Every company, organisation, institution, start up or even freelancer has a lot of stakeholders. Of course Google will have more stakeholders that Marie-Anne’s cupcakes shop. But in both cases a huge percentage of the success of the business will depend on the ability of keeping stakeholders satisfied.
When we have a lot of stakeholders to care about, it is difficult to balance their demands. Therefore, it is important to identify which are the most important ones. The ones that can become the biggest danger for our brand/organisation/us. The ones that we have to pay attention first. On this post we are going to identify those using the Stakeholder Salience Model (as fancy as it sounds).
This model was proposed by Mitchell, Agle and Wood in 1997 in a paper called Theory of Stakeholder Identification and Salience. The Model is essentially this:
But don’t panic, it is not as difficult to apply as it looks and it serves for all kind of organisations and brands (even your personal brand).
According to this model, we have to classify our stakeholders on those who have Power, Urgency or Legitimacy. This is, you have to decide what attributes (can be one, to or the three of them) has each stakeholder.
What is THAT?
Power: influence on the company
Legitimacy: Validity of their claim
Urgency: the want their claim solved NOW
According to this the different types of stakeholders that we can find are:
- Dormant Stakeholders: They only have power. They have power to impose their will on the company but don’t have a legitimate claim or an urgent one. It can be an investor, the owner of the company, etc.
- Discretionary stakeholders: They have legitimacy but no power or urgent claims. According to Mitchell et al. There is little pressure on engage in an active relationship with this group as they don’t have power or urgency. Examples of this group can be non-profit organisations that receive donations from the company.
- Demanding Stakeholders: They are kind of “annoying” stakeholders”. They have urgent claims but neither power nor legitimacy. The media can sometimes be in this group. They want everything for now but don’t have power on the organisation and sometimes their claims lack of validity, as they are not involved in the company.
These three groups are what it’s considered “low salience”. There are not the ones to prioritize in the case of need, although their demands should eventually been listened. Otherwise there is a real risk that these dormant, discretionary and demanding stakeholders will evolve to salient stakeholder.
- Dominant Stakeholders: Have both power and legitimacy. Therefore, they are a type of stakeholders that you want to keep happy. They are not the most important ones because their claims lack of urgency, but a company should always keep an eye on them. An example of a powerful and legitimate stakeholder is the government. For example if you have a restaurant, that sanitary inspector that comes to check that everything is fine is a Dominant Stakeholder.
- Dependant Stakeholders: have both urgency and legitimacy but they have no power. Consequently, they depend on others to solve their claims.
- Dangerous Stakeholders: This is a stakeholder that has power and urgency. Therefore, it can become a real danger for the firm. This type of stakeholder can show a coercive power or even been violent. Examples of this, according to Mitchel et al. are wildcat strikes, employee sabotage, and terrorism. Also another group to keep an eye on for the negative consequences that can bring to the company.
Finally, the unique, the most important, the final stakeholder group. This one groups the three attributes (power, legitimacy and urgency) and therefore is the critical one for us.
- Definitive Stakeholder: We have already mentioned that when a stakeholder mixes power and legitimacy is already a very important person of interest. However, when urgency it’s added to the mix, keeping this stakeholder satisfied becomes our number 1 priority.
A relevant thing about the Stakeholder Salience Model is that stakeholders can easily change from one group to another. For example, customers can be low salience, Dormant stakeholders for years until something happens and they have a legitimate claim. There are then Dominant stakeholders. Imagine that the company decides not to listen to this claim and customers become impatience because they are not seeing their problems solved. They become Definitive Stakeholders and a real issue for the firm.
The “trick” here is trying to avoid stakeholders to move into the Definitive Stakeholder group. Attend their claims before. Otherwise it is likely to be too late. I am going to dedicate a post on the following weeks to companies that did not take this into account until it was “too late” so keep an eye on the blog!