Chapter 5- 1 Chapter 5

Chapter 5-1

Chapter 5

BUSINESS & SOCIETYEthics and Stakeholder Management

Carroll & Buchholtz 6e

Business and Society: Ethics and Stakeholder Management, 6e • Carroll & BuchholtzCopyright ©2006 by South-Western, a division of Thomson Learning.  All rights reserved

Prepared by Deborah BakerTexas Christian University

ISSUES MANAGEMENT and CRISIS MANAGEMENT

Chapter 5-2

Corporate public policy

The firm’s position, stance,

or strategy regarding the

public, social, & ethical issues of

SH.•How do we know?•Handled by … ?

The firm’s position, stance,

or strategy regarding the

public, social, & ethical issues of

SH.•How do we know?•Handled by … ?

AIDS inWorkplac

e

Affirmative Action

Sexual harassment

Product safety

Employee privacy

Chapter 5-3

Issues Management

Conventional Approach

Issues handled by Public Affairs Department as they arise (reactive)

Chapter 5-4

Strategic Management Approach Issues handled by strategic management staff (ethical decisions

incorporated into strategy)- proactive

More emphasis on anticipation of threats/opportunities & issue identification

Newer way of thinking.

What is an ISSUE?

Chapter 5-5

Issue

A dispute between parties that evokes public debate, controversy, or differences of opinion.

High visibility, media exposure, special interest SH involved.

-Requires the Co. make a decision-

Example: ATV safety

Chapter 5-6

Issues ManagementBenefits of Early Anticipation of Issues?

More options (prevent crisis!)

Clear understanding of the issues

Can develop a positive attitude

Faster & better identification of SH

Opportunity to supply information to public & media.

Chapter 5-7

First Step of SH Mgmt—

Identification of Issues

Scan the environmentHow?

Scan the environmentHow?

Identify emerging issues& trends

“Trend spotting services”

Identify emerging issues& trends

“Trend spotting services”

Chapter 5-8

Identification of Issues

Predictors of Social Change

Triggering events

Authorities/ advocates

New literature

Special interest groups (Websites)

Political jurisdictions

Chapter 5-9

• WhichWhich SH are affected?

• WhoWho is in a position to exert influence?

• WhoWho has expressed opinions?

• WhoWho started the ball rolling?

• WhoWho is now involved?

• WhoWho is likely to get involved?

Analyzing cases, paper…

Analysis of Issues

Chapter 5-10

Prioritize Issues

Consider SH legitimacy, urgency, power

Assign top priorities to an issues management team (part of Public Affairs Department)

Begin to mobilize resources to deal with issue

Chapter 5-11

Response To Issues

Create Strategy

Take Action

Things to consider… Have resources needed? Top mgmt support? How to deal with media? Ready for government scrutiny? Can we turn threat into opportunity?

Chapter 5-12

Evaluation

Constant evaluation of SH responses, activities, opinions to the issues

Is our strategy on track?

SH audit

Chapter 5-13

Issue Development Life Cycle (Page 146)

Chapter 5-14

Benefits of Issues Management

Better reputation & financial performance• Johnson & Johnson vs. Dow Corning

Provides a bridge to crisis management • And maybe even prevention!

Avoid governmental action.

Example: McDonalds & Bird-Flu

What is CRISIS?

Chapter 5-15

What is a Crisis?

•Abrupt

•Unpredictable

•Involves a major SH

(hurt, killed, “unfair” treatment)

•High visibility (media)

•Usually involves ethical issue

•“A turning point for better or worse”

•Potential threat to organization- What kind?

Chapter 5-16

Types of Crises

EconomicEconomic

Personnel (HR) Personnel (HR)

Physical Physical

Criminal Criminal

InformationInformation

ReputationalReputational

Natural disastersNatural disasters

Chapter 5-17

Outcomes of Major Crises

Escalate in intensity

Subject to media & government scrutiny

Interfere with normal business operations

Damage the company’s bottom line

Result in major power shifts.

Chapter 5-18

Business Week’s Five Steps in Managing Crises

1. Identify areas of vulnerability

2.Develop a plan for dealing with threats

3.Form crisis teams

4.Simulate crisis drills

5. Learn from experience.

Skip the others

Chapter 5-19

Crisis Communication

Most important step in managing a crisis communicate effectively with SH

Which SH first?

Why?

Communicate with all media at the same time

Use trained spokespersons (consistency)

Tell the truth!