Managing Stakeholders

Sanjay Dhar sanjaydhar@sailmti.com

Session Objectives
 Becoming aware of the different stakeholders who affect
your work.
 To be able to appreciate better the different expectations
of key stakeholders and their impact.
 Food for thought
Minding our own business
Statutory Bodies –CVC, CAG, Pollution Control Boards,
Inspector of Factories, Inspector of Weights and Measures,
Labour Commission, Director General of Mines Safety(DGMS),
…
Unions/Local Politicians/NGOs/RTI Activists
Residents of localities around our Plants & Mines/displaced
persons
Industry Associations, Suppliers, Customers
Standard making bodies/Consultants- BIS,API,RITES,IBM, …..

……….
 Is how we work any of their business?
&
 Is managing their expectations and concerns our business?
Evolving Role of Managers- Why stakeholder
management matters to AGMs
Demands on your time and attention

Managing Stakeholders-
Managing Technology,
Other People, agencies,
processes, dealing with
bodies not in your direct
direct chain of command
control

As we grow in the organization

Even if many stakeholders don’t interface with you directly, they will influence
decisions that you will have to implement or have impact on your working
“Peripheral” Issues with dramatic impacts
 Issues we faced despite being a responsible government
owned enterprise
 Stopping operations in mines due to non-renewal of lease
 Delay in commissioning of Sinter Plant due to accident
 Bank guarantee worth crores given to PCB for not meeting
emission norms in coke ovens
 Delay in laying out railway track due to refusal of villagers to
relocate their temple
 We are not alone
 Delay in Kalinga Nagar project of Tata Steel
 Non-starter status of POSCO Orissa Project due to land
acquisition issues
 The Tiered Corporate Information Pyramid
External User access Boundary defined by
Complete Mandatory
public
disclosure Regulation

Complete
Voluntary public disclosure

Company
Privileged
Selected private disclosures, eg
users only to analysts
Company
None
Undisclosed private information

Things we don’t know that

Business maybe
Reporting: wechange?
the inevitable should
Beattie, 1999

Ruth Bender Page 6

From shareholder to stakeholder
management
 We need to see beyond our day to day operational
concerns about our impact on the eco-system and
society at large.
 These are no longer peripheral issues. These are issues
which directly affect our ability to conduct our business
affectively.
 If the society and the eco-system feels threatened by our
operations, however efficient and well intentioned they
may be, we will not be allowed to operate.
 Our well being lies in the wellbeing of our society and
eco-system and we should embrace, not just tolerate
these expectations.
 BUSINESS ECO SYSTEM

-ve -> Narmada Dam,

-ve -> Maruti Manesar
contract workers

-ve -> closing of factories in

8 delhi (tilak nagar)
Stakeholders

 Stakeholders are those groups who affect and/or

could be affected by an organization's activities,
products or services and associated performance.
Not include all those who may have knowledge of
or views about the organisation.
 Organisations will have many stakeholders, each
with distinct types and levels of involvement and
often with diverse and sometimes conflicting
interests and concerns.
From shareholder to stakeholder
management
 We need to see beyond our day to day operational
concerns about our impact on the eco-system and
society at large.
 These are no longer peripheral issues. These are issues
which directly affect our ability to conduct our business
affectively.
 If the society and the eco-system feels threatened by our
operations, however efficient and well intentioned they
may be, we will not be allowed to operate.
 Our well being lies in the wellbeing of our society and
eco-system and we should embrace, not just tolerate
these expectations.
“Peripheral” Issues with dramatic impacts
 Issues we faced despite being a responsible government
owned enterprise
 Stopping operations in mines due to non-renewal of lease
 Gas Accident at Bhilai
 Bank guarantee worth crores given to PCB for not meeting
emission norms in coke ovens
 Delay in laying out railway track due to refusal of villagers to
relocate their temple
 We are not alone
 The Bhushan Steel Blast Furnace accident Disaster
 Delay in Kalinga Nagar project of Tata Steel
 Non-starter status of POSCO Orissa Project due to land
acquisition issues
“Peripheral” issues that are a boon to us
 Protection offered by Steel import floor price.
 Steel and Steel Products (Quality Control) (Amendment)
Orders making BIS certification mandatory for many steel
products
 Grant of Chiria mines to SAIL despite other big players
eyeing it
Why we are relatively inefficient at
Stakeholder Management
 We never really addressed it systematically (unlike other
business processes where we gave sustained attention)
 We treated it as a “peripheral” and idiosyncratic process
best left to those who have a knack for “fixing” things

The need of the hour

Treat it as a business process
amenable to systematic analysis and
execution
The Case for managing stakeholder
management as a Business Process

