Identifying and prioritizing stakeholders correctly, the key to good crisis management

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Strategy Documents
I04/2011

Public Affairs

Identifying and prioritizing
stakeholders correctly,
the key to good crisis
management
Stakeholders management has, since the 80’s, been the paradigm that has
transformed management the most. The right of companies to have information
at their disposal about activities which affect them directly or indirectly has
brought an era of transparency which coexists with the associated risks of
revealing certain information.

It was the philosopher R. Edwards Freeman, the satisfaction of their needs, on the knowledge
Professor in Business Administration at the of their expectations and on the management of
Darden School in the University of Virginia who, relationships between them. Clearly, this led to a
in 1984, launched his theory – until then unknown change that has consolidated in the management
– about the administration of organizations such as of the intangible assets, as it is used in fields such as
the management of interest groups – stakeholders CSR, Reputation, Image, Communication, Public
-, in other words, parts of society who have an Relations or Corporate Governance.
interest in the evolution and development of a
company from an economic, social, environmental The stakeholder master copy
or even psychological perspective, an interest to The first tool that companies can use to understand
know if the company contributes to the general and get know interest groups around them in detail
interest or only to its own good. is the stakeholder master copy, which includes 4
important points:
For Freeman, the company had to change its
rapprochement to the creation of value approaching 1. Identification: who they are
it from a more holistic and integral perspective, where and what they are called.
the said creation is not made ‘against’ society but ‘with’ 2. Expectations: what are they looking
society, with suppliers, shareholders, investors, clients, for and what do they expect.
consumers, employees and the local community, 3. Obligations: what rights do they have
namely introducing the Kantian perspective of not and what obligations do we have.
seeing people as media, but as an end in themselves. 4. Prioritization: who are the most
important in terms of the above.
With the objective of changing it, of turning the
tables, he proposed a new focus, a new mentality The problem is always this last point: how to define
based on the management of interest groups, on priorities, grant a value to each one and place

Identifying and them on an understandable and manageable map. By using a combination of these three attributes a
prioritizing Professor Freeman proposed an initial division of more precise prioritization can be established:
the key to good interest groups:
crisis management 1. Latent (they only have one attribute, of
1. Primary: those who are directly, less concern): inactive (those who have
significantly or potentially affected by power, but no legitimacy or urgency in their
the activities of the organization. petitions); discretional (they have legitimacy,
2. Secondary: those indirectly affected or for but no power or urgency); demanding (they
whom the impact is not that relevant. have urgency, but no power or legitimacy).
2. Expectant (they have two attributes, of
Example of primary and more concern): dominant (those who have
power and legitimacy, but no urgency);
secondary stakeholders
dependent (legitimacy and urgency,
but no power); dangerous (they have
urgency and power, but no legitimacy).
Customers
Customer
rs s
de
ol S Interest groups with the three attributes are those
Suppliers
re h

tra
with a high priority for the company, who must be

teg
Strategic Sha

Banks
treated and analyzed with priority in any strategy.
ic
Management of
the organization Partners

Types of stakeholders
through 3 attributes
Em

plo
yee
s Unions

Power Legitimacy

Source: 12 Manage; 2011.
Latent Dominant Stakeholders
stakeholders optional
A second way to prioritize interest groups consists Definitive
in dividing them into three categories:
Dangerous Dependents
1. Key: those who are essential to
the survival of the company. Stakeholders
2. Strategic: those associated with defendants
relevant threats or opportunities. Urgency
3. Environment: those who are not included Source: Academic of Management Review, 1997.
in any of the other two (all the rest).

‘The problem is This last model (developed in 1997 by Professor
Mitchell to analyze who really counts) is the most
always how to define appropriate for crisis management, according
priorities, grant a value to Antonio Vaccaro, Assistant Professor at the
Department of Ethics in Business at IESE, especially
to each stakeholder because it provides information not only, as in
and place them on an the first case, about the interest which certain
matters related to it have on the company, but also
understandable and about the potential they have to influence their
manageable map.’ environment, extend or contain good reputation,
the good name of the company, as well as the time
factor, fundamental in crisis management.
Finally, there is a third way to differentiate or
categorize a company’s stakeholders:
How to establish priorities and how
1. Urgency: the relationship with to dialogue with stakeholders
the stakeholder is marked by time In order to establish clearly which interest groups
and is key for the company. are a priority, Professor Vaccaro proposes to carry
2. Power: the stakeholder can influence out 3 steps related with information:
others to take decisions that wouldn’t
have been taken on their own. 1. Obtain it: to know what they
3. Legitimacy: the stakeholder has a think (data collection).
moral or legal ‘capacity to influence’ 2. Contribute it: to analyze what
the behavior of the company. you do (re-design).

