When talking about business, almost everyone is aware of the concept of a shareholder – someone who holds shares in a company. But, fewer people are familiar with the concept of a stakeholder. A stakeholder is any individual or organization that has an interest in the activities, success, and/or objectives of the company – and it can come in many shapes and sizes.
Stakeholders are part of the big picture when it comes to a company’s operations: they can be customers, suppliers, the local community, consumers, employees, investors, government agencies, and more. They can also be internal or external. Common examples of internal stakeholders are employees, management, and board members, while external stakeholders include creditors, customers, suppliers, local communities, and so on. What that means is that stakeholders have an influence in the company’s reputation, management decisions, and success, with interests that may or may not be aligned with shareholders.
Understanding the Role of a Stakeholder
A stakeholder plays an important role in a business, from helping to set objectives and managing resources, to influencing decision-making and monitoring results. They may also provide valuable input on product and services that are tailored to their interests or needs.
Stakeholders, however, can also create conflict. Because stakeholders can either be internal or external, and they may have differing interests and opinions, it can lead to disagreements between groups. For instance, if a customer group provides expert input and advice and suggests a change in a company policy, it is possible that this could be in conflict with the opinions of an internal stakeholder, such as an employee.
Harnessing the Power of All Your Stakeholders
Despite their potential to create conflict, stakeholder relationships are vital for any business—they can provide a competitive edge. They offer valuable insights to management and help to shape the future decisions and direction of the company.
Smart businesses understand that a successful company is one that manages and develops relationships with all of its stakeholders, not just its shareholders. By collaborating with and listening to their stakeholders, companies can create strategies for success— and navigate conflicts as they arise.