In today’s hyper-transparent business world, in which corporates are held accountable by the media, the public and campaign groups, ‘authenticity’ is the primary factor behind a positive public image. A company’s objectives, character and ability to generate profits determine its overall authenticity. This, in turn, dictates its ability to grow both internally by increasing staff numbers, and externally by attracting investors or support from other organisations. Show
Investors and employees rank among the company’s stakeholders. Stakeholders encompass all individuals or groups who have a vested interest in the performance of the business. It is vital that organisations build healthy and balanced relationships with their stakeholders, as their level of authenticity is determined by how well they meet their stakeholders’ demands.
The roles of different types of stakeholdersStakeholders can be broken down into two groups, classed as internal and external. Each has their own set of priorities and requirements from the business. Internal (primary) stakeholdersA company’s employees, managers and board of directors make up a business’s internal stakeholders.
External (secondary) stakeholdersExternal stakeholders include clients or customers, investors and shareholders, suppliers, government agencies and the wider community. They want the company to perform well for a multitude of reasons.
Which stakeholders are most important?
An employee may also be an investor. A politician may also reside in the community in which the company operates. Despite its best intentions, it is unrealistic for a company to satisfy the demands of all parties equally. It will regularly face scenarios in which it has to prioritise one stakeholder to the detriment of another. Should investors wish to cut costs, the company may have to reduce the wages of its employees or let some go altogether. Similarly, they may have to end a relationship with a trusted supplier in favour of a more competitive price to maintain profitability. To ensure optimum stakeholder satisfaction, companies must identify their primary and most influential stakeholders. These are the ones they should be investing reasonable resources to engage with. This activity is known as stakeholder prioritisation and is based on three stakeholder features:
For example, a multi-national corporation trading on the public market will likely prioritise its investors first. It wants to maximise profitability for its current investors in the hope of attracting new ones and increasing its share price. Meanwhile, a start-up or SME will be less concerned with attracting large-scale investment. It will focus instead on establishing good relationships with local suppliers, having a satisfied, loyal workforce and, most importantly, building a solid community customer base. How can companies prioritise their stakeholders?As a general rule, stakeholder priority can be divided into three levels. The first and most important comprises employees, customers, and investors, without whom the business will not be able to operate. Secondary to them are suppliers, community groups and media influencers. Their individual relevance is determined by the performance of the company’s primary stakeholders and their response to it. Finally, there are regulatory bodies. Persistent failure to comply is problematic, but their demands are by and large consistent and straightforward to follow. In addition to a company-wide stakeholder profile, each project within the company will have its own project stakeholders, which may need to be ranked differently. Project managers and assigned employees will be responsible for prioritising and satisfying their demands to ensure the programme’s success. In the rapidly evolving business world, in which new issues are constantly surfacing and vying for supremacy, stakeholder roles are changing. There cannot, therefore, be a definitive ranking of stakeholder importance to a company.
Securing and maintaining stakeholder trust and satisfaction is a never-ending process. To win the continued commitment and support of their stakeholders, companies must remember the three elements on which they will be judged:
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What are the 4 types of stakeholders?The primary stakeholders in a typical corporation are its investors, employees, customers, and suppliers.
What are stakeholder roles?What Is the Role of a Stakeholder? A stakeholder's primary role is to help a company meet its strategic objectives by contributing their experience and perspective to a project. They can also provide necessary materials and resources. Their support is crucial to a successful project.
What are two types of stakeholders?Stakeholders can be broken down into two groups, classed as internal and external. Each has their own set of priorities and requirements from the business.
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