Strategic Stakeholder Management: Inter Pipeline Ltd.
Strategic Stakeholder Management
A stakeholder is any individual, group, or organization that has an interest or concern or may be impacted as a result of an organization’s activities, objectives, policies, or products. Strong relationships between an organization and its stakeholders are critical to a company’s success. To effectively manage stakeholder relationships, an organization must understand the nature and composition of its stakeholder community and how stakeholder power and interest levels can influence strategy decisions and ultimately business outcomes.
This paper will investigate the organizational structure and stakeholder management practices of Inter Pipeline Ltd. It will include a summary describing how the company is organized …show more content…
and the company’s approach to stakeholder management. Next, it will discuss a stakeholder analysis for the company and a stakeholder register and a stakeholder engagement assessment matrix will be prepared. Finally, the effectiveness of the organization’s stakeholder management practices will be evaluated. This paper will specifically address the following topics:
1. Organizational Stakeholder Management Summary
2. Stakeholder Analysis
3. Stakeholder Management Effectiveness Evaluation
Organizational Stakeholder Management Summary
The company to be discussed throughout this paper is Inter Pipeline Ltd. This company is in the industry of Oil and Gas operations, specifically pipeline transportation. Inter Pipeline Ltd. started back in 1997 with two pipelines. Today, it has grown its operations to four pipeline business units and three natural gas units in Canada, and a bulk liquid storage operation in Europe. It works with key oil and gas players, including Shell, Suncor, and Husky to ship their oil/gas. Inter Pipeline Ltd. is a service-based company who is responsible for shipping oil and gas products through pipelines. The oil and gas transportation market is huge. Inter Pipeline Ltd. enjoys a large market share with peers, such as Enbridge Inc., TransCanada Corp., and Pembina Pipeline Corp.
Currently, Inter Pipeline Ltd. has a robust organizational structure in place. The organizational structure mirrors the functional departmentalization structure. The organization consists of one President/CEO, and several Vice Presidents. Each of these Vice Presidents look over business areas. Each business area has one, or several, Managers. Each Manager typically has several Supervisors below him//her. Front-level staff are below the Supervisors. Each business area is its own ‘silo.’ For example, the CFO oversees the Human Resources and Accounting functions. Within Accounting, there is a Controller and four Managers. There are several Supervisors and even more Accountants (front-line staff).
Three ways that Inter Pipeline’s organizational structure allocates decision making authority are:
Inter Pipeline Ltd.
has a Spending Authorization Matrix (SAM) in which each employee has a number that limits their spending approvals. For example, a front-line staff member has a level one, while the CEO has a level six. Level one will only have authorization to sign off on small costs. Meanwhile, level six has authorization to sign off on everything.
Decision making authority is filtered down through the organizational ranks. For example, the CEO may make decisions based on a new acquisition decision presented by the lead Vice Presidents.
Continuing with the above example, the Vice President who could not make the acquisition decision may have authorization to make other decisions based on their own functional area. For example, the Vice President may decide to hire three more staff to undertake a large Accounting project. Three ways that Inter Pipeline’s organizational structure supports its strategic objectives of increasing market share, strengthening its financial resources, and increasing productivity:
Since big decisions are to be made by the CEO, the increased market share objective is always being considered with utmost importance. The CEO is expected to make big-picture decisions which result in the best decision for the company as a whole, rather than for one specific business …show more content…
unit.
Since decisions for business units can be made by the Vice Presidents, they may be able to strengthen the financial resources of that business unit. For example, if a Vice President is presented with three options to purchase a new piece of machinery for the unit, he/she can choose the highest quality build with a, perhaps, better price.
Smaller decisions that can be made by business unit Supervisors will allow for better productivity.
For example, if an Accounting Supervisor decides that a new Excel spreadsheet will be a more efficient way of creating a recurring journal entry, that Supervisor has the authority to make that decision and better the productivity of the team. Two theories that define the responsibility of a business to its constituents are:
Stakeholder theory, according to Audiopedia (2014), is a theory of ‘organizational management and business ethics that addresses morals and values in managing an organization.’ It identifies the groups of stakeholders and recommends methods of how management can give regard to the interests of those groups. It argues that all stakeholders should be considered (employees, customers, suppliers, financiers, communities, governments, political groups, trade associations, competitors).
Shareholder theory, according to Pfarrer (2010), is a theory that the shareholders/owners of the company are most important. It has the company putting those needs first to increase value for them. The theory that most closely aligns with Inter Pipeline Ltd.’s stakeholder management approach is Stakeholder
Theory. Three ways in which the stakeholder management approach above (Stakeholder Theory) supports the strategic objectives of Inter Pipeline Ltd. are:
Considering all stakeholders strengthens Inter Pipeline Ltd.’s ability to increase its market share. For example, customers may be more opt to choose Inter Pipeline Ltd. as their oil/gas supplier because of its environmental practices. By Inter Pipeline Ltd. knowing the concerns of their customers and accommodating them, they can increase their market share.
Considering all stakeholders strengthens Inter Pipeline Ltd.’s ability to increase its productivity. For example, when employees are considered, they will work more productively. The employees are an important resource. When they know they are valued they will make an extra effort to improve processes.
Considering all stakeholders strengthens Inter Pipeline Ltd.’s ability to strengthen its financial resources. For example, when Inter Pipeline Ltd. approaches a bank for a bank loan, the bank can be assured that Inter Pipeline Ltd. is considering its interests before it loans money to them. Access to financial resources comes easy for Inter Pipeline Ltd. because of its good relations with the bank.
Stakeholder Analysis
Stakeholder Register
Company Name: Inter Pipeline Ltd.
