be elaborated on in this article for the sake of brevity, moreover they are widely available on the Internet. In brief, attributes that must be possessed to be considered stakeholders include Power, Legitimacy, and Urgency, the last-mentioned is viewed from the perspective of the organization/company concerned.
Some stakeholders only have one or two attributes. However, others have all three attributes (category 7), and therefore these parties are the ones who need the most attention. Conversely, category 8 (depicted in red) is not a stakeholder as it does not possess any of the three attributes. Basically this category does not warrant the company’s attention.
Assignment of attributes is the first step toward stakeholder identification and, afterward, developing stakeholder mapping as the basis for stakeholder engagement. The objective of stakeholder management, the all-encompassing concept that covers all the steps mentioned here, is prioritizing engagement activities. Setting priorities is one of a company management’s primary functions as no company, however large, has unlimited resources.
The next question that arises is how companies use stakeholder mapping for operational purposes. Corporate social responsibility (CSR) as defined in ISO 26000 regarding Social Responsibility is explicitly an application of the stakeholder concept. The current internationally accepted standard in Sustainability Reporting, GRI Standards, are centered around the stakeholder concept as well.
Another example of stakeholder mapping prior to initiating stakeholder engagement activities is in corporate communication to maintain the company’s reputation in a sustainable and structured manner. A frequently quoted case in international literature about the role of stakeholder management in maintaining reputation relates to Shell, the giant multinational oil and gas company.
Shell was undergoing internal changes to implement stakeholder engagement principles when two coincidental occurrences produced a shock that accelerated the corporate transformation to align with this new paradigm. The first one is the Brent Spar incident, a floating oil storage facility in the North Sea that has reached the end of its useful life and therefore served no economic purpose any longer. Shell decided dispose of the facility at the bottom of the Atlantic Ocean as the best alternative.
Shell’s plan was based on an extensive internal technical study that had obtained the approvals of the relevant authorities in the United Kingdom. However, consultation with other stakeholders has not been conducted. When news of this plan broke, spirited resistance arose from environmental activists spearheaded by Greenpeace. The actions unleashed by the environmental activists made international headlines and shaped public opinion that condemned Shell as an irresponsible company. Ultimately, the plan to confine this obsolete vessel to the seabed was scrapped.
The second incident in the same year was the execution by hanging of eight Nigerian environmental activists who advocated against pollution in the Ogoni area where Shell was operating. Ken Saro-Wiwa, a writer and television producer with an international reputation was among the eight activists sentenced to death. Shell was accused of conspiring or at least not having done enough to prevent the death penalty imposed by the Nigerian government under General Sani Abacha, who ascended to the presidency through a coup d’état in 1993.
Both Incidents in 1995 resulted in accelerating stakeholder management implementation at Shell. This oil and gas company now is often mentioned as an example of best practice in stakeholder management, including the acquisition of the social license to operate.
Stakeholder mapping as part of business management is widely used by the heavy construction industry and human development projects by international organizations such as the World Bank, IMF, and other similar institutions. One gigantic European construction project is the development of the Donau River Basin by the European Union, which covered an area of 1,084,000 km2 or equivalent to half of Indonesia’s mainland, crossing 13 countries.
Stakeholder identification preceded the commencement of the project to create a stakeholder map and engagement strategy to gain public support. Identified stakeholders include the government, NGOs, business and industry, professional groups, tourism and tourists, educational institutions, youth groups, media, and the general public in the impacted areas.
Examples in this short article have shown that stakeholder mapping is not merely an aspiration or academic exercise but is widely applied in the real world, becoming a part of the management function, especially to create mutual understanding among stakeholders. Technological advances have enabled the creation of various software applications to facilitate stakeholder mapping and engagement.
Chairman & Chief Consultant, Kiroyan Partners
This article has been published in PR Indonesia magazine 89th edition issued on August 2022, page 58.
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