What and who are stakeholders?

Traditional usage

The concept of stakeholders is complicated by different meanings and uses dependent upon both context and association. In traditional usage a stakeholder is a third party who temporarily holds money or property while the issue of ownership is being resolved between two other parties e.g a bet on a race, litigation on ownership of property. (Further information at http://en.wikipedia.org/wiki/Stakeholder)

Business usage

The Concise Oxford Dictionary describes a stakeholder as a person with an interest or concern in something, especially. a business. This definition is somewhat unhelpful as it takes no account of those whose only interests are directly opposed to those of the organization and would make cooperation between them an absurdity.

The definition postulated by Post, Preston, and Sachs amalgamates the idea of contributors, beneficiaries, risk takers, voluntary and involuntary parties thus indicating that there is mutuality between stakeholders and organizations.

“The stakeholders in a corporation are the individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and that are therefore its potential beneficiaries and/or risk bearers”

If we settle on stakeholders being the parties that contribute to an organization’s wealth-creation capacity and benefit from it, we cannot dismiss all the other interested parties because they don’t qualify as stakeholder as we have defined it above. Their influence needs to be managed. For example

It is important to win support from the media as bad press can destroy reputations
It is important to keep co-workers on your side as their cooperation might be essential to your success
It is important not to alienate other managers as they might limit the availability of resources you need
It is important to build rapport with Trade Associations, Unions and other organizations from which you might need help

Following on from the previous question, organizations depend on support from a wide range of other organizations and individuals. Some are merely different terms for the same thing. These can be placed into five categories as follows:

Shareholders including investors, owners, partners, directors, people owning shares or stock, banks and anyone having a financial stake in the business

Customers including clients, purchasers, consumers and end users. (ISO 9000 also includes beneficiary but this term can apply to any stakeholder. Purchasers also include wholesalers, distributors and retailers).

Employees including temporary and permanent staff and managers. Some texts regard management as a separate stakeholder group but all managers are employees unless they happen to be owners who also manage the organization

Suppliers including manufactures, service providers, consultants and contract labour

Society including people in the local community, the global community and the various organizations set up to govern, police and regulate the population and its interrelationships.

These labels are not intended to be mutually exclusive. A person might perform the role of customer, supplier, shareholder, employee and member of society all at the same time. An example of this is a bar tender. When serving behind the bar he can be an employee or a supplier if he contracts with an employment agency, but on his day off he might be a customer and since acquiring shares in the brewery he became a shareholder. He also lives in the local community and therefore benefits from the social impact it has on the community. He is a contributor, he affects the outcomes and is affected by those outcomes.

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