Before understanding stakeholders’ management, let’s first understand what exactly is meant by the term stakeholder, as the term itself depicts stakeholder means a person who holds stakes in a company. By Stakes, it means either benefits or advances. There are different classes of stakeholders in a company. But the primary stakeholders for any company are its shareholders, creditors, customers, employees, etc. Stakeholder management is a key and essential concept covered in all BBA certification programs.
Stakeholders are mainly of two types:
- Internal stakeholders
- External stakeholders
1. Internal stakeholder:
These are the stakeholders whose interest in the company comes from direct relationships. For example, the employees are directly connected with the company because of their employment, shareholders hold ownership in the company, and thus their interest is apparent. They are affected by performance and association concerns.
2. External stakeholders:
External stakeholders don’t hold direct relation with the company through employment or ownership but are somehow impacted by the actions and outcomes of the company. For example, the company’s creditors, suppliers, customers, etc. Anyone affected by the company.
Difference between stakeholders and shareholders
Stakeholders of a company are bound to the company because of some investment, may it be financial or physical. This is generally for the long term. Whereas in the case of shareholders, they are financially invested in the company with an option to withdraw their shareholding and thereby interest in the company by selling the shares they hold. Thus, there is no time limit or time factor in their relationship with the company. Their interest sometimes relies and depends upon different aspects.
For instance, if the company decides to reduce the workforce in the company to reduce the cost of production, thereby increasing the profit, this will lead to a loss to the employees as they may lose jobs, on the other hand as the shareholders will be benefited as with an increase in profit the shareholders’ dividend will also increase.
Importance of stakeholders
Stakeholders are said to be people without whom the business or organization will cease to exist. Stakeholders include everyone who runs and helps run the company; thus, they are essential. They have everyone from employees and owners to loyal customers and suppliers. They give your business practical and financial support and therefore hold great importance.
Stakeholder’s management
Being a vital part of the business, the management of stakeholders is essential. Stakeholders’ management is developing and maintaining good relations with the stakeholders, and communication and interaction with them are the most important ways to keep them on board.
Now, this stakeholder management depends upon numerous factors such as;
- The size and complexity of the project. This can be determined based on the resources needed, the risk factor, positive and negative effects, and the time allocated to the project.
- The time factor plays a vital role. More time available for communicating better can be the management, as there is ample time for convincing and getting help from the stakeholders. Thus, there should be proper time management and time allocation for communication.
Principle of stakeholder’s management
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Identify all stakeholders
To manage or look after the stakeholders, it is essential to identify them. Identifying and bifurcating them based on their interest in the company and their impact on its functioning is crucial.
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Focus on stakeholders who can make a significant impact on the business
All stakeholders hold a different level of power in the company’s functioning, and thus, the impact their actions can bring also differs. Therefore, identifying those helps you focus and engage with the preferential stakeholders.
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Acknowledge their concerns
Every stakeholder’s concern needs to be acknowledged and taken care of because stakeholders are the whole and soul of any organization. These activities help the business function and are relevant; thus, keeping them content is essential.
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Communicating with them
Communication and engagement with the stakeholders are vital as it creates a sense of belonging within the business. This further helps maintain a good and long-term relationship between the stakeholders and the organization.
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Rewards
Keeping or maintaining the engagement with the shareholders is by providing them with their desired rewards. Those with a positive interest in its success would work harder to hold and increase their acquired interest/profits. A manager should recognize the efforts and rewards among the stakeholders, and they should also try maintaining a fair distribution of rewards.
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Risk recognition
A manager should work cooperatively with both private and public entities to recognize and minimize the risks and harms arising from the company’s activity.
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Try avoiding conflicts
The manager should acknowledge and identify future potential conflicts between the stakeholders. Sometimes, the profit of one stakeholder may result from another stakeholder’s loss, which may cause a conflict between the stakeholders.
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Attain enough agreement to secure goals
Sometimes you don’t have to agree with all the company stakeholders over every matter, and just enough agreement from the required stakeholders is enough to secure the goal. Thus, how one decides their goal is a nuance to consider. But for getting a long-term sustainable result, there is a need to get agreement from more stakeholders.
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Implementation of the plan
A plan solely won’t guarantee the organization’s success. There is a need for implementation or more precise proper and correct implementation. Stakeholder management is an integral part of any project. If broken into small, possible steps and goals, the plan will be more achievable. The skills required for implementing the plan are crucial and depend on academic and theoretical knowledge. A bachelor of business analytics can help in gaining the essential skills.
Conclusion
As stakeholders are defined as “the group of people without whose support an organization will cease to exist,” it is essential to manage them and keep them content for the well-being and healthy future of the business. The management process may differ from organization to organization, but the sole motive remains the same with all the companies.
