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Sustainable Stakeholder Management

Maintenance of amiable relationships between the management and all stakeholders is an important aspect in any organization. The business has to ensure that is takes care of all the needs of the stakeholder where possible (Hill, Jones & Schilling, 2014). In the event that there are other constraining factors that are deterrents to the pleasing of the stakeholder, the management has to ensure that it explains the situation and does the best to please the stakeholders.

The problem with this approach is that there are limitations to what the management can do to please the stakeholder. In most cases, the management cannot please all the people. Tradeoffs ensure in the relationships with the stakeholders (Seuring & Gold, 2013). The approach that the management adopts towards treatment of the stakeholders is a major determinant of the sustainability of the company. The dilemma sets in when the management has to determine the choices according to their ethical appropriateness.

Ethics are a set of guidelines to the performance of an organization. Ethics determine the acceptance of the company and viability of the same in the different business context. How the organization approaches the issues ought to be ethical in order for it to be acceptable. Ethical behavior is important in the organization it ought to be cultivated. Ethical behavior protects the management from the incurrence of the litigation liability since some of the ethical behaviors are also covered by the law.

Development of the most ethical approaches to the conduction of business also determines the viability or legitimacy of the business in a certain context. For instance, when a company establishes an operation base system in populated area, it has to ensure that it caters for the needs of the community. It also has to ensure that it conducts its operations in a manner that increases the value to the entire community while protecting it from the harm that could result from the nature of the operations.

In the event that the business does not operate according to the tenets of the ethical code set by the industry of required by the virtue of common practice, the business has no chance of developing to a higher level. Chances are the people will not accommodate it in the community. Failure of the business to meet the needs of the community when designing the policies leads to the loss of legitimacy. Therefore, the business has to ensure that it covers the needs or interests of the external parties (Ackermann& Eden, 2011).

The management may want to please the shareholders and other investor groups. Therefore, it may adopt some business practices that are harmful to the organization and the community (Seuring & Gold, 2013). For instance, it may resort to the unconventional accounting procedures that focus on the development of the misleading perception in the eyes of the investors and creditors. Resorting to this approach may please the needs of the investors and the creditors (Hill, Jones & Schilling, 2014). However, it may also lead to the loss of the legitimacy to operate in the region.

Leader of the business have to focus on the sustenance of an ethical business irrespective of the conventional practices in the industry. Aligning a business on the ethical practices is important for all companies. However, a business could find itself operating in the environment whereby all the players are focused on the cutting corners. In this case, it could be difficult for the company to stay competitive (Ackermann& Eden, 2011). However, promoting the image of the company and the association of all the business processes with quality and ethical processes will lead to the increased acceptance of the company.

Failure of a business to observe the ethical requirements is a major detriment to the business in the case of Enron; the company was managed by a bunch of people that were non-complaint to the ethical requirements (Hill, Jones & Schilling, 2014). Failure to follow the rules of ethics led to the eventual collapse of the company, loss of the shareholders’ investments and the collapse of Arthur & Anderson.

The unethical conduct of the business also led to the unearthing of the faults in the law controlling corporate governance, the lapses in the control mechanisms were the main reasons for the development of the practices by the company. Being able to control the lapses and reduce their effects on organizational performance became the main foundation of the Sarbanes Oxley act (Ackermann& Eden, 2011).

Shell has been focusing its operations on the development of the most ethical conduct. Being able to develop the business has been hinged on the capability of the inclusion policy. As a result, the company has been focusing on the development of the best approaches to business that extolls the role of all stakeholders. A stakeholders approach is applicable in the running of the business whereby the main goal is the development of a viable business environment that meets the needs of all the players (Hill, Jones & Schilling, 2014).

The company has run an ethical business even in the operational environment rife with corruption and self-serving management approaches. The result of an ethical management has been development and sustained growth.

References

Ackermann, F., & Eden, C. (2011). Strategic management of stakeholders: Theory and practice. Long Range Planning, 44(3), 179-196.
Hill, C., Jones, G., & Schilling, M. (2014). Strategic Management: Theory: An Integrated Approach. Cengage Learning.
Seuring, S., & Gold, S. (2013). Sustainability management beyond corporate boundaries: from stakeholders to performance. Journal of Cleaner Production, 56, 1-6.