In business, a stakeholder is a shareholder who has stakes in your company and whose activities influence the outcome and performance of the business. All stakeholders play a key and critical role in the success of a business firm and in helping the organization sustain its competitiveness. Every business enterprise chooses a different and unique approach to dealing with its stakeholders. However, the roles of these stakeholders vary among different businesses depending on the rules and regulations stipulated in the company’s code of ethics and how the business has evolved over the years.
In this light, the stakeholders can be the organization’s employees, who have a stake in the company's success and in the ability to make it realize its objectives. The stakeholders can also be the customers who are the lifeblood of the organization and a business can never place too much emphasis on its clients. If treated right, customers play a very major role in the success of an organization since a company’s success is heavily dependent on its customers.
Harmonious, solid and robust relationships between an organization’s core stakeholders are key aspects to realizing long-term business success. Common business stakeholders include customers, employees, the shareholders, creditors, suppliers, the local community and the government. The relationship that a business firm has with its stakeholders influences the company's accomplishments. However, it takes hard work, commitment and dedication to build and sustain such strong and solid relationships and the management is tasked with the responsibility of aligning the interests of each stakeholder with those of the business and in resolving conflicts in case they arise. By using their influence, stakeholders hold the key to the environment in which an organization operates. It is in this light that this paper analyzes conflict resolution among the different stakeholders in an organization as conflicts are inevitable and to realize its goals and objectives, an organization should not overlook these conflicts.
Employees and Management
Employees are an invaluable asset to organizations and companies that appreciate and invest in their employees’ welfare certainly gain a competitive advantage over other key players in the industry. Again, a motivated workforce will certainly channel their hard work and dedicate all their efforts to the achievement of the organization’s goals and objectives.
Employees’ welfare, diversity, health and safety, personal development, work-life balance and their compensation packages are important issues that a sound leadership should concentration on to warrant a motivated and contented team of workers (Carroll and Brown 52). Ideally, dissatisfaction and discontentment among employees lowers their productivity, consequently leading to crises in the workplace. Conflicts between employees and the management can arise due to.
Unrealistic needs and expectations - conflict between the employees and an organization’s management can be caused by the management setting unrealistic and unachievable targets that are impossible to meet. This often leads to pressure among the employees and crises slowly begin to spring up in the organization. It is important that an organization puts into consideration the welfare of its workers and keep a check on the expectations and demands that they set for them. Employees who feel overburdened with a heavy work load often become disillusioned, reducing their productivity levels. This often causes conflicts between the employee and the management where the employees feel unappreciated and overworked while on the other hand the management feels that the employees are not working hard enough to meet their targets.
This can be resolved through setting measurable and attainable goals and always reviewing the expectations and demands put in place for the employees. Setting goals which drive workers to accomplish the organization’s vision leads to remarkable performance (Carroll and Brown 52). On the other hand, setting unworkable goals can have a damaging effect on the employees and their overall productivity because they will feel overburdened.
Poor leadership- sound leadership is essentially an important aspect in enhancing motivation among employees. In essence, if a strong, concerned and sound leadership lacks in the management of an organization, the outlook of the workers team is negatively affected with demoralization setting in. Again, if the management does not involve the employees in key decision making processes and fails to communicate clearly while instilling confidence and focus to the employees, conflicts will certainly arise. Lack of effective and sound leadership is a root cause of many crises in organizations today.
These conflicts can be resolved by ensuring an all-inclusive and flexible leadership that puts the interests of their employees at the heart of everything they do (Carroll and Brown 71). Good leaders should be able to communicate clearly and provide focus and clarity to their team, while boosting confidence and rewarding hard work.
Lack of training and development opportunities-regular training and development opportunities can help boost employee motivation and engagement and help in avoiding crises since the employees will feel valued and appreciated. Many workers acknowledge and value continuous learning and development opportunities offered to them as they are able to improve their skills and knowledge. However, if employees feel unappreciated, non-progressive and stagnant, cases of workplace crises may arise as they try to air and table their grievances.
This can be resolved by providing regular training and development opportunities to the employees and embracing a flexible and an open door policy that will recognize and appreciate the work and efforts of the workers.
