This is from the “Accounting Makes Cents” podcast episode #20 released on Monday, 22 August 2022.
In today’s episode, our main topic is Mendelow’s Matrix, which is a mapping based on the power and interest that a stakeholder has over a business. To make it interesting, we’re going to try and put it into a coffee house setting. I am once again leaning into my quirky fascination with coffees. I’ve already done a story a while ago about a barista and the Balanced Scorecard, and this time it will be with a coffee house and the Mendelows Matrix. In this coffee house setting, and in fact, this is true for most businesses, the stakeholders are similar. Stakeholders are those people that are interested in what the businesses are up to and sometimes or most of the times they also have power to change the course of the business. So let’s start off with understanding the Mendelows Matrix.
Jump to show notes.
What is the Mendelow’s Matrix?
The Mendelows Matrix is sometimes referred to as the stakeholders mapping. Basically, what this matrix does is that it helps us map business stakeholders into categories which will help us in exacting the treatment that we should give them. The categories are based on the interest and power that a stakeholder has in our business.
The “Minimal Effort” Category
The first category is called “minimal effort”. This category deals with stakeholders who have very minimal interest and minimal power in the business. In our coffee house setting, these could be your customers or suppliers, who have some interest and perhaps some loyalty to the business, but not exactly a very big influence over how the business should be run or operated. With minimal effort, the coffee house doesn’t necessarily have to do anything extravagant or over-the-top to please or keep these stakeholders. We just have to keep on doing what we’re doing, sort of like a status quo.
The “Keep Informed” Category
The second category is called “keep informed”. This category deals with stakeholders who have slightly more interest in the business but perhaps still have minimal power or influence over how the business is run. In general, these stakeholders are more connected to the business, someone like an employee or a major customers or suppliers, even minority shareholders. These are of course just examples of stakeholders, and it may differ from situation to situation and business to business. In our coffee house setting, we can take the baristas and coffee house managers as stakeholders who may wish to be kept informed of what’s happening in the business. Employees are perfect examples of stakeholders to keep informed. They are interested in the business because it is their livelihood, but at the same time an individual employee likely will not have much power to direct and demand changes within the business.
The “Keep Satisfied” Category
So our third category is called “keep satisfied”. In this category, the stakeholders have lots of power to influence the business but don’t really care much as to how it’s currently operated. You may wonder what kind of stakeholders these are, those that don’t really care, but as an example, people like your lenders, or banks, or even government, could fall under this category. In our coffee house setting, if we had loans with banks, then the bank would fall under this category. As you can see, the bank would generally have some interest but not too much really, all the bank is worried about is that you fulfill your financial obligations to them. The problem comes in when you run afoul with these stakeholders, and that is when things get crazy. So like the bank, if our coffee house misses an instalment payment or anything like that, the bank could foreclose the coffee house, right? Additionally, think about the coffee house having to have health and safety standards in place to run the place. So the health and safety regulators would be another stakeholder that could fall under this “keep satisfied” category. They wouldn’t necessarily be interested in your particular coffee house per se, but could literally shut you down if your coffee house shows signs of being a health and safety hazard.
The “Key Players” Category
The fourth category is called “key players”. And in this category, the stakeholders have both high interest and power in enacting change in the business. So when we think of our coffee house setting, this could be your business owners and board of directors. Being someone in power in the business generally gives you the right and authority to make decisions for the company, and so as such, you have the power to influence the direction of the business. As an owner, you would also have interest since you’ve invested money into the business and you’d want to see returns on your investment.
Using the Matrix
So now that we’ve gone through the matrix, there is something that is important to note when using this matrix. It is that although you are able to classify the stakeholders into nice little boxes of categories, it doesn’t mean that the stakeholders are classified as just that. It’s not unusual for stakeholders to change their stance and status, and that there would be a shift in power or interest, and thus, would result in moving them from one category to another. A perfect example are employees. Think about our coffee house setting, that one barista probably would not make much of a difference if he or she complains about a work issue, but if all the baristas group together to fight against the work issue by threatening to not work, the coffee house might have to consider finding a solution for the work issue to appease the baristas.
As mentioned earlier, individually, employees tend to have minimal power but high interest in the business, but collectively, employees could garner enough power as they grow in numbers. Which would mean that these stakeholders could start off as “keep informed” but could end up as “key players” in certain situations. So just be aware whilst using this matrix that there is that possibility of movement depending on context.
Show notes simplified
In this episode, MJ the tutor explores the identity and relationship between business stakeholders in a coffee house setting. It cannot be denied that stakeholders, whether primary or other, are important to the operations and success of a business. MJ will discuss the different stakeholders by using the Mendelow’s Matrix framework.
The Barista and the Balanced Scorecard
“Ding Ding Small Bell” (https://freesound.org/s/173932/) by JohnsonBrandEditing (https://www.youtube.com/channel/UC1RImxnsbfngagfXd_GWCDQ) licensed under CC0 Licence.