How to work with business stakeholders
What is a stakeholder?
A stakeholder is a person or entity that has an interest — financial or otherwise — in a business or its activities. A stakeholder may have some control over the business’ operations, and/or the business’ operations may impact the stakeholder. A business needs to consider all of its stakeholders to operate in the most strategic, sustainable and profitable way.
Internal vs. external stakeholders
The main difference between internal and external stakeholders is that internal stakeholders have a direct relationship with the business. External stakeholders generally don’t have a direct relationship with a business, but their actions may impact a business, or the business’ activities may impact them.
Internal stakeholders are directly involved in the business and have a financial stake in it. Some examples of a business’ internal stakeholders include:
An investor that owns shares or equity in a company in exchange for their investment is a shareholder, which means they have some control over business decisions. (Note that a shareholder is always a stakeholder, whereas stakeholders aren’t always shareholders).
Regardless of whether they have a say in business decisions, employees are internal stakeholders as they rely on their salaries and wages from their employers. As a result, the business’ activities, successes or failures directly affect them.
Company leaders, boards of directors and team managers are internal stakeholders. Some of these people may also hold other stakeholder roles. For example, they could be internal stakeholders as leaders and employees and external stakeholders as customers and community members.
Internal customers are the individuals and teams within your business who rely on the work that you do in your role to perform in theirs. Helping internal stakeholders to succeed ultimately helps your business deliver for its external customers and become more profitable.
External stakeholders are parties and groups who aren't a part of a business but are nonetheless affected by its activities. Some examples of external stakeholders include:
Your suppliers are important external stakeholders - you may rely on their supply to uphold your product or service and customer experience. Likewise, they rely on you and your timely payments to them as their valued customers.
Members of the public may become external stakeholders, depending on whether a business’ activities affect them. For example, if a business pollutes a river, the people who rely on that river for food, recreation or employment would become external stakeholders.
Government is an external stakeholder because its policies can impact businesses, even when the government has no direct relationship with the affected businesses.
Customers don’t necessarily have a direct relationship with the businesses they buy from. However, customers are everything to a business’ profits and reputation, which is why they are amongst the most important business stakeholders.
Stakeholder management: best practices
As a business owner, it’s important to consider all affected parties - whether internal or external - and engage them, as appropriate, in your decision-making processes. Stakeholder management isn’t necessarily easy as there may be lots of different and conflicting priorities to contend with. However, when it’s done well, your business benefits from taking onboard the needs and perspective of your stakeholders.
Here are some best practices to consider when managing internal or external stakeholders:
Identify affected parties
Whatever is happening in your business, identify who it affects the most and consult them in the decision-making process. This doesn’t necessarily mean doing everything they say, but it does mean taking onboard a diversity of opinions and perspectives for best results.
When working with a group of stakeholders, it’s important to suss out who has the final say in decisions. This is where you’ll need to focus your attention. These key decision makers may also help to champion your cause with other stakeholders.
Document stakeholder expectations
Take time to understand and document stakeholder expectations. If you ever reach a point where you and your stakeholders disagree about the direction of your business, a project or priorities, you can review this initial documentation for clarification.
Create and enforce a communication plan
Good communication is the foundation of any relationship. Decide how you’ll communicate with stakeholders, the frequency of communication, and what supporting materials you’ll provide. For example, depending on the matter, you might agree to bi-weekly calls, along with quarterly reporting emails.
Keep your business running smoothly with MYOB
Running a business is hard work. It takes time, dedication and excellent people management skills to succeed. MYOB can help lighten the load. Our business management platform offers powerful solutions for your finances, invoicing, payroll, accounting, and much more so you can focus on your important business stakeholders, and not on back-office administration.