Name of Stakeholder
Description
Type
Interests
Influence on Business Outcomes
Field Employees
A stakeholder is any individual, group, or organization that has an interest or concern or may be impacted as a result of an organization’s activities, objectives, policies, or products. Strong relationships between an organization and its stakeholders are critical to a company’s success. To effectively manage stakeholder relationships, an organization must understand the nature and composition of its stakeholder community and how stakeholder power and interest levels can influence strategy decisions and ultimately business outcomes.
This paper will investigate the organizational structure and stakeholder management practices of Inter Pipeline Ltd. It will include a summary describing how the company is organized …show more content…
and the company’s approach to stakeholder management. Next, it will discuss a stakeholder analysis for the company and a stakeholder register and a stakeholder engagement assessment matrix will be prepared. Finally, the effectiveness of the organization’s stakeholder management practices will be evaluated. This paper will specifically address the following topics:
1. Organizational Stakeholder Management Summary
2. Stakeholder Analysis
3. Stakeholder Management Effectiveness Evaluation
Organizational Stakeholder Management Summary
The company to be discussed throughout this paper is Inter Pipeline Ltd. This company is in the industry of Oil and Gas operations, specifically pipeline transportation. Inter Pipeline Ltd. started back in 1997 with two pipelines. Today, it has grown its operations to four pipeline business units and three natural gas units in Canada, and a bulk liquid storage operation in Europe. It works with key oil and gas players, including Shell, Suncor, and Husky to ship their oil/gas. Inter Pipeline Ltd. is a service-based company who is responsible for shipping oil and gas products through pipelines. The oil and gas transportation market is huge. Inter Pipeline Ltd. enjoys a large market share with peers, such as Enbridge Inc., TransCanada Corp., and Pembina Pipeline Corp.
Currently, Inter Pipeline Ltd. has a robust organizational structure in place. The organizational structure mirrors the functional departmentalization structure. The organization consists of one President/CEO, and several Vice Presidents. Each of these Vice Presidents look over business areas. Each business area has one, or several, Managers. Each Manager typically has several Supervisors below him//her. Front-level staff are below the Supervisors. Each business area is its own ‘silo.’ For example, the CFO oversees the Human Resources and Accounting functions. Within Accounting, there is a Controller and four Managers. There are several Supervisors and even more Accountants (front-line staff).
Three ways that Inter Pipeline’s organizational structure allocates decision making authority are:
Inter Pipeline Ltd.
has a Spending Authorization Matrix (SAM) in which each employee has a number that limits their spending approvals. For example, a front-line staff member has a level one, while the CEO has a level six. Level one will only have authorization to sign off on small costs. Meanwhile, level six has authorization to sign off on everything.
Decision making authority is filtered down through the organizational ranks. For example, the CEO may make decisions based on a new acquisition decision presented by the lead Vice Presidents.
Continuing with the above example, the Vice President who could not make the acquisition decision may have authorization to make other decisions based on their own functional area. For example, the Vice President may decide to hire three more staff to undertake a large Accounting project. Three ways that Inter Pipeline’s organizational structure supports its strategic objectives of increasing market share, strengthening its financial resources, and increasing productivity:
Since big decisions are to be made by the CEO, the increased market share objective is always being considered with utmost importance. The CEO is expected to make big-picture decisions which result in the best decision for the company as a whole, rather than for one specific business …show more content…
unit.
Since decisions for business units can be made by the Vice Presidents, they may be able to strengthen the financial resources of that business unit. For example, if a Vice President is presented with three options to purchase a new piece of machinery for the unit, he/she can choose the highest quality build with a, perhaps, better price.
Smaller decisions that can be made by business unit Supervisors will allow for better productivity.
For example, if an Accounting Supervisor decides that a new Excel spreadsheet will be a more efficient way of creating a recurring journal entry, that Supervisor has the authority to make that decision and better the productivity of the team. Two theories that define the responsibility of a business to its constituents are:
Stakeholder theory, according to Audiopedia (2014), is a theory of ‘organizational management and business ethics that addresses morals and values in managing an organization.’ It identifies the groups of stakeholders and recommends methods of how management can give regard to the interests of those groups. It argues that all stakeholders should be considered (employees, customers, suppliers, financiers, communities, governments, political groups, trade associations, competitors).
Shareholder theory, according to Pfarrer (2010), is a theory that the shareholders/owners of the company are most important. It has the company putting those needs first to increase value for them. The theory that most closely aligns with Inter Pipeline Ltd.’s stakeholder management approach is Stakeholder
Theory. Three ways in which the stakeholder management approach above (Stakeholder Theory) supports the strategic objectives of Inter Pipeline Ltd. are:
Considering all stakeholders strengthens Inter Pipeline Ltd.’s ability to increase its market share. For example, customers may be more opt to choose Inter Pipeline Ltd. as their oil/gas supplier because of its environmental practices. By Inter Pipeline Ltd. knowing the concerns of their customers and accommodating them, they can increase their market share.
Considering all stakeholders strengthens Inter Pipeline Ltd.’s ability to increase its productivity. For example, when employees are considered, they will work more productively. The employees are an important resource. When they know they are valued they will make an extra effort to improve processes.
Considering all stakeholders strengthens Inter Pipeline Ltd.’s ability to strengthen its financial resources. For example, when Inter Pipeline Ltd. approaches a bank for a bank loan, the bank can be assured that Inter Pipeline Ltd. is considering its interests before it loans money to them. Access to financial resources comes easy for Inter Pipeline Ltd. because of its good relations with the bank.
Stakeholder Analysis
Stakeholder Register
Company Name: Inter Pipeline Ltd.
Name of Stakeholder
Description
Type
Interests
Influence on Business Outcomes
Field Employees