Individual flair

External
Engagement-
Process
Driven

Internal Preparedness
–Process Driven

Either a gear compensates for the loss of gearing ratio in any gear through other
gears or the organization loses stakeholder management capability
Responding to Stakeholders
Combination of internal and external actions
 Internal Preparedness Strategies
 Improving compliance
 Strengthening internal systems and controls to minimize vulnerability
(e,g ISO systems)
 Educating internal stakeholders on possible impact ……..
 External engagement strategies
 Networking (e.g Seminars and conferences)
 Strategic Alliances and lobbying (e.g anti dumping)
 Proactive participation in associations, and standard making bodies
etc. (e,g Technical committees)
 Involvement of external stakeholders in internal initiatives (e.g. Safety
week celebrations in mines)
 Information sharing
 ……..
Stakeholder Management as a process

Plan

Monitor, Evaluate &

Understand
Document

Internal
Respond & Implement
Preparation & Alignment

Build
Consult
trust
Identifying Stakeholders
Stakeholder Interest/Stakes
Appreciating both sides of Stakeholder
Management - OWANs and SWANs

Stakeholders
Organizations Wants and Needs
Wants and Needs
Compliance to rules
Clarity on rules and
guidelines Timely Information
Stakeholder Access for supervision
Consultation in policy
formulation (Statutory Effective governance
Body) mechanisms
Opportunity to present
perspective in any Compliance with
issue/incident directions/orders passed
License to operate from time to time
within framework of law
Finding common ground
Stakeholder:
OWANS SWANS
Prioritization of interventions
Example- Deciding Focus of CSR
1. Infrastructure (drinking
High

1. Solar light water, Community hall,

pond renovation, drain,
road, toilets etc.)
External Stakeholders' Inputs

1. Education
2. Skill development
1. Employment
Medium

3. Entrepreneurship
1. Kewada processing 2. Income generation activities
4. Health facility
unit for unemployed youth
5. Agriculture allied activity
(Poultry, dairy, goatery,
fishery, etc.)

1. Sports activity 1. Agriculture (irrigation,

Low

2. Promote culture & improved seeds, implements)

folk dance

Low Medium High

Internal Stakeholders' Inputs

2
 Mapping our stakeholders
Power-Interest Matrix
Interest

Low High

Keep Satisfied Manage Closely

High
Power

Monitor Keep Informed

Low
 Mapping our stakeholders
Collaboration-Confrontation Matrix
Potential for Threat

Low High
(Supportive- Involve) (Mixed Blessing-
• Keep informed Collaborate)
• Co-develop systems and • Educate and influences their
processes
High

systems and processes

Potential for cooperation

• Support with resources- • Support with resources- help them

strengthen their position manage their key stakeholders
• Build coalitions and networks • Influence their influencers

(Marginal- Monitor) (Non Supportive- Defend)

• Track developments- have regular • Minimise vulnerability
monitoring mechanism • Legal defence
Low

• Dipstick surveys • Offence-hit at vulnerability, counter-

coercion,
Exercise on Identifying Stakeholders
 List out your key external stakeholders and their
interests/stakes
 Then map them on a potential grid for
Cooperation/Threat
 Devise Strategies for managing them
Bhushan Incident- Stakeholders
BJP
Politician
Director of
Residents of
Boilers and
local area
Factories

District
Congress
Labor
Politician
Officer

Bhushan

BJD
DC
Politician

Contract
SP
Labor
Technology
Provider

The stakeholders map is dynamic- Any incident can change it dramatically

Expanding our horizons

Seeking win-win with stakeholders

Some Win-win strategies for stakeholder
management
 Suppliers/Contractors
 Transparency in tendering process
 Consultation in framing specifications
 Technical support/capacity building
 Unions
 Acknowledgement of role and positive contribution
 Respect for bipartite forums
 Developing trust through fulfilment of commitments
 Having futuristic agenda after establishing trust
 Statutory Bodies
 Support with information and education
 Involve yourself in making industry standards and norms
Some Win-win strategies for stakeholder
management
 Affected Communities
 Demonstrate empathy
 Address their key concerns
 CSR for capacity building- not charity
 Press/Media
 Keep informed and brief properly on issues
 Recognize their legitimate power and responsibility
 Others
 ……
Competitive Advantage from Stakeholder
Management
 Favorable Regulatory Environment
 Stakeholders as brand ambassadors and force multipliers
 Employee engagement derived from organizational
purpose
 A case-study of a Green Field Project
– 6 MTPA Integrated Steel Plant Project
of Tata Steel, in Odisha
Tata Steel Operations & Projects in Odisha…
Keonjhar-Sundergarh:
• Joda Group – Iron & Mn.
Mines
• FAP Joda / Bamnipal
• Tata Sponge Iron Ltd.
Jharsuguda:
• TRL-Krosaki
Jajpur:
• Sukinda Chromite Mines
• Kalinganagar Project
Ganjam:
• Gopalpur Project
Bhadrak:
• DPCL – TMILL-Dhamra
Angul-Dhenkanal:
• TSIL – Coal Project
• Tata-Sasol Project
Cuttack
• TS Alloys
Jagatsinghpur
• TMILL-Paradip
Project Location Existing Operation Location
The Context …
 A general negative perception in the state –
– Although Tata’s have been mining in Odisha for more than 100 years, they
have not put in any significant industrial investments in the state.
– Although Tata’s are considered to be the benchmark in CSR, they have
not put in any significant social investment in the state.

