Chapter 4 balancing stakeholders

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Chapter 4 balancing stakeholders

  1. 1. CHAPTER 4: BALANCINGSTAKEHOLDERS Week 5
  2. 2. Balancing Stakeholder Forces Not all stakeholders play an equal role in an organization success. It is important to understand where their values are also in conflict with each other as well as with the organization.
  3. 3. Balancing Stakeholder Forces Organization who did not accurately assess the power of their stakeholders’ values risk being blindsided. The forces of stakeholder values exist and will impact the company’s performance, regardless of whether or not you measure and act on their influences.
  4. 4.  Therefore, to balance the influences from different stakeholders, it is important to align corporate values with key stakeholder groups. Focus on: 1. Measure Brand and Reputation 2. Brand Assessment 3. Stakeholder Assessment 4. Stakeholder Return on Investment 5. Balanced Conversation 6. Creating and Maintaining Balance
  5. 5. 11. Measure Brand and Reputation2. Brand Assessment3. Stakeholder Assessment4. Stakeholder Return on Investment5. Balanced Conversation6. Creating and Maintaining Balance
  6. 6. 1. Measure Brand &Reputation Measuring Brand  A method of evaluating a brand is by: 1. Measuring its financial strength, 2. Stakeholder support, and 3. Overall brand awareness.  Brand value measurement must include more than just the measures of the end user, because there are other audiences and stakeholders that impact the future shareholder value that can emanate from the brand.
  7. 7. 1. Measure Brand &Reputation Measuring Reputation  Key dimension to measure reputation (7Ds): • Perceptions of the company’s financial Performance results and prospects. • Perceptions of the company’s Workplace workplace environment and the quality of its people. • Perceptions of the quality and price of Products the company’s products and services.
  8. 8. 1. Measure Brand &Reputation Measuring Reputation • Perceptions of how well the company is Leadership managed. • Perceptions of the environmental Citizenship strength and social responsibility of the company. • Perceptions of the company’s Governance organizational systems and culture. • Perceptions of the company’s Innovation entrepreneurial orientation and innovativeness.
  9. 9. 1. Measure Brand &Reputation Measuring Reputation  Reputation:  “Build in a Lifetime, Lost in a Moment”
  10. 10. 1. Measure Brand &Reputation Measuring Reputation  Reputation:  “Build in a Lifetime, Lost in a Moment” In our judicial system, you are innocent until proven guilty, but in the media, you are guilty until proven innocent. That’s why it’s important for companies to build strong and trusting relationships with the media.
  11. 11. 1. Measure Brand &Reputation Third Party Validation  The strongest part of your brand reputation comes from the comments and opinions of key stakeholders or industry experts.  It is not easy to get third party validation, but it can be done.  There are a some methods to build company reputation via third party validation.
  12. 12. 1. Measure Brand &Reputation Third Party Validation  Ways in getting third party validation: #1 Articulate your values to all constituencies. #2 Align your corporate values with your key stakeholders’ values. #3 Empower employees and customers as ambassadors. Continually question how your products or services impact your #4 stakeholders. #5 Work within your industry to address problems and issues affecting the community or environment. #6 Be active in the community.
  13. 13. 1. Measure Brand &Reputation Reputation and Mistakes  If you’re thinking that companies with great reputations never make mistakes, you’re wrong.  If you want to build a strong reputation, you need to accept that mistakes will happen and make a plan now about how to handle them.  Here are some basic guidelines to follow when mistakes happen:
  14. 14. 1. Measure Brand &Reputation Reputation and Mistakes  Here are some basic guidelines to follow when mistakes happen: 1. Be honest. 2. Take responsibility. 3. Be willing to change and adapt. 4. Be consistent.
  15. 15. 1. Measure Brand &Reputation Reputation and Mistakes  Example: Schwan’s is the largest direct-to-home food company in the United States, with multibillions in revenues and 700 national distribution depots. With 24,000 employees, they are the largest producer of frozen pizza and egg rolls in the country. In 1994, more than 200,000 people were sickened in the largest single case of salmonella poisoning in the United States from a single food source—Schwan’s ice cream.Salmonellosis is an infection with Salmonella bacteria.Most people infected with Salmonella develop diarrhea, fever, vomiting, and abdominal cramps.
  16. 16. 1. Measure Brand &Reputation Reputation and Mistakes The company didn’t waste time assigning blame or denying that their product had caused the illness. They sent their home delivery truck drivers to every house on their routes, retrieved all the ice cream, then shut down production until the source of the problem was discovered and appropriate corrective action could be taken.
