Stakeholders are a fundamental figure in the structure of any company, as they condition and mark the course of its actions. In fact, they have great power over the company and not paying attention to them can seriously damage the company. However, few people know this technical name and this means that they are not given the importance they really have.
what is a Stakeholder?
The word Stakeholder comes from the English word "stake" and the verb "to hold". In other words, a Stakeholder is someone who holds an interest, but what are they interested in? In our company. Over the years, it has also been speculated that the word stake could be the union of two other English terms that are also related to this group: "stock" and "share".
Stakeholders are all those people, institutions or groups that have an interest in our business insofar as our actions affect them in one way or another. They are an example of how a company interacts with the environment in which it operates and of the interdependence of a business with any external (and internal) element.
Specifically, "a stakeholder is any group or individual that can affect or is affected by the objectives of a company". It is a term popularised in 1984 by the philosopher Edward Fremman, but coined by Eric Rhenman, Robert Stweart and Igor Ansoff in 1963. Although it is mostly used in economics, it is also studied from a sociological, political and philosophical perspective, among others.
who are stakeholders?
If we take into account globalisation and the interdependence of the company and its environment, we could say that the actions and decisions of an organisation affect each of the people in an environment, a society or a market. For this reason, the term must be relatively limited. The main stakeholders are:
- Customers: This is usually the first group that comes to mind when we think about who is interested in the decisions of a company. They are directly affected by the quality of the product, the distribution model, etc. Customers are an important recipient of the actions of a business, as they will be the ones who provide the income that will be transformed into profits, although the concept of Stakeholder goes beyond this.
- Competition: Other companies with a similar market niche to ours are affected by our actions, albeit indirectly. Large movements or important modifications in the business structure can generate, in the short or long term, a change in theirs. For example, a change in the selling price affects them almost as much as the customers.
- Suppliers: Although it may not seem so, they are some of the most important. The direction of our company depends on them, as they provide the raw material (whether a product or a service) that will later be launched on the market. It is essential to offer suppliers a message of profitability so that they bet on us, and their actions affect us internally almost more than in the opposite way.
- Investors: Depending on how a company's financing is structured, investors, shareholders and banks can be key decision-makers. In fact, they are most likely the first group to be consulted, as there is a direct dependency on them. A loss of profit affects this group to a greater extent than an employee.
- Institutions: They are another example of a stakeholder on whom the company depends almost more than the stakeholder depends on it. Public institutions such as municipalities are responsible for granting subsidies, permits and other organisational documents that are fundamental to the development of an organisation. However, this group is also greatly affected by the decisions that a company makes, for example, in terms of the levels of pollution that a factory emits or how it recycles its waste.
- Employees: Taking care of this group is also decisive for the direction of a company as they are the first face that other stakeholders such as the market or customers will see of us. Generating a sense of loyalty with them is a long-term investment. They have a strong interest in how internal actions and decisions may affect them, although they have not risked as much, nor are they as dependent on them, as investors may be.
- Market: This is a stakeholder in that a company is one of the organisms that make up the market and, although it is usually long-term, large-scale actions can end up changing the market itself.
- Media: Usually forgotten as a stakeholder, they are a group of great interest above all for the company, as they export an image of it, an opinion, and are listened to and read by millions of people who belong, at the same time, to one or more of the previous stakeholders.
Organisationally, stakeholders can be grouped in different ways according to certain criteria. For example, there is a distinction between external and internal, primary and secondary stakeholders.
An internal stakeholder is a stakeholder who is part of the company, e.g. investors or employees, while an external stakeholder is an individual who is affected by the decisions of a company but is not part of the group or the organisational structure. In this case, we are talking about customers, the market, etc.
From another perspective, a primary stakeholder is someone who has a direct link with the company, even if he or she is not part of it. They are usually the first to be affected by the company's actions: shareholders, employees, customers, etc. And, in the same way, those who are affected in a more collateral way, such as competitors or suppliers, belong to the secondary stakeholder group.
It is easy to conclude that not all companies have the same stakeholders. For example, a potato producer has no suppliers but is accountable to the government and may also have investors interested in his fields.
why do they matter?
Before making any decision, think about how it will affect each stakeholder. Not all stakeholders are impacted equally when a decision is made, and this inadvertently creates a hierarchy that needs to be addressed.
Being aware of who the key stakeholders are is a great strategy that has important benefits. For example, situating how a change in management will affect staff and customers can tip the balance in favour of one side or the other when making a decision. Depending on the organisational structure and financing of our company, we may need to have prior approval from some of them (investors and institutions) and therefore need to turn to them and think about these groups as a first step.
It follows, therefore, that there is no specific formula for addressing each one of them, but that there must be the most appropriate strategy for each one, and for each moment. Furthermore, looking at who makes up the internal and external stakeholders, it can be seen that interaction with them is a transversal action in the business skeleton. Interaction with the media stakeholder depends on the communication department; with customers, on the marketing department; and with human resources workers.
