Stakeholders could have an essential role in the success of your company. For that reason, you should always consider them while doing your business. But how do they influence the company? And what are Stakeholders in particular? Those questions are essential for your success.
What is a Stakeholder?
Stakeholders are people, groups, organizations, or institutions that are affected or influenced by you. At the same time, the Stakeholder’s interests directly or indirectly affect you and your company. Successful corporate management must fulfill the Stakeholder’s interests and always consider them when making decisions.
Every company that doesn’t have Stakeholders will not generate any revenue. It will mostly overlook chances and obstacles. That’s why it is essential to be aware of your Stakeholder.
Which importance do Stakeholders have?
Every Stakeholder follows their interest and tries to implement them in your product. Those interest can be very different, but it always impacts the company. You have to act and react to those claims and interests. Therefore, it is essential to collect every interest and define every Stakeholder.
All entities that are indirectly influencing the company are defined as external Stakeholders. They don’t have a part in the product production itself. Some external Stakeholders are:
- The State
- The public
Their interests and claims are different from the internal Stakeholder. Customers, i.e., search for a good product with a reasonable price, while supplier search for a reliable partner.
In contrast, internal Stakeholder interest groups directly affect the company and work for the company. They have an interest in leading the company to success. Some internal Stakeholders are employees, company owners, management, and Shareholders.
Critical stakeholders are entities that have a high impact on the company. They could stop projects and productions or even change conditions, slowing down everything or bringing them to hold. Influential Stakeholders with a negative attitude or high conflict potential can be critical to the company.
Difference between the Stakeholder approach and the Shareholder approach
While getting an overview of all your participants through a Stakeholder approach, the Shareholder approach will only focus on the company’s investors. Both concepts deal with how to deal with the company’s interests but have different target groups.
Therefore, the answer to questions will most likely be different if you have a Shareholder-approach instead of a Stakeholder- approach because the company decision will be based, i.e., only through the corporate meeting.
The company will consider the wishes and interests of shareholders. On the other hand, a stakeholder can only see the direction a company wants to go and have to decide if they want to follow the company or cut ties.
This disadvantage could lead to Stakeholders ending their relationship with the company because they don’t feel represented anymore. In addition, the company will have difficulty understanding why a Stakeholder is leaving.
How does good Stakeholder management look?
It is essential to look over the requirements, interests, and expectations of relevant Stakeholders. Therefore, the first step should be Stakeholder-Identification. The generated list will be used in the Stakeholder analysis. This analysis covers chances, potentials, and risks from individual Stakeholders.
The analysis makes it easier for the management to understand why the Stakeholder is reacting in a certain way and which measures they need to take to neutralize the situation or turn it into a positive outcome. Solutions will likely not satisfy every Stakeholder’s interest, but knowing about every interest will give a chance to compromise and get the most covered.
One of the components to get the interests of all Stakeholders is by creating a communication plan where your company will regularly inform the Stakeholder groups.
To better understand the Stakeholder, the management should create a Stakeholder-Matrix. In this Matrix, the Stakeholder will be evaluated on how much influence and interest in a product they have:
By creating this, you can now define the attitude of every Stakeholder towards you and your company. Also, this visualization allows you to quickly decide how to communicate with anyone and which measurements benefit each most.
Why do you need a Stakeholder approach?
Following a Stakeholder the approach takes a lot of time and energy. Every concern, interest, and claim to identify is not easy. But the value and benefit you are getting are tremendous. You invest in your company’s sustainability and bind the Stakeholder to you. To create a good Stakeholder approach, you always have to ask yourself:
- Who are my Stakeholders?
- Which needs do my Stakeholders have?
- Is the state one of my Stakeholders?
- Is my workforce a Stakeholder?
There isn’t one rule that can give you a clear answer, but those questions are generally the most important to minimize the risk and improve the overview for further planning.
Stakeholders have much influence when it comes to your company’s decisions. Every Stakeholder has their interest, and there could be many differences between them. Dependent on the importance and influence of a Stakeholder, your company should take measurements to create the best outcome. The Stakeholder analysis helps you to make the right decision. You should constantly reevaluate your Stakeholders to shift your decision if necessary A Stakeholder approach helps you keep everyone in the long-term, contrary to a Shareholder approach, and will minimize the risk when included in your corporate planning.