Approach for XAT Decision Making Questions: Stakeholder Analysis

Welcome to this second article in this free XAT Decision Making Course!

In case you feel we are running behind schedule, you do not need to worry as decision making is a topic that can be covered in a day and all you need to do is combine a decent amount of practice, some smart preparation advice, and ample amounts of common sense to crack this section. Let’s get started with this article.

What is the Stakeholder Analysis and why is it important?
XAT decision-making questions consist of situations that have multiple stakeholders, and each of these stakeholders will have their objectives and ends to achieve. Some of the stakeholders might have similar objectives while others will have diverging objectives. In fact, all decision-making questions set-up a conflict between the objectives of different stakeholders and you need to resolve the given situation with the best possible approach.

It is vital that you identify the important stakeholders and their objectives as the objectives are the issues probed in different questions. In fact, you will find that different questions will ask you to identify the correct approach for different stakeholders in the given situation.

Example for Stakeholder Approach:
Let’s set-up a sample case and understand how the stakeholder approach works.

Sample Case:
Zindware is a company in the heavy manufacturing space, and it produces heavy manufacturing equipment for different industries across the country. The company was set-up by Mr. Gupta in the early 90s, and over the last 20 years, Mr. Gupta has single-handedly driven the company to the top echelons of his industry. During this time, Mr. Gupta has maintained an extremely hands-on approach in the business and has been involved in the decision-making process across hierarchies in the company. Under Mr. Gupta, the company grew from 10 employees in a single facility to over 2000 employees working in 10 facilities across the state.

One year back, Mr. Gupta’s son, Prateek, joined the company. Prateek completed his MBA from a leading business school in the country and upon joining his father’s company, he decided to modernise the management structure of the company. One of his first measures was the setting-up of the HR department in the company. He was the firm belief that his father’s time and energy could be saved up if he excuses himself from the day to day issues concerning his employees. He did not believe that his father should be dealing with trivial issues such as employee appraisals, leaves and so on. But Mr. Gupta was not willing to change his management style and continued to operate the same manner as before. Because of this, on several occasions, he overturned the decisions of the HR department, and several old employees of the firm continue to report to Mr. Gupta instead of the HR department. Considering the scenario, two HR managers, who are from the same business school as Prateek, are feeling extremely frustrated and have decided to put in their papers. This has led to potential flashpoint between the father and the son.

Questions based on the case:
There following questions can be based on this case:

  1. How should Mr. Gupta resolve the situation?
  2. How should Prateek resolve the situation?
  3. What is the key bone of contention/issue in this case?
  4. What is the best recourse for the HR employees in this case?

Let’s put stakeholder analysis to test.
Clearly, in this case, we can see the different points of conflict, and there is no easy way out in this situation. The different stakeholders in this case are:

  1. Mr Gupta: The company belongs to him, and he has an established system of working.
  2. Prateek: He is trying to leave his mark and introduce a new way of working.
  3. HR department: This department is marginalised and needs to find its relevance in the organisation.

How will you resolve this situation?
The simplistic solution, in this case, is that Mr. Gupta needs to change the way he works. But is it the practical way out in this case? We can easily forget that it is his company and more importantly, his method of working has worked in the past twenty years. Can the given system be overturned in a short span of time?

If you practical about the situation, this is not a situation that can be solved simply and tact as well as logical persuasion needs to be used solve this situation.

How can you convince a successful person to change his ways?
You can only do so by proving that there is a better way of doing this. How do you do so? You need to showcase, with the help of case studies, how organisational efficiency and employee productivity increases by putting in the right set of HR practices. This is the only logical way in the given situation. This is a common solution for Prateek and the HR department in this case. This is how they can convince Mr. Gupta to change his mind.

For Mr. Gupta, there are two options here:

  1. Either he let’s go of the HR managers, and in turn, risks his son and HR personnel to be further alienated in the organisation.
  2. Or give a patient hearing to his son and the HR managers; and if he sees merit in their proposals, implement those.

Remember, if Mr. Gupta takes an aggressive stand, in this case, he puts the future of his company at risk. In short, his company’s long-term future is at stake here. He cannot replace his son, right? So, even though he is set in his ways, he will ultimately need to accept the viewpoints of others and resolve the conflict.

Effectively, this is a case centred around conflict resolution, and this is something you must take up often in these questions.

How to use stakeholder analysis?
The best use of stakeholder analysis is while reading the case given in the question. While reading the given information, you should clearly identify the different parties in the conflicting situation and identify what is at stake for them. By doing this, you are already subconsciously prepared for the question prompts and ready with a rough framework to challenge the questions. This is what the stakeholder analysis is all about, and this is how you use for decision-making questions.

XAT Decision-Making: Articles and Tests

Introduction and Seven-Basic Rules
Article-1: Approach for XAT Decision Making: Stakeholder Analysis
Article-2: XAT Decision Making: Ethical Dilemma Questions
XAT Decision Making: Test-1