Insights 2

Identifying and 3. Link it: to change the perceptions company goes through a crisis, it cannot and must
prioritizing they have (action). not hide its responsibilities, nor can it avoid them or
the key to good put them in someone else’s hands. That is the true
crisis management In the process of dialogue with stakeholders it is socially responsible attitude.
essential to speak in the same frequency, to have
common points of connection to establish dialogue, At the worst times, companies should prioritize
bearing in mind that in many cases, the relationship key stakeholders’ interests, but especially those
with the different interest groups either is not based of its employees: in a crisis situation, before any
on or has nothing to do with an economic question, other constructive action is taken with clients and
but a social or even an emotional one. investors, for example, employees morale must be
immediately reconstructed: they will only know
Communication problems with stakeholders tend to what to do correctly if they have previously been
be with the establishment of very specific points of taken into account.
discussion, the dichotomy between simplicity and
transparency, and the need to rapidly fix contact Examples such as 9/11 in the US and the companies
points, bases on which to build mutual dialogue, (many of them of professional services, consulting
as well as identifying the boundary value, the and accounting) who had their headquarters in the
opportunities of finding meeting points, often more Twin Towers or the fire in the Windsor building
in one’s surroundings than in the relationship itself. in Madrid and the Deloitte case in February
2005 confirm this: they managed to make their
The increase of ethical expectations in society also relationship with their employees a priority and
prompts the gap between expectations and practice produce a sensation of relative normality, despite the
to widen, even when the latter has improved, difficult circumstances, reinforcing the confidence
leading therefore to the dialogue with interest groups of the other stakeholders.
becoming difficult and complicated. The danger of
communication with stakeholders is also to increase
expectations through communications itself.
‘In any case, a good
Crisis Communication
Stakeholders and Crisis Communications management is not possible
There are 3 types of crisis:
without taking into account
1. Related to Customer Service. stakeholders’ expectations.’
2. Competence failures in the operation.
3. Others: exogenous factors. In the management of a crisis, the possibility of
converting a threat into an opportunity is always
One of the usual dilemmas in these kinds present, and that opportunity in both cases was the
of situation is what type of information is fact that employees were supporting the activities of
transferred to interest groups and according to the company facing clients, institutions, the media
what criteria (in relation to the data obtained and society as a whole.
for its prioritization and its attributes: urgency,
power and legitimacy), in order to avoid the risk
Conclusions: upcoming challenges
of information which is not controlled.
Finally, the management of stakeholders is a
question that affects the Corporate Governance
Another key aspect is to clearly identify the
of organizations. One of the priorities is to
company’s business, the brand promise and
correctly identify/prioritize them. Furthermore,
acquired social commitments, the expectations of
it is a live, dynamic question, there are no static
stakeholders: what is expected from the company
visions, interest groups change and so too do their
(also in ethical terms) and on what basis is the
expectations/perceptions.
confidence placed on it so far.

Frontier values, the common aspects and interests
One of the most effective approaches is the so-called
that can be found on the horizon, not looking at
‘reverse way’ or backwards way, which consists in
each other, but outwards in the same direction. The
identifying and prioritizing interest groups well,
next challenges in stakeholder management are
what interests and expectations they have (not
centered on changing the vision of the management
only extrinsic motivations, but also intrinsic ones),
that refers to this approach, its true implementation,
as we’ve mentioned before, and, above all, compare
overcoming the gap between theory and practice,
both things, finding a solution of interest for all
and favoring social change.
important parties involved.

In any case, a good Crisis Communications
management is not possible without taking into
account stakeholders’ expectations. When a

Insights 3

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Identifying and prioritizing stakeholders correctly, the key to good crisis management

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