The Corporate Finance Institute defines stakeholders as people, groups, and entities affected by the operation of a business. The key to the long-term profitability and business success of any company lies in building and maintaining strong relationships with core stakeholders.
Common business stakeholders include employees, investors, customers, suppliers and partners, communities, and government agencies and regulators. This article will explore the importance of stakeholders for any venture, helping businesses to build and maintain relationships that are healthy and mutually beneficial.
For customer-centric companies, no stakeholder relationship is more important than that between the business and its customers. Providing quality products, great service, and treating customers well all help businesses to garner long-term customer loyalty. This includes follow-through on all product or service commitments and honesty in promotions.
In addition to customers and employees, all businesses have responsibilities to the communities they operate in. As well as acting responsibly and legally, companies should give back to local communities through charity and local community events and activities, furthering causes local people care about while simultaneously elevating the business’s standing. Forward-looking companies all over the world are increasingly adopting social responsibility practices, such as embracing sustainability and making their products and operations greener and more environmentally friendly.
The relationship a business has with its employees has a huge impact on company culture, in turn affecting productivity and how employees interact with customers. Over the course of the early 21st century, recognition of the importance of the employee relationship increased significantly. In addition to meeting legal requirements in the realms of health and safety, wages, non-harassment policies, and equal employment opportunities, companies are also increasingly focusing on providing improved benefits, awards, recognition, and wellness programs.
With smaller businesses, owners tend to play a hands-on role in operations, while in companies, shareholders may simply provide financial support in the form of an investment. This places a primary responsibility on companies to generate profits legally to provide investment returns. Since companies often collaborate with other entities, such as having trade relationships with suppliers and buyers, an essential element of managing and sustaining stakeholder relations is honesty, openness, and transparency regarding these third-party partnerships.
To create and maintain healthy relationships with stakeholders, the first step is determining who they are. Many different types of stakeholders exist both within and outside of an organization, and the business will need different stakeholder engagement plans for different stakeholder categories.
High-power and high-interest stakeholders are those primarily responsible for decision-making. Engaging regularly with high-power stakeholders is crucial, as they can have a big impact on the success of a project or the company as a whole.
High-power and less-interest stakeholders have decision-making power but take a hands-on approach. Here, businesses should focus on maintaining the stakeholder relationship without overcommunicating.
Low-power and high-interest stakeholders appreciate regular updates despite their lack of influence. Maintaining communication with this category of stakeholder can help minimize issues while providing businesses with the benefit of valuable stakeholder suggestions that could potentially enhance their success.
With the low-power and less-interest stakeholder category, businesses can typically spend less time nurturing relationships, although they should still monitor this group to minimize issues as they arise.
As head of ReputationDefender, Chad Angle is responsible for building and maintaining strong relationships with both internal and external stakeholders, collaborating to develop, launch, and champion new processes, channels, and initiatives.
Maintaining good relationships with stakeholders is important for any company, as it helps the organization to better identify and meet stakeholder needs. This helps businesses to make decisions that better align with stakeholder expectations, improving their standing. Forging strong relationships with stakeholders may also help businesses to access fresh ideas and suggestions to help improve their overall performance.
