Gone are the times when senior corporate affairs executives could to do their jobs from an ivory tower – in this day and age, senior leaders need to invest solid time and effort into creating engagement internally and externally.
Needless to say, managing stakeholders is tricky business, and the advent of social media has made it even tougher.
Why is stakeholder management important?
Information-rich online communities are a double-edged sword. While they are great for building trust and spreading the good word, internet forums are just as potent when it comes to negative publicity.
Research from the University of Western Ontario suggests that there is a link between financial performance and how the company manages
Shareholder value, stakeholder management, and social issue participation are intertwined.
those with a direct vested interest.
With tougher competition in the market for investment capital, it is becoming increasingly important to satisfy key stakeholders – particularly customers, employees and suppliers.
By testing the relationship between shareholder value, stakeholder management, and social issue participation, the authors concluded the three aspects are intertwined.
Understanding the nature of stakeholders is key to developing a communication strategy that works.
Three types of stakeholder relationships
A recent study published in the Journal of Public Relations Research has made significant headway in this area.
Academic and author Vilma Luoma-aho suggests there are three types of relationships that stakeholders have with a company – faith-holders, hateholders, and fakeholders.
1. Faithholders – positive engagement
These are what Ms Luoma-aho calls "gold". They are loyal and have had many pleasant exchanges with a company. With strong trust, they invest in the business, whether it is through purchasing products or buying shares. Most important is the fact that they and can influence others to do the same.
2. Hateholders – negative engagement
There is only one word to describe the emotion these people feel towards a company – anger.
They have a tumultuous relationship with the organisation and it is usually it is a specific incident or individual that has upset them. If their issues are addressed and resolved, these people have the potential to become faithholders.
3. Fakeholders – nonexistent but sway opinion
The concept did not exist two decades ago – the term refers to fake reviews and interactions created to help the online community develop an opinion on a specific issue.
With significant influence, they are limited in number but have the power to cause damage – especially as they turn new stakeholders into hateholders. This means the company's narrative on an issue may end up getting disregarded.