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Whats Wrongand Whats Right
with Stakeholder Management
Whats Wrongand Whats Right
with Stakeholder Management
Whats Wrongand Whats Right
with Stakeholder Management
Whats Wrongand Whats Right
with Stakeholder Management
In the article In Whats Wrong and Whats Right with Stakeholder Management, John Boatright (2006) presents a stakeholder management concept that aims to balance the interests, benefits, and drawbacks of all stakeholders of the organization. There are two main points highlighted regarding the failure of such a concept. First is the idea that executives of the company are those who serve stakeholder interests the best. Second is the failure to encounter that a corporation serves all stakeholders interests, including external and internal ones that can influence the organization. Boatright advocates stakeholder management theory to be useful for the businesss ethical management and differentiates it from the stockholder management theory.
Corporate governance and the theory of management are two main themes the author introduces to discuss the stakeholder theory to present his views. To support the stakeholder concept with the management theory, Boatright (2006) states that each stakeholder group can get benefits when being involved and considered in the corporation. The statement leads to the shareholders dependence on the performance of different stakeholder groups, which suggests the necessity of all groups to collaborate. Boatright underlines that when executives of the company work closely with stakeholders, they exchange moral issues and ethical information with stakeholders and empower them to be viewed as shareholders. The stakeholder management concept aims to promote cooperation among groups and help them understand various views on the corporations operations.
Nevertheless, the view of the author might have some issues that should be highlighted. The stakeholder management theory considers all external and internal stakeholders needs and interests that can be on different sides of the business and can oppose each other, which is the corporate managers problem. Executive primarily serves the interests of stockholders that have specific views on the corporation that cannot align with stakeholders needs that might lead to ineffective decisions.
From the point of corporate governance, an organization must maximize profit for stockholders or shareholders. Boatright (2006) claims that pursuing such a strategy is not a reliable option because the maximization of profit goal only serves one group but not other stakeholder groups that a corporation consists of. In this situation, the company does not consider other groups that contribute their efforts to the organizations development and might not be satisfied with the corporate governance approach to managing needs and expectations. It is assumed that executives who cannot build strong relationships among all groups will not achieve excellent performance for the company. However, here it should also be mentioned that the companys executives should not overlook financial KPIs to ensure that individual interests do not prevail over others and do not harm the companys goals to expand with the help of financial values.
To summarize Boatrights vision on stakeholder management, it can be said that there are points that define the concept and evaluate the positive and negative sides of the idea. Stakeholder management is helpful when it comes to building objectives and balancing between various stakeholders needs and interests. The problem with the stakeholder management concept lies in the fact that it is not an obligatory theory that executives should apply to achieve results for stockholders of the organization. Therefore, it is crucial to focus the companys efforts on long-term objectives and take into account the interests of different people that help the company grow and develop further.
References
Boatright, J. (2006). Whats wrong and whats right with stakeholder management. Journal of Private Enterprise, 21(2). Web.
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