The Value of Stakeholders

A brief overview of the structure of Hot House Music and how we interact with our stakeholders.

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Our Company Structure.

Hot House Music is a Limited Liability Partnership (Act, 2000) that provides music education and opportunities to schools and private students. Hot House Music LLP currently functions as a social enterprise, investing the income of its activities into provisions for its current members and providing access to musical provisions through free assemblies and trial music lessons. As a private sector commercial business, Hot House Music LLP’s activity type falls under the tertiary sector as it provides a service to members of the public. This service comes in the form of musical education where customers can undertake musical lessons and ensembles both inside and outside of standard schooling. Currently, Hot House Music LLP is a small enterprise of 14 employees that encompasses an executive board, full-time teachers and directors with volunteers. Hot House Music LLP follows a more divisional business structure in line with the company’s geographic expansion to different parts of the United Kingdom. The flagship school in Derby is the basis for which all other schools are being modelled on structurally, with a primary director who is aided by teachers and a system of volunteers, Friends of Hot House (FoHH) and student mentors. The activities of Hot House Music LLP are arranged into a flat structure that are further divided into each school. Within a school, activities and decisions are made almost entirely autonomously led by the director of the given area. All decisions are reported back to the CEO and are used as learning aids for other schools and directors to influence future decisions. For each school, the primary customers are parents of children who are looking for musical education. Alongside this, Hot House Music LLP also targets schools for both individual and ensemble learning. As well as the educational customers, Hot House Music LLP relies on repeat and casual concertgoers which is normally comprised of family and friends of the students. Outside of the educational and subsequent performance custom, Hot House Music LLP aims to create relationships with relevant entertainment and event outlets such as corporate events or relationships with regional, national or international performance venues.

Music Education Matters

Education, and more specifically for this report musical education, faces constant changes as different political strategies impact the facilitation of education in schools. Both primary and secondary education places a heavy emphasis on the ‘core subjects’ of mathematics, English and science; emphasised in the amount of attention attributed to these subjects in the Governmental Primary Curriculums (Education, 2013). The implications of this are a lack of focus on what are termed ‘foundation subjects’ including music. The trends in public and private musical education are outlined in a report by Daubney, et al. (2019) who analyse how music is approached by these sectors and what factors impact delivery. A notable mention here is ‘The Henley Review’ (Henley, 2011) which “emphasises problems with funding, provisions, quality of work and training of the diverse workforce”. MPs found in their parliamentary debate this past July (Roberts & O’Donnell, 2019) that “music education should be taught from Key Stage 1” and most importantly note that “the quality of the teaching is paramount”. These educational findings have fundamentally impacted the way in which Hot House Music LLP approaches music education. Hot House Music LLP accentuates the impacts music has on cognitive development, emphasising the positive impacts this can have on other core subjects. This is a particularly successful strategy that Hot House Music LLP has for building strong relationships with core customers in the education system, as it references key areas of the national curriculum that schools are looking to provide to their pupils. Once these relationships are created, Hot House Music LLP utilises the strengths of its teachers to focus on quality delivery which was previously noted as being a concern for local music hubs (Henley, 2011). The result here is the positive development of reputation within the geographical area which has successfully led to new relationships for the company. An example of this would be the relationship between Hot House Music LLP and a prominent Multi Academy Trust in Derby which spawned from a free music workshop day for the schools. This has led to the creation of a new band and teaching opportunities for the Derby school which will attract new consumers. The development of a strong reputation has been pivotal to the sustained social and economic growth of Hot House Music LLP; a pattern that is noted in Aras & Ingley (2017).

Where can we improve?

Where the company struggles structurally is balancing demand and growth with the workforce that is currently employed. Businesses have to be “structured appropriately to take advantage of the benefits of scaling” (Merson, 2016) and as Hot House Music LLP has expanded, it has become evident that replicating the Derby structure has been challenging. This is in part due to a lack of an established HR department and clear recruitment structure that can be replicated through the different geographic areas. This internal challenge has added impacts on the company’s ability to meet increased demand which creates a need to employ staff that must meet the high standards of the company. This cyclical problem indicates a need for facilitating the current recruitment process on a larger scale rather than the current reliance on our CEO to be present during the process. The new directors in our company structure must receive further training in the recruitment process to ensure that as the company expands, they can respond to the increasing demand of external stakeholders with dynamic employees. The company must also ensure that its employees can be productive at peak times, namely during school hours and at prime after-school and weekend activity times. Baumann (2009) indicates the “relationship between an effective employee and a supportive employee”; a process that Hot House Music LLP is deciphering by monitoring employee time spent on specific activities. Extracting this time is aiding the management in establishing what other departments can be added to the company to increase the outputs of effective employees. When this is all factored into Porter’s (1985) concept of value chains, it becomes clear that value is added primarily through the initial contact with potential stakeholders and consumers with the trials and assemblies. Porter (1985) notes that “sustainable competitive advantage comes in two basic forms: low cost or differentiation”. What Hot House Music LLP has focused on is the differentiation from standard musical education practices. In providing schools with a free initial service, the company seperates itself in the industry creating a replicable model of access for the company. This adds value by providing an additional service rather than a simple sign up. By suplementing the unnecessary secondary activities of effective employees with supportive employees, the value chain can be better structured and implemented across the different geographic areas.

