How to identify and manage business stakeholders (2024)

Every business has an owner. Some companies have many owners called shareholders. Beyond ownership, a broader group of individuals known as stakeholders also have an interest in a company.

It’s important to have a clear understanding of who your stakeholders are and how their interests align with your company’s values ​​and goals.

Here we present the most common types of stakeholders and their different levels of participation, as well as the importance of different stakeholder interests.

What are stakeholders?

A stakeholder is an individual, entity, or group that has a vested interest in the potential benefits or harms that may result from the success or failure of a business or project.

There are several types of stakeholders, each with different priorities and levels of participation. For example, employees may be stakeholders who have an interest in job security and are affected by an employer’s actions. Other stakeholders, such as the communities in which a company operates, are more indirectly affected by a company’s decisions, but still experience impacts that can shape the company’s social, economic, and environmental landscape. There is likely to be.

Stakeholders vs. Shareholders

Stakeholder is broader than shareholder. A shareholder is a specific type of stakeholder, but not all stakeholders are shareholders.

Stakeholders are individuals or entities that have an interest in a company, whereas shareholders have a primarily financial interest because they have invested capital by purchasing shares or units. Stock ownership.

In contrast, community members may be stakeholders in a local company, but they are not shareholders unless they purchase stock in the company.

Internal and external stakeholders

Both internal and external stakeholders have a vested interest in a company’s actions and outcomes, but internal stakeholders have a more direct stake than external stakeholders.

Internal stakeholders, also known as key stakeholders or primary stakeholders, are more directly involved in a company’s day-to-day operations and have more influence over organizational decisions. Employees, board members, and investors are examples of internal stakeholders.

External stakeholders, such as suppliers and communities, are still important but have less influence on decision-making processes within companies and projects.

How do companies manage their stakeholders?

Entrepreneurs often try to manage stakeholders to reconcile different interests and make decisions that are best for everyone involved. The stakeholder management process includes the following steps:

• Stakeholder analysis. This strategy involves identifying stakeholders and gathering information about them and their level of involvement with the organization.

• Stakeholder prioritization. Prioritize primary stakeholders over secondary stakeholders based on which person or entity has more influence over the outcome of your business or project.

• Stakeholder engagement.Stakeholder engagement includes creating a communications plan to manage expectations, share important updates, and solicit feedback.

Types of stakeholders

Learn more about some of the different stakeholders that can influence the progress of your company and project.

customer

Customers are interested in companies that offer products and services that meet their specific needs. As external stakeholders, customers indirectly influence corporate decisions through their buying and purchasing power. feedback.

Customers are key stakeholders, and their purchasing intentions can change a company’s bottom line for better or worse. Similarly, customers are influenced by the company as well as by the quality of the company’s products and services. customer service.

employee

Employees are internal stakeholders who have a direct stake in the organization’s success and project outcomes based on their interest in their continued employment and financial security.

Business owners and managers understand the needs and interests of their employees and motivate them Increase employee productivity and retention. While managing external stakeholders such as customers and suppliers is essential, a company’s success depends even more on the people involved in day-to-day operations.

Investor

This stakeholder group includes debt holders such as banks and equity investors with ownership interests. Investors have a direct interest in the company or project in which they invest their capital with the expectation of financial return.

Investors are internal stakeholders who receive regular financial reports and can influence the organization in a variety of ways, including through shareholder voting rights. Other stakeholders, such as lenders and bondholders, have contractual rights to influence a company’s actions.

For example, a bank lender can determine how a company uses the loan proceeds and when the loan must be repaid with interest. Similarly, bondholders enter into debt restriction agreements that can require the company to take actions such as making certain financial reports or restricting activities such as incurring further debt.

supplier

These external stakeholders are the vendors that provide supplies to your company and depend on it for success. For example, a vendor who sells medical equipment to medical professionals has a vested interest in the medical companies that purchase its supplies.

relationship between supplier And companies consider each other as stakeholders. Suppliers can influence companies based on their ability to supply goods and services at prices that buyers can afford. Companies can influence their suppliers by choosing whether to buy from them. Suppliers are indirect stakeholders, meaning they have less influence over decisions than direct stakeholders such as investors and employees.

government

Government agencies are external stakeholders that influence companies through corporate governance, the process of guiding and regulating companies.government collect taxes Payments from companies and fees for permits and licenses. Examples of stakeholders in this category include federal agencies such as the Internal Revenue Service and the Environmental Protection Agency, as well as city and state governments.

The federal government is interested in successful companies and projects based on their potential increase in gross domestic product (GDP). GDP is a measure of the market value of all products and services produced by a country during a specific period of time. Check your industry and local government rules and regulations to ensure compliance.

board member

Some companies, especially publicly traded companies, have a board of directors that oversees the company’s management, business activities, and key decision-making processes. Board members are key stakeholders who have an internal and direct relationship with the company. Board members have a significant influence on business outcomes, and their interest is in maintaining the organization’s values, reputation, and financial success.

community

Community members are important stakeholders who can influence or be influenced by a company, albeit indirectly and externally.

For example, successful businesses can promote economic development and job creation in local communities. On the other hand, companies can negatively impact local communities through actions such as displacing local businesses or contributing to pollution.

A community that expresses concerns and opposes a new business can have a significant negative impact on a company’s growth. e-commerce and Real store Retailers need to develop stakeholder management strategies to understand the needs of relevant physical and virtual communities and how their business can add value to those communities.