For those who run a business, the word “stakeholder” may be a term you often hear. However, I think there are many people who have heard of it but don’t really understand what it means.
Stakeholder refers to “interested party”. Stakeholders may seem difficult at first glance, but it is easier to understand that they are people who are influenced by a company’s activities.
In recent years, many companies have recognized the importance of relationships with stakeholders and are focusing on building relationships. So why is it important for a company’s development?
In this article, we will explain the meaning and types of stakeholders, and the key points for building good relationships.
What is a stakeholder?
Stakeholders are those who are directly or indirectly affected by a company’s management.
It was first used by scholar R. Edward Freeman and is now used as a business term. It is said to be derived from the English words “stake” and “holder.”
Customers, shareholders, and employees who have financial connections or relationships come to mind, but this applies to all people who are affected by a company’s activities.
For example, it refers to a wide range of areas such as local communities, financial institutions, subcontractors, and partner companies.
Importance of stakeholders
In modern times, this stakeholder is given great importance. One of the reasons for this is that various companies have started to think deeply about their role as a society, not just profits.
Up until now, many companies had a strong pursuit of profit, and the state of society was not considered very important. However, in recent years there has been a growing trend toward the need to contribute to society from various perspectives, such as connecting with local communities and responding to social situations.
In order for a socially responsible company to operate smoothly, relationships with the stakeholders surrounding the company have become essential. Relationships are not temporary, but long-lasting relationships are important.
It was believed that companies could not survive on their own, but that they could only develop through relationships, and this came to be considered important.
Difference between stock holder and share holder
Two terms that can be easily confused are “stockholder” and “shareholder.”
Stakeholders refer to all interested parties who are affected by a company’s activities, and stockholders/shareholders refer to “shareholders.”
The difference between the two is as follows.
Stockholder: A shareholder who owns a portion of the stock Shareholder: A major shareholder who has a major influence on the company’s management, etc.
Stockholder companies tend to conduct management that emphasizes balance so that everyone benefits. On the other hand, a shareholder company is a company that manages its business with priority given to the interests of its shareholders.
Types of stakeholders
There are two types of stakeholders: “direct stakeholders” and “indirect stakeholders.” Although the words are similar, it is important to understand the differences so that you can use them properly in business.
direct stakeholders
A direct stakeholder is a person or organization that directly influences or is affected by the activities of a company or organization.
An example is as follows.
indirect stakeholders
Indirect stakeholders are entities that do not directly influence the activities of a company or organization, but rather indirectly influence each other.
An example is as follows.
The importance of management
Building good relationships with stakeholders is very important for companies to improve their activities. To achieve this, it is necessary to manage relationships, and this is called “stakeholder management.”
It is necessary to identify, understand, and analyze the relationships, priorities, and
needs
of each. Each person has completely different attributes, and the type of interaction that is effective will also change.
Management is not an easy task, but it is an important matter that will determine the subsequent development of the company. Let’s take enough time.
Please refer to the flow below for management.
1. Identifying stakeholders
2. Analysis/attribute confirmation
3. Engage and create relationships
4. Management
Stakeholder engagement is important
Engagement
is a word that means “deep involvement.”
In other words, stakeholder engagement refers to efforts to understand the thoughts and concerns of stakeholders and proactively build relationships.
Since the approach will vary depending on each person, it is necessary to change the approach to suit the person.
The following is an example of how to interact.
Customers: Close customer support, collecting information through customer surveys to further improve products and services, and disclosing information when there is a problem with a product or service.
Shareholders: Create a preferential treatment system for your company’s products and services to encourage them to become attached to your company, and exchange opinions at shareholder meetings, etc.
Employees: Provide fair personnel, pay, and treatment, and check their satisfaction with the company and their opinions for development.
Society…Relationships with local residents, event activities, volunteer activities, social contribution activities
It is important not to just implement and build the system, but to utilize it for the business development of the company. Let’s think about how it can be used to develop a company’s management, and what kind of engagement is necessary for further development.
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Three points for building good relationships with stakeholders
As mentioned above, companies have come to focus on social responsibility in recent years. In order for a company to develop further in the future, it is important to build good relationships with stakeholders and continue to be involved.
In order to build good relationships, keep the following three points in mind.
be involved in the whole without distinction
Companies should engage with all stakeholders without discrimination. It is dangerous to have relationships only with certain people.
It is no exaggeration to say that companies are supported by many stakeholders, including customers, employees, shareholders, and financial institutions that provide financing, and are built on a variety of relationships.
If a company manages its business only with specific people and neglects its relationships with other people, it risks damaging the company’s credibility. If the relationship continues to deteriorate, there is a risk that some people will say, “I can’t trust that company,” which could affect the survival of the company.
We recommend increasing opportunities to engage not only with specific people, but also with local communities, other businesses, and consumers.
Be aware that you are also a stakeholder
As long as you are involved in society, it is extremely important to be aware that you are also a stakeholder.
It is important to consciously expand your connections with a variety of people, and to look at company management and social conditions from a different perspective from the perspective of another consumer.
If you are a representative of a company, you need to make efforts to make your employees aware that they are also members of the stakeholders who have an impact on the company.
By making them more aware, they will think about how their thoughts and actions will affect the company, what benefits they will bring to the company, and will be able to act independently.
This can be an opportunity to grow the company.
Check whether stakeholders and corporate philosophy are connected
Let’s reconfirm whether there is a connection between stakeholders and the corporate philosophy.
You cannot manage your business unless you understand how your company interacts with its stakeholders and whether your company properly understands them.
If you understand it properly, your corporate philosophy will be connected to your stakeholders, and your corporate philosophy will help you further strengthen relationships.
summary
In this article, we explained the meaning and types of stakeholders, and the key points for building good relationships.
Stakeholders refer to “interested parties” who are affected by a company’s activities. It is no exaggeration to say that a company can only survive if it has relationships with its stakeholders.
In order to build good relationships, keep the following points in mind.
There is a high possibility that you can maintain a good relationship just by keeping these things in mind, but since the way you approach each person will change, you will need to change the way you work to suit the other person.
Take the time to think about what each stakeholder is looking for.
Nowadays, when companies have a strong social responsibility, building good relationships is essential. Strong relationships and reliability are also important for the further development of a company.
Additionally, understanding and analyzing stakeholders, collecting their opinions, and understanding their needs is useful for determining the direction of a company and steering projects.
Let’s always take action to build good relationships with our stakeholders. Strengthening relationships is a major key to business development.