A look into Stakeholders and their relationship with the company.

An identification of stakeholders has become increasingly important in determining who has influence on the company and how a manager needs to act to meet their needs. Mitchell et al. (1997) categorised stakeholders into a system that acknowledges their “power, legitimacy and urgency”. What their model has helped define for Hot House Music LLP is an understanding of how the directors need to approach each individual stakeholder group. It has been particularly successful in acknowledging which stakeholders have power over the company. Mitchell et al. (1997) comment on the “importance of power and how we must ensure as managers that we meet the needs of those who have power over the organisation irregardless of their desires to exercise that power”. In identifying power, it was essential to distinguish who impacts the day-to-day function of the company as well as those who have significant influence over the perception and reputation of the company which has been established as pivotal to company growth. The other notable outcome was the presence, or lack, of urgency. Very few stakeholders were categorised as urgent, indicating a need to keep the majority of stakeholders informed on company updates. Those stakeholders whose needs were urgent were also commonly categorised as powerful and legitimate. Whilst the categorisation of stakeholders is useful, what needs to be considered is the scale of importance or salience. A useful continuation of this is mapping the stakeholders onto a power/interest grid which is described well in Ackermann & Eden (2011) where they demonstrate how the “power and interest of stakeholders correlate to influence on the company” (see appendix 5). When considering stakeholders with this scale, it becomes more apparent who managers need to give greater consideration. This can be demonstrated using two dominant stakeholders: media outlets and alumni. Both of these stakeholders are categorised as stakeholders with power and legitimacy and yet to map them onto Ackermann and Eden’s (2011) power grid, media outlets would be positioned in the lower right quadrant and Alumni in the upper left hand quadrant. Both are important to the manager but the power influence means a difference in salience: the sheer power of the media outlets to influence the reputation and reach of the company would increase their salience to the manager whilst the alumni have high interest but less power to influence the company direction and thus are less salient for managers.

How Hot House Music engages with its Stakeholders

Having now considered influential trends and stakeholders, it is now essential to consider how Hot House Music LLP encourage engagement with stakeholders, suppliers and customers. The foundation of strong external engagement is internal engagement: “managers must be able to energise their workforces to be fully engaged in their work” (Kakabadse, 2015). At Hot House Music LLP, the leadership structure is designed so training new employees or directors is direct. Product delivery and quality is essential to the satisfaction of customers and stakeholders who have interest and power over the company. Therefore it is key that during training, all employees are fully versed in all aspects of delivery. For the company, key external stakeholders and customers are those that engage with the education, namely schools, teachers, pupils and parents. Hot House Music LLP uses an initial free trial lesson to engage with pupils and parents and a free assembly to engage with schools and teachers. This model has proven to be very successful in developing relationships as it is face-to-face engagement with the consumer. Customer engagement behaviors (van Doorn, et al., 2010) are in direct response to company activities. Van Doorn, et al. (2010) use Hirschman’s (1970) model on exercising voices to summise that “loyalty is important to customer choice”. Loyalty to consumers is vital to the success of Hot House Music LLP as it demonstrates value to each stakeholder. Loyalty is coupled with quality and positivity to add value to the company value chain; parents and teachers appreciate loyalty and quality whilst the immediate consumers, pupils, enjoy positivity. This two-pronged strategy falters when the deficits in employee numbers are factored in. For this model to continue to be successful, those who are new to the company must always be exposed to the educational products so they can replicate that experience in other schools. Further to this, the company must find a way of recording the positive feedback that it receives and how this can be effectively transmitted to potential consumers and stakeholders. Currently, the company is promoting video testimonials from participating schools as primary media content that can be shared across all media platforms but it can be difficult to acquire this, especially when schools are in busy periods. This can be improved by asking for these testimonials during the initial contact rather than as an appendage to the product.

A conclusion on company structure and stakeholders

What has become clear from this report is a focus on upscaling of the company structure and strategies. Whilst reputation is very strong, the business world is demanding and reputation can be lost quickly. Hot House Music LLP must continue to engage well with key stakeholders, especially external stakeholders that hold power over reputation and delivery. The company has successfully adapted to changes in musical education trends as well as the implications of the SWOT/PESTLE anlyses but now must meet the demand through improvements to recruitment processes and internal HR. By clearly differentiating effective and supportive employees (Baumann, 2009) in the growing company structure, Hot House Music LLP will be able to engage more successfully with external stakeholders in the education sector as well as those stakeholders who contribute to positive reputation building. The sustainability of Hot House Music LLP will come from balancing the already successful delivery strategy with a workforce that can maintain the quality of supply.

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