  17. 17. 1. Measure Brand &Reputation Reputation and Mistakes It turned out that an independent trucking contractor Schwan’s used for hauling milk and ice cream had previously hauled raw eggs that were contaminated with salmonella enteritis. In the name of product safety and quality, Schwan’s decided to cut out the middleman and bought their own fleet. And they didn’t stop there. All dairy products used in making ice cream solutions are pasteurized twice—before and after transport.
  18. 18. 1. Measure Brand &Reputation Reputation and Mistakes  What has the impact been on Schwan’s reputation?
  19. 19. 1. Measure Brand &Reputation Reputation and Mistakes  What has the impact been on Schwan’s reputation?  Customers appreciated the speed in addressing the problem and the way the company took responsibility for its actions.  “they did the right thing”
  20. 20. 1. Measure Brand &Reputation Redemption  One of the most difficult jobs is to repair a damaged brand or reputation.  Most consumer brands could not survive one year, much less the three to five years it would take to begin rebuilding trust.  Therefore redemption is not an option for most companies.
  21. 21. 1. Measure Brand & The Four Pitfalls of BrandReputation Development  While having a strong brand and reputation creates the right environment for selling products and services, success is not guaranteed.  The four pitfalls: 1. Weak Product or Service 2. Poor Strategy 3. Lack of Research 4. Relying on Limited Marketing Tools
  22. 22. 1. Measure Brand & Pitfall Number 1: Weak Product orReputation Service  Not all products or services are good.  Some are ill conceived or don’t deliver a relevant benefit to the customer.  Instead of correcting the flawed product or improving service levels, some companies hold meetings where committees insist that poor marketing is the problem.
  23. 23. 1. Measure Brand &Reputation Pitfall Number 2: Poor Strategy  Building a strong brand and a strong reputation requires innovative, disciplined strategy.  A company’s strategic planning flounders without clear values, positioning, and brand message.  Other companies rely on the same strategies regardless of changing market conditions, which parallels playing chess and making the same moves every game.
  24. 24. 1. Measure Brand &Reputation Pitfall Number 3: Lack of Research  Many companies believe that research is expensive and they either don’t require or can’t afford.  You need research to help you check in with your stakeholders’ attitudes and your competitors’ actions.
  25. 25. 1. Measure Brand & Pitfall Number 4: Relying on LimitedReputation Marketing Tools  If you’re not using all the tools available to you, and your competition is using them, you’ve put yourself at a formidable disadvantage.  Arguing whether advertising is more effective than public relations, or that direct mail is more effective than Internet marketing, is like going to a hardware store and arguing the merits of a hammer versus a saw.  Without a clear strategic plan none of the tools are very effective at all.
  26. 26. 21. Measure Brand and Reputation2. Brand Assessment3. Stakeholder Assessment4. Stakeholder Return on Investment5. Balanced Conversation6. Creating and Maintaining Balance
  27. 27. 2. BrandAssessment Brand Assessment  A careful examination of organization current vision, values, reputation, brand, and position.  Vision:  Allorganizations must have a clearly stated vision that explains why you’re in business and where you’re going.  Without a clear vision, there cannot be values or operating procedures.
  28. 28. 2. BrandAssessment Brand Personality  Brand personality provides human characteristics that help audiences relate to a company.  A clearly defined brand personality is important for stakeholders to understand the attributes of an organization.  There are some notions stakeholders might form based on the dimensions of your brand personality:
  29. 29. 2. BrandAssessment Brand Personality 1. Size: 2. Age:  Small companies are  Young companies seen as having an might go out of entrepreneurial business soon; older spirit, while large companies are not companies are seen as innovative. considered monolithic and staid.
  30. 30. 2. BrandAssessment Brand Personality 3. Category Preconceptions: 4. Regionality:  People stereotype car  Decisions about your dealers as brand can be based shady, technology on feelings that the companies as East Coast is geeky, government pushy, the West organizations as slow Coast is moving—even if your flaky, Midwesterners particular organization are bumpkins, and is not that way. Southerners are backward.
  31. 31. 31. Measure Brand and Reputation2. Brand Assessment3. Stakeholder Assessment4. Stakeholder Return on Investment5. Balanced Conversation6. Creating and Maintaining Balance
  32. 32. 3.StakeholderAssessment Stakeholder Assessment  Compares and contrasts key stakeholder values with corporate values to identify opportunities and possible differences.  Each stakeholder group has its own unique profile and relationship to a company.  Identifying individual stakeholder groups and classifying groups into different categories is the first step of Stakeholder Assessment:
  33. 33. 3.Stakeholder Identifying and ClassifyingAssessment Stakeholders  Stakeholders can be classified into 4 groups: • Anyone who directly purchases or influences BUYERS the purchase of the product or service. • Investors, analysts, foundations, and private FUNDERS ownership are potential funders. • Boards of directors, employees, distributors, dealers, and BUILDERS any other group that builds, distributes, or sells the company’s product or service. • Community, media, industry leaders, opinion leaders, competitors, special interest groups and INFLUENCERS government that can impact the organization’s brand and reputation.