 Tata Steel was setting up a 6 mtpa integrated steel plant

 IDCO had acquired about 13,000 acres during 1992 – 1996 for
developing the Kalinganagar Industrial Complex.
 3500 acres of land was allotted to Tata Steel in the year 2005.
 On 2nd January 2006, 14 tribal protesters died in an unfortunate police
firing incident.

37
The Context …
 Widespread protests against land acquisition and
displacement across the country. These protests are
mobilized at three levels:
 Level 1 – Project affected & local participants
• Collective behavior caused by insecurity due to feared loss of shelter &
livelihood, concerns about R&R, Quantity & Quality of Compensation, High
expectations created by sudden spate of development projects.
• But no articulated ideological concerns.
 Level 2 – Activists & Academics
• Questioning the inevitability of displacement for development
• National in reach. - Norm oriented
 Level 3 – Intellectual community
• Interrogation of the paradigm of development
• Concerned with ‘Culturocide & Ecocide’
• Functioning at National & International platforms

38
 Stakeholder Management Process

 Identify the key stakeholders

 Prioritize the stakeholders
 Understand the different perspectives
 Develop the Communication Strategy / Plan
 Develop Innovative / new engagement approaches
 Meticulously execute the plan
 Develop a feedback mechanism & measure perception
 Systematically improve the processes

39
Identification of the Stakeholders – June’10
Key Issues & concerns–
• Displacement of Families from the plant site - Loss of land ownership & livelihood
• Kalinga Nagar firing incident / Deprivation of rights of the tribal population
Stakeholders-
 Who are affected by our work? Who have influence or power over it?
 Who have an interest in its successful or unsuccessful completion?

Local People Politicians & Bureaucrats Media External Local District

political Parties Influencers Industrial Administration
Units
Local Opposition Ministers / Local CS / Rev. Secy / Vernacular Dailes Opposing Supporting SP / IIC
group MLA / MPi RDC-Central Groups local industries

Land Owners Ex-MLA State Police / English dailes Supporting Opposing local Collector / ADM /
Other Political Director R&R publishing from Groups Industries LAO / D - R&R
Leaders BBSR

Local Contractors / Congress State & Other Bureaucrats Business Opposition Neutral local Other
local leaders Central Leaders Reporters & NGOs industries Government
Social Media Officials
Displaced Families CPI & CPI(M) Industry Secy. / Local Positive NGOs
central & State IDCO , IPICOL Correspondents
Periphery BJP state leaders SCST Department National E & P NGOs -
Population Media International
Families to be New political UNDP – R&R Local TV
displaced parties / leaders Channels
 Developing the Communication Strategy
HIGH
KEEP SATISFIED MANAGE CLOSELY
SP / IIC BBJM
Central & State CM Central CPI / CPIM /
Collector
Congress Leaders
BJD Leaders
Some key Tribal
PM supporters
DGP IG (SpOP)
Media – Sambad / Dharitri / Left Wing – Inf
Ind. Exp / OTV / ETV etc
Local MLA CPI – ML-ND
CPI-ML-JS
Local Politicians
Ex-MLA CPI-ML-Maoist
P Bobby Das/ Tutu Bala
Periphery JSL / VISA
RDC - Central
O groups
Rohit F-
Land Owners Families who
have not
W Rev. Secy Local
Contractors
Tech
Land Owners shifted out

E
R MONITOR KEEP INFORMED
Families who
have shifted
Local Media out
National Media correspondent s
(E&P)

Left Wing – Inf

S&M. Secy CPI – ML
CPI-ML-LIB
CPI-ML-PCC
NINL / MESCO Director Secy SC / ST
/ MAL etc
R&R
Ind. Secy
Senior Absentee land
Rev. Dept UNDP – Citizens
LOW Officials R&R Forum
owners
MD – IDCO
MD-IPICOL

