Internal Stakeholders
Internal Stakeholders
Internal stakeholders are individuals or groups who are part of the organization. Examples include:
employees
managers
directors (executives),
shareholders (the owners of the business)
Shareholders, also known as stockholders, are internal stakeholders who own a part of the business through purchased shares. They are crucial internal stakeholders in any business, particularly in limited liability companies.
Ownership: Shareholders have partial ownership of the company based on the number of shares they hold.
Decision-making influence: They have voting rights on important business decisions, with the extent of influence typically proportional to the number of shares owned.
Financial interest: Shareholders expect a return on their investment, primarily through:
Regular dividend payments (a share of the company's profits)
Increase in the value of their shares over time (shareholder value)
Types of companies and shareholder influence:
In a Public Limited Company (PLC) listed on stock exchanges, there are usually many shareholders, each with minimal individual voting power.
In private companies, there are typically fewer shareholders, each with greater voting power and influence.
Relationship with other stakeholders: The interests of shareholders often need to be balanced with those of other stakeholders (e.g., employees, pressure groups), which can create tensions in decision-making.
Shareholders can significantly influence a business's success through:
Investment decisions: They can invest more capital into the business or withdraw their investment.
Voting on key decisions: Their collective votes can shape the company's strategic direction.
Pressure for performance: The desire for shareholder value can drive the company to improve its performance and profitability.
Conflict with other priorities: The focus on shareholder returns may sometimes conflict with other business priorities, such as employee welfare or environmental concerns.
Profit sharing: Rights to a share of the company's profits through dividend payments.
Voting rights: Ability to vote on major company decisions, usually proportional to the number of shares owned.
Financial returns: Expectation of a certain financial return on their investment.
Information access: Right to receive regular updates about the company's performance and financial status.
Managers are internal stakeholders hired to oversee specific functions, operations, or departments within an organization. They play a crucial role in the day-to-day running of the business and act as a bridge between the owners/shareholders and the employees.
Senior Management:
Plans and oversees long-term aims and strategies
Responsible for middle managers
Middle Management:
Runs individual departments
Sets departmental objectives aligned with overall company aims
Implements strategies to achieve goals
Accountable to senior management
Junior Management (Supervisory):
Monitors and controls day-to-day tasks
Accountable to middle managers
Business Success:
Genuine interest in the business succeeding
Can lead to additional pay (bonuses, commissions)
Improves job prospects (promotions)
Increases job security
Performance Improvement:
Strive to improve operational efficiency, labor productivity, and profits
Aim to enhance customer relations and competitiveness
Personal Growth:
Seek to improve their own salaries, bonuses, and fringe benefits
Business Influence:
Make daily decisions that impact the business
Develop a motivated and productive workforce
Coach employees and impart necessary skills and knowledge
Hire the right people and manage underperforming employees
Develop effective and efficient processes
Employees are workers within an organization and are crucial internal stakeholders. They often represent the business in customer-facing roles or produce products in manufacturing businesses.
Job Security: Desire for stable, long-term employment
Compensation: Better pay, bonuses, and improved terms of employment
Career Growth: Opportunities for career progression and promotion
Job Satisfaction: Improved working conditions and job fulfillment
Equal Opportunities: Fair treatment and non-discrimination
Customer Interactions: Direct impact on customer experience and satisfaction
Product Quality: Influence on the quality of goods produced
Productivity: Affect overall business efficiency and output
Business Reputation: Can impact the company's image through their actions and interactions
Performance Impact: Motivated employees are more likely to perform well
Ripple Effect: Employee performance affects managers' targets and overall business performance
Customer Loyalty: As noted by Tiffani Bova, "The fastest way to get customers to love your brand is to get employees to love their jobs."
Mutual Dependence: Managers rely on employee performance, while employees depend on managers for guidance and support
Shared Interests: Both groups benefit from the company's success through job security, bonuses, and career opportunities
Performance Chain: Employee performance impacts manager performance, which in turn affects the business's overall success