"Visions of World Benefit & Global Responsibility: Perspectives of McGill Students

Thursday, July 26, 2007

Stakeholder Management

In recent years, new paradigms have emerged throughout the business world that have completely altered the way in which twenty-first century managers should choose to operate their organizations. One of the most important concepts that has emerged from these changes is that of stakeholder management. In the earlier part of the 20th century, as large corporations began to emerge in various countries around the world, the main focus of managers was based solely on the interests of the shareholder. This emphasis on ‘bottom line’ results often meant that managers would run organizations without regard for social or environmental interests. In the last 25 years, however, more emphasis has been placed on the idea of stakeholder theory, a concept that was introduced in detail by Professor R. Edward Freeman of the University of Virginia in 1984. In the shift from shareholder to stakeholder interests, firms no longer just consider the welfare of shareholders and investors but also take into account the interests of the community, employees, government, and consumers in addition to its owners. The shift towards an increased emphasis on stakeholder management has gained popularity around the world due to changing social conditions (more educated and conscious consumers), changing environmental conditions (increased emphasis on environmentally friendly products and practices to offset global warming), and increased organizational support from such organizations as the United Nations Global Compact to further promote stakeholder interests.

In the twenty-first century, stakeholder management will become a significant consideration in the overall operations of small, medium, and large corporations. Professional managers will need to consider stakeholder interests in order to have good relations with government agencies, keep employees and shareholders happy, and create strong relationships with more conscious consumers and their community. In return, strategic stakeholder management will contribute to the firm by providing it with a better public image within the community, increased productivity from employees, improved customer satisfaction, and higher profit levels. In order to continue to promote stakeholder management practices throughout the business world, both business leaders and politicians should inform themselves of this new paradigm and participate in various initiatives such as the UN Global Compact Summit. This will allow both governments and businesses to share ideas and cooperate in a formal setting in order to improve future economic, social, and environmental sustainability.

As a new paradigm in the business world, stakeholder management will play a key role in the future practices of global corporations. By promoting stakeholder management and working with employees, government agencies, and the community, twenty-first century managers will be able to better adapt themselves to the changing social and business environment. This greater understanding will provide benefit to all by allowing managers to play an important role in addressing social and environmental concerns faced by employees, consumers, and the community alike, and will ultimately provide the corporation with future promise of higher productivity levels, increased customer satisfaction, and higher long-term profits.

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