Stakeholder… do you know what the term means? I will tell you so! Read me!
A stakeholder is anyone who has a “stake” in the success of a business, a person, organization or institution who can be affected, or can affect the operations of a business. For example, if a company bankrupt, it will not only harm its owners, it will also affect the lives of its workers, their families, their suppliers, their competitors, ONG’s, governments and probably the whole community where it operates.
There are essentially two different types of stakeholders in a company: Primary and secondary Stakeholders
- Primary Stakeholders of a company are those ones with a contract or special relationship within the company as: directors, shareholders, employees, suppliers, owners… Indeed, a stakeholder therefore is everyone with a stake, a strong link, in the business success.
- Secondary Stakeholders have an indirect relationship with a company. They tend to not be employees or directors and don’t have any direct engagement with a company but can still be influential. For example, competitors, ONG’s, governments,
Successful relationships with stakeholders are essential to your company’s success. Treat your employees well and pay them fairly, so they’ll work towards your mutual success. Create the highest quality products you can, so your customers will go the extra mile to help you keep providing them. Cultivate relationships with investors who are more interested in long-term viability than short-term dividends.
External stakeholders and shareholders often have conflicts of interest: shareholders can pull out of investing in a public company by selling their holdings at any time, while external stakeholders are dependent on the company for their own success. Anyway, corporations have a relationship with both primary and secondary stakeholders, so investors and corporations have worked on the concept of Corporate
Social Responsibility which has become really popular for the last years.
Corporate Social Responsibility helps a company to boost its brand and its relationship with primary and secondary as good corporate citizens. They are perceived that way whenever they act with consciousness of their impact on the community in which the company’s headquarters and activity is located. The way a company impacts society, include social perception, economic influence, and environmental conscientiousness as a part of a company’s social responsibility program.
Corporations attract stakeholders when they operate benefiting society and the environment. A Corporate Social Responsibility program must be a part on the company strategy, which will include volunteer activities, community assistance, and philanthropy. A CSR program can help to strength the loyalty of employees to their employer, can boost employee motivation and indeed, sales.
So, these mechanisms of loyalty will contribute to the sustainable development of a corporation and prepare it to develop strategies for its stakeholders. When you know what consumers or workers want, it is much easier to find what benefit them. But be careful, considering the needs of the community, it shouldn’t be used exclusively as a way to increase sales, it should be a value of the company to want the best for its environment.
By David Mauro Palma
March 15, 2020