What is a stakeholder? Are Customers and Employees the Only Stakeholders? What does it mean to create value with your stakeholders? How do you identify your stakeholders?
What is a Stakeholder?
Businesses readily identify two key stakeholders, customers and employees. This is especially the case when the business is small or a startup. Those two stakeholders attract all of the attention while launching a new product or service.
However, other stakeholders become increasingly important as the business grows. Stakeholders are all of the groups that can affect and be affected by a company’s values, mission, policies, and actions.
Who are Stakeholders?
Stakeholders can be comprised of partners, investors, regulatory agencies, and the community at large, as well as customers and employees. Each of these groups are comprised by many different members.
Partners can be suppliers, sales channels, and professional partners, such as your lawyer and accountant. Investors or shareholders can be friends, family, venture capitalists, private equity, banks and others. Regulatory agencies can be comprised of local, state, and federal taxing authorities as well as those governmental entities regulating the production, distribution, and sales of a product or service.
As you can see, the specific groups of stakeholders can be numerous, each with their own specific contribution and need.
Stakeholder Value
The company’s brand and image rests upon the relationship between the company and its stakeholders. In that sense, a company’s most important value (brand and image) is collaboratively created with its stakeholders.
Stakeholder relationships are essentially built upon trust and that trust is exhibited in a number of relevant facets. Using the work of David Maister in The Trusted Advisor, trust can be defined in four aspects.
One aspect of trust is credibility, which exists in the domain of the word: what an organization says about itself, what others say about the organization, what is written about the organization, etc.
Second, trust is reliability, which exists in the domain of action: what an organization does, how quickly it takes action, how dependable an organization acts, etc.
Trust is also interest, which exists in the domain of motivation: the reasons for an organization’s actions, recognizing the motives of various stakeholders, etc.
Finally, trust is transparency, which exists in the domain of authenticity: the visibility of an organization when recognizing problems, when working through solutions, when stating self-interest, etc.
Mutual Value
The value of a stakeholder engagement correlates to the amount of trust built with the stakeholder in all aspects. Companies need to continually steward trust through all of their stakeholder interactions and engagements. The result is mutual value created through those trusted relationships.