  34. 34. 3.Stakeholder Identifying and ClassifyingAssessment Stakeholders  Prioritizing Stakeholder Groups  Not all stakeholder groups are equal.  Ranking each group by their importance to the success of the organization is a complex process that ties directly back to your corporate values.  Establishing objective criteria for identifying and prioritizing stakeholder groups is imperative to managing your brand and reputation.
  35. 35. 3.StakeholderAssessment Stakeholder Agendas  Each Stakeholder Group has a unique and sometimes conflicting set of values: Buyers care about how a product or service will fulfill their aspirations and personal values. Funders are interested in maximizing shareholder value. Builders care about work environment and doing important work. Influencers are concerned with social or economic impact, job creation, and the environment.
  36. 36. 3.StakeholderAssessment Managing Stakeholder Values  There are 3 dimensions of stakeholder values that are interrelated in shaping attitudes and opinions about a company’s brand and reputation.  By sorting stakeholder values into these three dimensions, you are able to systematically analyze multiple stakeholder groups.
  37. 37. 3.StakeholderAssessment Managing Stakeholder Values  The three dimensions of the Values Pyramid: 1. Aspiration:  How well does the company’s product or service satisfy a stakeholder’s needs and desires? 2. Process:  How well does the product manufacturing process or service delivery process achieve the expected standard performance? 3. Impact:  What is the impact of your product or service on the community or environment?
  38. 38. 3.StakeholderAssessment Stakeholder Assessment  Stakeholder Assessment:  Identifies stakeholder values and  Provides a framework for understanding the reaction, a company can expect from each stakeholder given a particular decision or action.
  39. 39. 3.StakeholderAssessment Stakeholder Assessment  Depending on the importance of the stakeholder group, your company will choose to: Align corporate values with stakeholder values Manage stakeholder expectations Monitor stakeholder reactions
  40. 40. 41. Measure Brand and Reputation2. Brand Assessment3. Stakeholder Assessment4. Stakeholder Return on Investment5. Balanced Conversation6. Creating and Maintaining Balance
  41. 41. 4.Stakeholder Stakeholder Return on ROI Investment  Alignment with stakeholder values must show measurable outcomes.  The return on investment (ROI) may be measured as a direct benefit to the stakeholder as well as demonstrating financial performance.  Alignment outcomes can be identified and measured by using the 3R Brand Equation.
  42. 42. 4.Stakeholder Stakeholder Return on ROI Investment  For employees, the equation refers to Return on Involvement instead of Investment.  While there are monetary incentives for performance, there is also the personal benefit, which is a major factor in employee satisfaction.
  43. 43. 4.Stakeholder Stakeholder Return on ROI Investment  The 3R Brand Equation is designed to measure the following:  Relevance + Relationship = Return on Investment • For the stakeholder, what need is fulfilled by the Relevance brand, product, or service? • How do the values of the organization align with Relationship those of the stakeholder? Return on • What is the outcome as measured in direct Investment benefit or financial returns? • What are the direct benefits for supporting the organization’s values? Employees are looking Return on for job satisfaction, career growth, and positive Involvement work environment in addition to wages and benefits.
  44. 44. 4.Stakeholder Stakeholder Return on ROI Investment  Example:  Health care industry.  Stakeholder values is used in the 3R Brand Equation to demonstrate outcomes and ROI.  This example illustrates the importance of:  Understanding physicians’ needs and values (ongoing product information and training) combined with  Manufacturers’ willingness to align with these needs and values (full disclosure, training, and collaboration).
  45. 45. 4.Stakeholder Stakeholder Return on ROI Investment  Reducing risk allows the company to increase market share and enhance its reputation.  The 3R Brand Equation provides the critical information necessary to identify and evaluate which stakeholder values, impact outcomes.  By ensuring that the alignment of corporate values with stakeholder values has a measurable outcome, the benefit of values driven activities can be determine.
