Have you ever heard the word stakeholder? If you often read or watch things about business, you must be familiar with this word. Stakeholders are an important role in running a business. When you enter the business world, it is important to know what stakeholders are and their role in a business. In this article, we will discuss these stakeholders in-depth.
What is Stakeholder?
Stakeholders are individuals, groups, or communities that have importance in a business or company. They can influence or be influenced by the business they run. Examples are employees, consumers, distributors, investors, suppliers, communities, and even the government. Each position has its own importance in the running of a company.
At first, this term was only for those who went straight into a business. However, with the passage of time and mindsets changes, the definition changes to parties who have importance in a business or company. Anyone who influences or is influenced by the company, whether positive or negative, can be called a stakeholder.
The Difference Between Shareholder and Stakeholder
Even though they have similar pronunciations and spelling, shareholder and stakeholder have different meanings even though they both have influence in policymaking within the company. Simply put, shareholders certainly play a role as well as become stakeholders but stakeholders do not always become shareholders.
So, what is a shareholder? They are the parties who have a financial stake in a company. It can be interpreted that part of the company’s ownership belongs to the shareholders. Shareholders can be individuals, companies, or institutions who have a voice in setting policies in a company.
Usually, the difference between shareholders and stakeholders is in the length of the relationship with the company. Shareholders do not have a long-term need with the company and can sell their shares at any time and buy shares of other companies. Meanwhile, stakeholders usually have a long-term relationship with the company.
The interests between the two parties are also usually different. For example, when the company is about to produce but the environment will be polluted. In the eyes of the shareholders, it will not be a problem as long as the shareholder get benefits. Different from shareholders, environmental pollution is a management and operational problem for stakeholders, so they must find ways to solve the problem.
Types of Stakeholder
1. Main stakeholder (primary)
This type relates to the formulation of policies, activities, projects, and programs. Primary stakeholders are the main roles in the company’s decision-making in the ongoing program. Examples of this type are community, community leaders, and public managers.
2. Support stakeholder (secondary)
A secondary stakeholder is a party that is not directly related or has no importance in a program or policy of a program. But primary stakeholders still pay attention to this type in making decisions so that they continue to convey their opinions to primary stakeholders. Examples of this type include non-governmental organizations, government agencies, universities, and entrepreneurs or business entities.
3. Key stakeholder
A key stakeholder is a group of executives who have official authority over decision-making or policy determination in a project. Examples of this type are DPR, local government, DPRD, and also agencies that are directly related to the project.
Types of Stakeholder in Business
As reported from the official page of Investopedia in the business world, stakeholders are divided into two types, internal stakeholders and external stakeholders.
Internal stakeholders are individuals or groups who are in the business and are directly affected by the results of projects or activities carried out by the company. For example, company owners and employees.
While external stakeholders are individuals or groups who have a relationship and importance in the success of the company but are not directly related to the project or the company’s work system. Some examples are government, investors, media, consumers, distributors, and others.
These are complete explanations of the individuals or groups that include the stakeholder category.
1. Investors and Creditors
Investors and creditors have an important role in a business because investors and creditors can help the financial aspects of the company. Therefore, the company must have both so that the company’s financial aspects become stable. Investors are a group of people who invest in a company. These shares can help the company in operation.
Not only in the financial aspect, investors who invest large capital can also have the authority to supervise and monitor the performance also the financial condition of the company. While creditors or banks are financial institutions that play an important role in providing loans to companies as business capital. The function of creditors is to provide loans with certain conditions or guarantees.
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Employees are the company’s human resources in carrying out its operations. Employees are stakeholders who have important functions to contribute directly to the production process.
Suppliers are in charge of providing raw materials for production which is usually found in the manufacturing business. The supplier’s importance in the company terms of making a profit. Therefore, suppliers also expect the company’s sales.
Of course, suppliers are also important stakeholders in the company. Because without them, the company’s production process will not run.
No matter how big the company’s production is, there will be no profit if it doesn’t have consumers. Because without consumers, a business will not be able to run. Consumers are referred to important stakeholders because they determine whether a business continues or not.
Communities also have an important role as stakeholders because they are directly affected by job creation, health, economic development, and safety. The existence of a business or company will have an impact on the surrounding community. In order to have a good relationship with the community, companies usually make certain social events or contributions to the community.
Functions and Roles Stakeholder in the Company
1. Make a decision
Stakeholders usually do meetings that invite company executives. Company executives such as directors and other groups that have high authority within the company. Stakeholders have the authority to make policies or provide ideas to the company. In addition, stakeholders can also appoint or dismiss company leaders if necessary.
2. Direct management
Several stakeholders are also directly participate in the management of the company. Stakeholders can occupy certain positions within the company such as HRD, R&D, and others to ensure and manage their business directly. Usually, a private business or a public company can give positions to large investors so that they can directly do managerial work on the company.
3. Financial support
As previously explained, investors are also stakeholders of a company. Therefore, stakeholders can also reduce or increase their investment in the company. Usually, investors consider their financial condition first before deciding to reduce or increase their investment. The company must maintain good relations with stakeholders so the company’s financial condition is stable.
4. Corporate Social Responsibility (CSR)
Companies need to balance the relationship between business and stakeholders. For this reason, companies need to have corporate social responsibility. This social responsibility can be applied to employees, consumers, suppliers, and all parties involved with the company. These stakeholders will later make decisions or policies based on existing CSR results.
How to Do Stakeholder Analysis
Stakeholder analysis is a process of identifying either individuals or groups who will influence by an action to be taken and then grouped by the impact of the action. This analysis aims for collaboration between stakeholders and the project team to ensure the success of the existing project. The analysis will occur when there is a need such as a project change, or a briefing that occurs before the project starts.
The stages of stakeholder analysis are:
1. Identify all stakeholders both internal and external (brainstorming). In this session, brainstorming took place to determine who the existing stakeholders were, both internal and external. If there is a difference opinion, then it is the group’s job to determine who belongs to the stakeholders and who does not.
2. Identify stakeholder needs and interests. After brainstorming, there was interest to see how much interest they had in the company. Is it low or high, as well as the power it has, the group must determine whether it is low or high.
3. Classifying stakeholder interests (using stakeholder mapping).
There are four results related to the previous stage, namely: Monitor (M), Keep Informed (KI), Keep Satisfied (KS), and Manage Closely (MC). From this, you can see which one you should watch closely (MC) or just monitor (M) only.
4. Identify conflicts between Stakeholders vs. Stakeholders, Company vs. Stakeholders. Then you needs analysis to see who has a conflict with you.
5. Prioritizing, synchronizing, balancing stakeholders. If the action is predefined, then you can prioritize, synchronize, and balance their needs with yours.
6. Align stakeholder needs with company strategy. This step is the final step in the stakeholder analysis. Aligning stakeholder needs with company strategy is an important step so that stakeholder needs and company strategy do not conflict with each other.
Have you understood more about the importance of this position in the company? A stakeholder has a responsibility to take the company to a higher level in the midst of intense competition. Because you need a good marketing strategy, good company management, as well as accurate financial management to compete.
In reaching this higher level, HashMicro comes with many solutions for your various business needs. HashMicro is a provider of ERP system with the most complete software suite for various types of industries. Many case studies show that stakeholders also play an important role in ERP success. Communication factors and support from stakeholders are some of the factors for the success of a business.