The Mendelow framework or matrix is a use case to understand stakeholders' needs and how to prioritise them in business to avoid their negative impact while protecting their positive contributions. The term is also referred to as the power-interest matrix. Where the power and interest of various stakeholders of a company are scaled in a matrix. Then, those with more power and interest are treated and prioritised better than others.
Stakeholders include the tax authority, regulators, creditors, directors and managers, customers, and employees.
The Mendelow Matrix
The Mendelow matrix is a 2 by 2 matrix with four quadrants. It explains the power and interest of each stakeholder group on a scale of high and low. The level of power and interest of the stakeholder determines the level of attention that the company’s management will pay. If the stakeholder groups have more power with high interest (Key players), more power with low interest (keep satisfied), low power and high interest (keep informed), and low power and low interest groups will require minimal effort.
Using the Mendelow matrix in different industries
The stakeholders' influence on a company depends on the industry. Some have more power in an industry than others. We discussed this below:
Banking sector
The stakeholder group with high power and interest is the Central Bank of Nigeria. The board of directors has this power too. Therefore, they are termed as key players. Tax authorities are to be kept satisfied to avoid them putting more interest in the company. This is done by paying taxes at the due date. Employees and customers are to be kept informed on the current situation, because their power is low but they have a higher interest in the company. For the community, the bank can put in minimal effort.
Oil and Gas Industry
Here, the regulators and directors are key players and must be treated as such. The community in which the company is located and the government tax authority must be kept satisfied. For example, the oil and gas company must ensure that there is no oil spill in the community, so that indigenous people can carry out their business. Some oil and gas firms employ locals as a way to keep the community satisfied. Employees, creditors, and customers can be kept informed. However, major creditors must be kept satisfied to avoid a bankruptcy filing.
Other Industries
For other industries, such as retail, services, and manufacturing. Their founders and board of directors are key players. Tax authorities, regulators, and banks (creditors) are to be kept satisfied, the community will be at minimum effort, while customers, employees, and other creditors can be informed.
What business managers can do with the Mendelow matrix
Business managers and the board of directors can use the Mendelow matrix to manage change, provide a good risk management policy, make strategic decisions, and manage projects.
Managing change
If the entity plans to change how things are done in the entity, such as a software change, the Mendelow matrix can be used to achieve that. Here, key stakeholders should be engaged in key decisions. Senior managers with high power and low interest must be satisfied, so that the change can be communicated to junior staff. Also, certain customers might be affected by the change in software, and they must be informed about it.
Risk management
In deciding the company's risk management policy, all stakeholders must be considered. For example, in the banking sector and companies listed in the Nigerian Exchange Group, regulators' guidelines must be followed when setting up a risk management policy to avoid stories that touch.
Strategic decisions
Strategic decisions required the consideration of stakeholder groups. Decisions such as choosing between low price and quality require taking statistics of what customers want from the company and how to deal with it when a decision is reached.
Project management
When carrying out a project for a company, the project managers must consider the shareholders with influence and ensure that these stakeholder groups are involved. Then the Mendelow framework can be used to ensure that each group is treated fairly.
In final words, the Mendelow framework provides the matrix needed by directors and other decision makers on how to deal with stakeholder groups when making decisions. Stakeholders with the highest influence should not be treated the same as those with less.
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