Professor Mohamed Zairi

Emphasising Stakeholder Orientation Professor Mohamed Zairi

The importance of 'Stakeholder Management' in management literature was, for the first time, underscored by R. Edward Freeman. Freeman, in his book 'A Stakeholder Approach to Strategic Management' suggests that the stakeholder management has widely affected the practice of management (Freeman, 2010). This is proven by the fact that in a highly competitive business environment, winning organisations are striving to identify key stakeholders and keep them satisfied as much as possible. An organisation, which is planning to expand its business, require new financial resources and hence obtaining investors' supports become critical for implementing its plan. Without availability of the sufficient fund, any plan may lose its credibility and feasibility and consequently, future opportunities and forthcoming profits may get lost. It is therefore crucial for the organisation to gain investors' agreement about the plan. Winning governments' and communities' supports for diversifying the business into a new geographical location is a key to success for the organisation. With a great support from government and high business reputation among community, the organisation can substantially decrease the cost of diversification and overcome major obstacles. Beside investors and people in societies, customers represent a very important group of stakeholders. In the future, even more than in the past, the customer must be king (Quinn, 1996). In the future, success in business will continue to depend on how effectively organisations meet their customers' needs (Zairi, 2009). If the organisation can listen to those needs carefully and respond to them with creativity and flair, then it will certainly be able to win the competitive race and make an acceptable profit from what it does. Due to a poor understanding about the concept of stakeholder, leaders may wrongly perceive that stakeholders are just those people who are outside of the organisation and possibly be affected by their businesses. To make it perfectly clear, the term 'stakeholder' refers to any group of individuals, either inside or outside of the organisation' who have interests in the organisation, to certain extent maintain power to influence on the organisation's operations and possibly be affected by the organisation's businesses. Considering the above definition of stakeholder, employees as insiders are considered to be an important group of stakeholders. This category of stakeholders can directly influence on the internal capability of an organisation. Leaders of organisations in the 21st century recognise that human capital is a source of competitive advantage in the knowledge economy. With the ever increasing globalisation and increased workforce mobility, leaders have to think proactively in order to ensure that they are successful in the "war for talent." Successful Talent Management as a key driver of business performance is vindicated by an Accenture survey of more than 850 top executives from the US, UK, Italy, France, Germany, Spain, Japan and China which puts the inability to attract and retain talent as the second most significant threat to business success - first was competition. Human capital is a key driver behind profitability, customer satisfaction, and innovation. As such, an optimal workforce is often considered to be the bridge between the business goals and performance i.e. it helps in meeting the business objectives by delivering the required performance.