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Stakeholder management is concerned with the alignment of the organization’s strategic objectives with the goals of its stakeholders, such as customers, shareholders, and employees. It is possible through the control of the relationship between these groups and organizations. Successful stakeholder management is an important management tool that helps achieve the mid-term success of an organization (Huber, Scharioth, and Pallas 136).
The institutions that have proper stakeholder management approaches transform their stakeholders into important assets have open communication with their stakeholders, and develop good reputations (Huber and O’Gorman 116). Successful companies emphasize heavily on the relationship with their stakeholders and routinely assess them as a part of management evaluation practices. As a result, those organizations tend to achieve a maximum level of commitment from their customers and employees, thus gaining a competitive edge over rival businesses (Huber, Scharioth, and Pallas 136).
Employees and Unions
Both Mitchell et al. and Savage et al. recommended different approaches to the stakeholder management for each stakeholder typology (qtd. in Roloff 236). In their view, it is enough to simply monitor the “marginal” or “dependent” stakeholder groups Whereas, the strategy of self-defense should be adopted when dealing with “dangerous” actors (qtd. in Roloff 236). According to scholars’ advice, it is reasonable to collaborate with influential stakeholders or those who have legitimate stakes (Roloff 236).
Even though employees of the corporation that considers moving its manufacturing facilities abroad would not have a considerable influence over the company, it is, nonetheless, advisable for the managers to address them directly. Successful managers who understand the needs of vulnerable or marginal stakeholders tend to address them directly, rather than through societal actors such as government organizations or media (Roloff 236).
Even though such an approach is inconsistent with the stakeholder management view of Savage et al. and Mitchell et al., it is nonetheless advisable to adopt it in order to improve the social development of the company (Roloff 236). Negotiating organizational changes on the production sites with local management groups or union leaders might help to build a long-lasting relationship with the remaining workforce (Roloff 236).
It is important for the management to recognize that even though offshoring some of the manufacturing facilities will inevitably deteriorate the relationships of the company with its employees and unions in the short run, it might save the business from many more layoffs in the future as a result of losing a competitive edge and falling demands for its products. (Hillman and Keim 127).
The company’s ability to outperform its competitors results from the unique relationship with its customers, employees, shareholders, and community residents, which provide it with tangible material and intangible social resources (Hillman and Keim 127). The organization with the high future expectations and the desire to outperform its rivals has to effectively deploy such ambiguous and complex resources as public relationship and reputation (Hillman and Keim 127). Undoubtedly, offshoring manufacturing facilities will have a negative and long-lasting effect on the inhabitants of the small rural communities.
According to Trevino and Nelson company’s employees, customers and the community are “the major constituencies” of the organization (gtd. in Robertson, Lamin and Livanis 170). Therefore, the management of the company must take into consideration the negative impact on the lives of the communities that the organizational change will inevitably involve. The issue of the job loss and subsequent relocation of the inhabitants of rural communities to the urban ones is considered to be a moral issue since it involves the decision that will affect the well-being of the employees (Robertson, Lamin and Livanis 170). Moreover, the third party might get involved as a result of the restructuring of the communities after the disappearance of the primary employer.
Even though the decision to offshore might promise potential financial benefits to the stockholders, it can also have various risks such as loss of the customer base as a result of the change in the marketing strategy and possible deterioration of product quality (Eskerod and Jepsen 46). Moreover, the moral component of the offshoring decision has to be considered as well, since it will lead to the major job loss.
Considering that stockholders, employees and consumers do not have entirely parallel objectives, their view of the relocation of manufacturing facilities will considerably vary. Numerous studies have suggested that ethical judgments about a relocation of the company’s manufacturing facilities are dictated to the great extent by the stakeholders’ view of the magnitude of consequences (Robertson, Lamin and Livanis 170). However, it is important to realize that it cannot be precisely assessed. Therefore, the offshore outscoring decision has to be treated with the utmost caution.
The decision to offshore manufacturing facilities will have a considerable effect on company’s relationships with all groups of stakeholders. Therefore, it is recommendable for the management of the company to take into consideration the negative impact on the lives of the communities and employees that the organizational change will inevitably involve. Moreover, the offshore outsourcing decision cannot be only driven by economic considerations, rather it has to be considered from the ethical and managerial perspectives as well as the economic ones.
Eskerod, Pernille, and Anna Lund Jepsen. Project Stakeholder Management. Farnham, Surrey, England: Gower, 2013. Print.
Hillman, Amy, and Gerald D. Keim. “Shareholder Value, Stakeholder Management, And Social Issues: What’s The Bottom Line?”. Strategic Management Journal. 22.2 (2001): 125-139. Web.
Huber, Margit and Susanne O’Gorman. From Customer Retention to a Holistic Stakeholder Management System: Living a Vision. New York: Springer Science & Business Media, 2008. Print.
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Huber, Margit, Joachim Scharioth, and Martina Pallas. Putting Stakeholder Management into Practice. Berlin: Springer-Verlag, 2004. Print.
Robertson, Christopher J., Anna Lamin, and Grigorios Livanis. “Stakeholder Perceptions of Offshoring and Outsourcing: The Role of Embedded Issues”. Journal of Business Ethics 95.2 (2010): 167-189. Web.
Roloff, Julia. “Learning From Multi-Stakeholder Networks: Issue-Focussed Stakeholder Management”. Journal of Business Ethics 82.1 (2007): 233-250. Web.