LOW HIGH
INTEREST
Communication Strategy
Stakeholder Key Concern Key Message Communication Approach
Group
Project Affected Loss of Commitment for • Leadership involvement
Population livelihood & appropriate R&R / • Intensive one-to-one R&R Policy
compensation Compensation / communication
Livelihood • Showcasing
Employability • Tribal brethren / Local volunteer
Local Periphery Local Development of • Television serial – Tata -CSR
development & locality / CSR • Sports & Medical access
Employment • Grass-root communication
Government Development & Development & • Regular engagement with top
Law & Order benefit to the state 100 stakeholders
/ Employment • CSR stories
• Social / informal interactions
Political Loss of vote Benefits of • Leadership engagement
Personalities bank / Development • Regular site / centre for
Political excellence visits
Polarization Apolitical stance • Engagement with influencers
• Friendship tournament with
media, bureaucrats & political
42
Communication Strategy
Stakeholder Key Concern Key Message Communication Approach
Group
Media Information Responsible • Regular meetings with key editors /
Industrialization beats
• Proactive engagement with media
reporters
• Immediate clarifications
External Deprivation of Responsibility & • Social media presence – Flood
Influencers vulnerable Commitment to positive stories / Quick response
groups cause to negative stories
• Disclosure through surveys & audits
• Engagement with Experts /
Activists
• Presentations at various forums
Environmental Environmental Adherence to Law • Proactive engagement
Activists degradation
Development Responsible Development of • Proactive consultations
Support Groups development of the State • Progress reporting
the state Employment • Engagement with social / industry
opportunity forums
43
 Learning …

 ‘Social consent ’ to be obtained prior to taking

significant project decision.

 Bipartite discussions with local community &

stakeholders with state government only playing the
role of the facilitator.

 Minimize information asymmetry and rent-seeking

opportunities for the vested interest groups.
 Learning …
 Project Affected communities must be fully
informed with access to accurate and
comprehensive information

 Listen & be responsive to Stakeholders

 Ensuring a political balance and no political

alignment / polarization.

 Leverage the power of social media

 Coordinated Communications.
 Stakeholder Perception Survey
Overall Views about Tata Steel Role in Nation Building
70 63.91 80
59.82 69.5
60 70
61.27
50 60

40 50
28.9129.46 40
30
30.49
30 25.18
20
11.27
6.63 20
10
8.24
10 5.32
0
Good Better than Not Good 0
Others Yes no Can't say

Role in Industrialization of Odisha Role in Development of Odisha

80 60
69.04 49.54
70 63.69 48.21
50
41.81 42.74
60
40
50

40 36.31 30
30.96
30 20
20 9.98
10 7.72
10

0 0
Yes No Yes No Can't say

2009 2012
Stakeholder Perception Today
Stakeholder Perception

• Tatas appears to be serious this time.

Political
• Gopalpur - They should utilize the acquired land gainfully
Personalities
• Not doing enough in CSR.

• The R&R is being done in the right way.

Bureaucrats
• Need to participate more in the development of the state

• It is difficult, but if Tatas want they can do it.

General Public
• Their CSR is good others should emulate
• Tatas will definitely do the project
Local Periphery • Need to participate in local development, support local
entrepreneurs & employment of locals
• Violent disruption may force Tatas to wind up.
Opposition
• Delays will hurt them
Expanding our horizons

Seeking win-win with stakeholders

Some Win-win strategies for stakeholder
management
 Suppliers/Contractors
 Transparency in tendering process
 Consultation in framing specifications
 Technical support/capacity building
 Unions
 Acknowledgement of role and positive contribution
 Respect for bipartite forums
 Developing trust through fulfilment of commitments
 Having futuristic agenda after establishing trust
 Statutory Bodies
 Support with information and education
 Involve yourself in making industry standards and norms
Some Win-win strategies for stakeholder
management
 Affected Communities
 Demonstrate empathy
 Address their key concerns
 CSR for capacity building- not charity
 Press/Media
 Keep informed and brief properly on issues
 Recognize their legitimate power and responsibility
 Others
 ……
Competitive Advantage from Stakeholder
Management
 Favorable Regulatory Environment
 Stakeholders as brand ambassadors and force multipliers
 Employee engagement derived from organizational
purpose
Closing thoughts
 We are an active part of our eco-system, influencing and
getting influenced by it.
 The quality of our existence depends upon the quality of
the eco-system in which we exist.
 We and our stakeholders are conjoint twins.
 ‘Different” is not necessarily “difficult”
 There is just one approach to stakeholder management-

Engage
THANK YOU

53