Poor communication-poor communication in the workplace can lead to stress, confusion, frustrations and conflicts among employees. Clear and concise communication creates an efficient and harmonious workplace (Esse and Szántó 99). Again, without proper communication, employees feel disconnected with no clear direction from the management, leading to low satisfaction and performance levels and often to crises (Esse and Szántó 101). If workers understand their duties and responsibilities, conflicts and crises at the workplace are avoided.
Conflicts arising due to poor communication can be resolved through effective communication. Clear and honest communication brings employees together and helps in building a strong team. It takes smooth communication to effectively handle a team as communication failure results to conflicts. Effective communication helps employees interact and live harmoniously.
Shareholders and Management
Conflicts between a company's management and its shareholders are usually referred to as agency costs and they are a major issue that can have damaging effects when it comes to governance. These conflicts include.
Risk profile differences-these differences occur because shareholders prefer high risk and high return investments while managers on the other hand prefer low risk investments which have low returns so as to secure their jobs. Again, profits made by the business will always reflect the management’s outstanding performance. This will certainly stir a conflict between the shareholders on the type of investments to always venture into since the two parties have conflicting interests.
Difference in valuation horizon- managers will always choose ventures that guarantee short term returns so that they can receive recognition for exemplary work done while on the other hand shareholders have a preference of long term ventures that take long to repay their capital. This again certainly creates conflicts between the shareholders and the management.
Unnecessary perks- these are often proposed and passed by the management who will advocate for a reward system that will appreciate their work. However, to the shareholders, this passes as unwarranted and unnecessary rewards. These benefits would include high salaries, unnecessary allowances and fringe benefits that the shareholders on the other hand do not acknowledge nor supporter as they deem them unnecessary, creating friction between the two parties (Wilkinson 121).
The shareholders and the management conflicts can be resolved through.
Threat of firing-the shareholders can implement policies that will terminate the managers’ contract if they do not perform as expected. Additionally, the shareholders can even elect and appoint new managers and board of directors that will accomplish the tasks and meet the organization’s goals and objectives. Shareholders have the right to hire and fire leaders who do not perform.
Threat of hostile takeovers- if the managers fail to accomplish their tasks, the shareholders can threaten to sell the company or acquire acquisitions and mergers. The threat of hostile takeovers is satisfactory enough to give incentives to the management and help avoid conflicts of interests happening between them and the shareholders.
Performance based remuneration- when performance is pegged on output, performance definitely improves. According to Wilkinson, compensating the management based on their output can be achieved by streamlining the compensation scheme of the managers so as to strike a balance between the interests of the shareholders with those of the managers (98). In this case, the managers receive their pay based on their competitive levels of performance, an incentive that will prompt them to work harder.
Establishing a voluntary code of ethics-this will guide the managers in their daily duties and help them act in the best interest of the shareholders. Again, a code of ethics is important because it stipulates the rules of the organization’s desired behavior and provides a foundation for a pro-active warning. Well-drafted rules of conduct describe an organization’s values, rules and ideologies
and explain the values that the organization desires to instill in its employees (Esse and Szántó 103). As a result, written codes of conduct act as yardsticks upon which individual and organizational performances can be measured.
Customers and Management
When handling business operations, listening to your customers is key and important since customers are the lifeblood of any organization. Customers keep an organization running with customer dissatisfaction and crises negatively impacting an organization performance. Hence it is important to identify the causes of customer dissatisfaction and offer corrective measures that will help in developing a successful and lasting relationship with the customers (Wilkinson 112). If a business firm does not execute plans that are in line and strategic with the needs, interests and preferences of its customers, the business may suffer negatively in the long run.
Customer satisfaction and lack of crises between customers and a business offers an organization with major competitive advantages, which result to increased sales and profits margins. Contented customers are more likely to stay with the firm for a longer period. Again, satisfied customers are more likely to recommend the brand to their friends and relatives, consequently improving the firm’s sales returns. Customer dis-satisfaction and crises can hence arise as a result of.
Poor quality of goods and services- Esse and Szántó (2012) assert that one of the most important aspects that an organization should put emphasis on is ensuring high quality of the goods and services that they offer (145). Managing quality is crucial for the success of any business organization. High quality of goods and services helps to maintain and sustain customer satisfaction and loyalty and reduces the conflicts arising from customers. The importance of customer satisfaction should never be ignored.
