1.4 Stakeholders

  • Stakeholders
    • People who can be affected by and therefore have interest or stake in actions of the business
      • e.g. shareholder, employees, suppliers, customers, competition, government/state, pressure groups, etc.
    • Stakeholder Concept – priority to stakeholders rather than shareholders
  • Interests of internal stakeholders vs. interests of external stakeholders
    • Internal
      • Employees
        • Employment security, wage levels, conditions of employment, participation in the business
      • Managers
        • Employment security, salary and benefits offered, responsibilities given
      • Shareholders
        • Owners of shares in the company, have decision-making power, receive dividends (share of profit)
        • Annual dividends, share price, security of investment
    • External
      • Suppliers
        • Speed of payment, level and regularity of orders, fairness of treatment
      • Customers
        • Value for money, product quality, quality of service
      • Government
        • Job creation, tax payments, value for output produced, impact on wider society/economy
      • Special Interest groups (SIGs)
        • Banks, creditors, pressure groups, local community, trade/labor union
        • Care about individual interests: payment of debts, environment, etc.
      • Competitors
        • Fairness of competitive prices, strategic plans of the business
  • Stakeholder conflict
    • Not possible to satisfy all stakeholders all the time
    • Conflict will always arise from new developments, business activities, etc.
    • Stakeholder conflict resolution
      • Arbitration
        • To resolve industrial disputes between workers and managers
        • Advantage
          • Both sides agree to an independent arbitrator who will decide th
        • Disadvantage
          • Neither stakeholder group will likely receive what they want
          • Decision is binding
      • Workforce Participation
        • To improve communication, decision-making and reduce potential conflicts between employees and managers
        • Advantage
          • Gain cooperation of workers – better motivated and involved
        • Disadvantage
          • Waste of time and resources to be able to get all information
      • Profit-sharing scheme
        • Reduce conflict between workers and shareholders over allocation of profits and benefits
        • Advantage
          • Sharing profits can encourage workers to work in ways that will increase ┬álong-term profit
        • Disadvantage
          • Reduces retained profits and/or profits paid out to shareholders unless the scheme pays off
      • Share-ownership scheme
        • To reduce conflict between workers , manager and shareholders
        • Advantage
          • Provides share options; employees and shareholders benefit and aligns their interests with one another
        • Disadvantage
          • Administration costs, decreased ownership, qualification constraints may limit motivation
    • Stakeholder Map
      • A tool to analyze which stakeholders to prioritize for a given issue, mapped in a grid classifying stakeholders in terms of interest and power

 

 

Kim De Leon1.4 Stakeholders