  46. 46. 51. Measure Brand and Reputation2. Brand Assessment3. Stakeholder Assessment4. Stakeholder Return on Investment5. Balanced Conversation6. Creating and Maintaining Balance
  47. 47. 5. BalancedConversation Balanced Conversation  There are two ways to have a Balanced Conversation. 1. Talking directly to your stakeholders.  This is achieved through all stakeholder contact with your company. 2. Having others talk about your company.  This occurs when people discuss personal experiences with your company, see media coverage or advertising.
  48. 48. 5. BalancedConversation Balanced Conversation  In all cases, these conversations are opportunities to build the organization’s brand and reputation.
  49. 49. 5. BalancedConversation Initiating a Conversation  Advertising and public relations professionals can start a conversation with stakeholders if the creative content is designed with that goal in mind.  When you take this approach, and align the conversation with stakeholder values, you are both memorable and compelling. This is an excellent way to begin a conversation.
  50. 50. 5. BalancedConversation Sustaining a Conversation  If a conversation is interesting, we want to participate, and most important, we want to be heard.  The most important element of a conversation is the ability to listen and to respond.  One-way communications are not conversations - they’re monologues.
  51. 51. 5. BalancedConversation Sustaining a Conversation  From a marketing perspective, a real conversation is two-way - it is responsive and respectful to the customer.  The goal of this level of communication is to build lasting relationships with the stakeholders
  52. 52. 5. Balanced Keep the Message, Change theConversation Inflection  All stakeholders have their own values, so it will be impossible to have the same conversation with every group.  While the subject may be the same, the nuances of what’s important and how to conduct a conversation differ with each group.Infection: A change in the form of a word, but the overall meaning remains the same
  53. 53. 5. Balanced Keep the Message, Change theConversation Inflection  Before you start a conversation, you must know your audience, what’s important to them and how they would like to be addressed.  Building separate strategies for each stakeholder group is imperative to creating meaningful conversations.
  54. 54. 5. BalancedConversation Conversation Breaks Down?  Conversations break down because:  Conversation become irrelevant  No agreement achieved  Lost of interest.  For businesses, the threat to breakdown is lack of agreement. This can destroy the stakeholder- organization relationship.  Silence rarely mends a relationship.  One-to-one communications are needed.
  55. 55. 5. Balanced The Role of Public Relations inConversation Conversations  Public relations creates an opportunity to provide comprehensive, in-depth information on the company, product, or service.  Unlike advertising, which is limited to TV commercial or single page print ad, PR gives the helps in gaining news segment or feature article that provides the background and analysis of the company.
  56. 56. 5. Balanced The Role of Public Relations inConversation Conversations  3 ways PR can ruin your reputation: Lack of • While public relations can help shape the Access and conversation, it cannot control it. Information • Some companies misuse PR to distort and spin stories. Spinning Out • This may work in the short term, but once trust is of Control broken with the media, the reputation of the company is difficult to restore. • Some companies report every insignificant corporate event, and it is difficult to differentiate proper coverage Wasting and really important news. Opportunities • Some companies never report their accomplishments or activities, “no news is good news”
  57. 57. 61. Measure Brand and Reputation2. Brand Assessment3. Stakeholder Assessment4. Stakeholder Return on Investment5. Balanced Conversation6. Creating and Maintaining Balance
  58. 58. 6.Creating &Maintaining Creating & Maintaining Balance Balance  If corporate values is not aligned with stakeholder values, you risk destroying important stakeholder relationships.  Stakeholders expect companies to understand and abide by their personal values.
  59. 59. 6.Creating &Maintaining Creating & Maintaining Balance Balance  Getting your organization into alignment with those values is important.  Of course you can’t perfectly align all stakeholder values with corporate values, so your job is to prioritize each stakeholder group and determine which values are essential for alignment.
  60. 60. 6.Creating &Maintaining Creating & Maintaining Balance Balance  Implementation Timelines:  In many organizations, a significant amount of work has already been accomplished in the areas of corporate values, reputation, brand personality, positioning, and brand messaging.  The goal of Brand Assessment is to identify a solid base from which your company can compare its values, brand, and reputation with the values and perceptions of your stakeholders
  61. 61. 6.Creating &Maintaining Creating & Maintaining Balance Balance  Benchmarking stakeholder values and employee engagement are recommended to be conducted annually.  A good values monitoring program will quickly identify potential shifts in values.  Major social, industry, and economic events also trigger times when your company should monitor shifts in stakeholder values.
  62. 62. 6.Creating &Maintaining Creating & Maintaining Balance Balance  Initiating conversations takes approximately the same amount of time as building and launching a new advertising or public relations program.  Additional communications will be necessary to explain the company’s new direction to all stakeholders.
  63. 63. END

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