Disrespectful employees- rude attitude among the employees will certainly cause crises among the customers and chase them away. If customers encounter rude employees, they will make purchases from their competitors offering similar products but treating them right. Customers will not want to deal with rude and disrespectful employees. Customer satisfaction is a factor that helps you stand out of the competition in the industry.
Poor accessibility- an organization should always make sure that the company’s services and products are accessible to its entire clientele base. With the digital revolution, online marketing has become an indispensable tool and it is important for business firms to incorporate online platforms to enable easy access of its products by their. Inaccessibility of an organization’s products and services can cause frustration and conflicts from the customers.
Customer conflicts arising in an organization can be solved through.
Adopting a customer centric culture- deciding to lay emphasis and creating a positive customer experience helps an organization build trust and loyalty among its customers. An organization is dependent on its customers and their interests, needs and wants should always be given a priority. When the needs and wants of customers are met and their expectations surpassed, an organization is able to create happy, content and happy customers.
Continuous product improvement and development- when an organization adopts a culture of continually improving their products and services, the quality of the goods and services that they offer is guaranteed to their customers (Carroll and Brown 114). An organization has hence to invest in research and development so as to be able to support its development activities. Quality is certainly important in satisfying the customers and retaining their loyalty. Again, quality products make an important contribution to the sustainability of an organization and the generation of its long-term revenue and profitability.
Giving feedback- an organization should establish focus groups and mechanisms of receiving feedback about their products and services from the customers. Customers’ opinions are important and their feedback offers an opportunity to the organization to improve their customers’ experience. To sustain its competitiveness and to retain its customers, an organization should listen to their clients’ opinion and complains and always offer corrective mechanisms without delay. Every feedback from clients offers an opportunity to the organization to improve its customer satisfaction. Positive feedback helps the organization identify on the issues and aspects that they need and require to reinforce, while complaints helps in identifying areas that need improvements.
Employee training and motivation- regular staff training plays a critical role in assisting employees improve and advance their skills on ways of handling customers. The first impression that the customers have of the employees often leads to a lasting relationship that would positively or negatively affect the business (Carroll and Brown).
Workers are the face of the organization’s brand and customers are heavily dependent on the employees to receive assistance and guidelines whenever they need it. It is hence important to train employees on ways of treating the customers’ right so as to create loyalty, enhance satisfaction and reduce crises.
However, it is ordinary that conflicts and disagreements will occasionally arise at the workplace. Crises occur as a result of differences in opinions, thoughts and ideas. However, such crises should not be ignored but rather quick solutions should be sought since it is highly important that peace and harmony are upheld among the numerous stakeholders in an organization. Peace and harmony gives an assurance of a conducive and relaxed atmosphere which in turn translates to improved productivity in the workplace. It is hence the management’s work to ensure that the workplace reigns with an atmosphere of peace among the different stakeholders. When a culture devoid of conflicts and characterized by peace is nurtured, an environment that reduces conflicts, augments stability and upholds inclusiveness is created. Peace creates a feeling of tranquility and security which supports the stakeholders’ ability to focus on their tasks and responsibilities and peacefully coexist with each other.
Efficient management of relationships with stakeholders is crucial to resolving issues facing organizations. Thus the effective management of stakeholder relations should be an essential focus of organizational activity. It is important for a business to balance the interest of its various stakeholders. Different stakeholder groups have different priorities, ideas and interests. For example, in order to create loyal customers, an organization needs to embrace a customer centric culture and value the opinions of their customers. Causes of conflicts such as unrealistic needs and expectations, poor leadership, lack of training and development opportunities, poor communication among the employees and poor quality of goods and services and disrespectful employees to customers should be resolved so as to create a harmonious relationship in the workplace among the different stakeholders.
Works Citied
Carroll, Archie B. and Jill Brown. Business " Society: Ethics, Sustainability " Stakeholder Management. Boston: Cengage Learning, 2017.
Esse, Bálint and Richárd Szántó. “Business Relationships and Relationships With Stakeholders.” IMP Journal , 2012: 98-105.
Wilkinson, Timothy J. Strategic Management in the 21st Century. Santa Barbara: ABC-CLIO, 2013.
