Mendelow’s Matrix is a tool that may be used by an organisation to consider the attitude of their stakeholders at the start of a project or when they are setting out strategic objectives.
What are stakeholders?
A stakeholder is anyone, as an individual or a collective such as organisation that has an interest or is concerned with the actions of a business to the extent they are affected by or they can influence it.
A business is likely to have numerous stakeholders including directors, shareholders, employees, customers, creditors, the government and the community in which it sits.
A business will frequently find that different stakeholders have different priorities, this often leads to conflict. For example, an employee would like to be paid more. If this were to happen, this would reduce the company’s profits and would be to the detriment of the shareholder’s requirement of increasing profits and resulting wealth.
A business will therefore need to find a way to balance the conflicting priorities of its stakeholders. Mendelow’s Matrix is a tool that is used to analyse stakeholders and their attitudes. This will consider factors such as the level of interest a stakeholder has in a project or organisation’s chosen strategies and whether are they likely to use their power to influence this.
Mendelow’s Matrix consists of four boxes representing stakeholders with:
- High Interest and High Power; these will be considered key players and a business will need to actively engage this group. This group are likely to have the significant influence; they may be the driver behind the change or strategy. They will likely have the power to stop the change or strategy going ahead if they are unhappy.
- High Interest and Low Power; this group have an interest in what is happening, however they are unlikely to have the power to influence change. This group should be kept informed. Whilst they have little power themselves they could attempt to join forces with a group with power.
- Low Interest and High Power; this group of stakeholders have the potential to move into the ‘High Interest and High Power’ group so it is essential that they are kept satisfied. By keeping them satisfied they are less likely to gain interest and exercise their power to influence.
- Low Interest and Low Power; this group is unlikely to have an interest in the organisation and direction; this is often due to their lack of power to influence a situation. They are likely to accept the position and show little if any resistance.
What factors may dictate whether a shareholder may exercise power?
If a stakeholder has a financial interest this will increase the level of interest, are they an investor who may consider their investment to be at risk or possibly an employee, their employment is their livelihood so would not want to risk that. As an example; employee may be averse to an organisation investing in new technology to increase automation thus placing jobs at risk. If a stakeholder does not have alternative options to dealing with or working with the organisation, this would increase their interest.
Likewise, an organisation may supply a product that cannot be obtained elsewhere. Instances like this would increase customer interest.
If an employee lost their job, they may not immediately find another so employee interest would increase if their employment was considered at risk.
If an organisation’s strategy is likely to have a high impact on the community that it is located; these strategies will generate interest with the potential to highlight these strategies to the stakeholders who have the power to influence. Examples of this would include job losses which impact on the economy or a change in processes that may impact on the environment may create interest from individuals, councilors or community/environmental groups.
Does the stakeholder have the power?
Power is determined by whether the stakeholder can take action that will make an organisation sit up and think.
Employees can strike, withhold their labor which can be incredibly disruptive to an organisation and its business potentially damaging relationships with customers.
Customers can cancel orders if they no longer like, agree with or support a supplier’s strategies.
Banks and other finance providers can call for repayment of overdrafts or loans.
Investors can withdraw their investments especially if the organisations approach to risk is no longer aligned with their own.