Employees work in a company and carry out tasks based on the manager’s direction. They perform daily tasks according to their job description. In return, they get wages or salaries.
In addition to higher salaries, employees are interested in their careers, job security, and work environment. They want the company to promise a prospective career path. They also want their job to be secure, allowing them to earn an income and make money to meet their daily needs. In addition, they also want a comfortable and supportive work environment.
Why are employees a critical stakeholder?
In addition to managers and boards of directors, employees are critical internal stakeholders. They are the people who carry out operations. They make, manufacture, promote, sell, and ship products to customers. They also manage finances and administration.
Employees are key stakeholders besides customers and suppliers. If suppliers provide inputs, employees supply human capital: their knowledge, labor, and skills to produce and deliver products to customers. Their physical and mental health is also vital to enable them to work optimally.
Employees contribute to the company through what they do, how they do their work, and their productivity. They directly impact customer satisfaction and, therefore, cash flow to the business.
Because employees are essential to success, companies invest in them. Companies ensure they continue to be paid, perform productively, have job security, and work in a comfortable and safe environment.
On the other hand, employees, in turn, benefit financially from the company’s performance and success. They trade their time and effort for paychecks and promotions. They also need training and development to grow into professionals.
What is the employee’s interest in the business?
Employees want the company to be continuously successful so they can have job security. They are also interested in the compensation package they receive if the company is successful.
In addition to higher salaries, employees have an interest in their careers. They want to be promoted and occupy a higher position, allowing them to earn more money.
In addition, employees also want their personal needs met. They want to be recognized and have the opportunity to actualize themselves. They also want to grow professionally, which requires adequate training and development support.
Another interest is the work environment. Employees can optimize their best abilities if supported by a safe, comfortable, and healthy work environment.
The work environment also contributes to job satisfaction. And it is an essential factor for employee productivity. A comfortable work environment makes them feel valued and allows them to grow socially by interacting with one another.
Conversely, a toxic work environment can reduce their productivity. It also prevents them from growing to their full potential. Another impact is dissatisfaction and unhappiness.
How do employees affect the business?
Companies see their employees as assets. Employees contribute to creating value and achieving the company’s vision and mission. Treating them as valuable assets will encourage them to have high morale.
High morale ultimately contributes positively to other stakeholders, such as customers and shareholders. For example, they treat customers well as if they were serving themselves.
In addition, high morale drives higher productivity. Thus, companies can generate more profits by producing more output at a lower cost.
Employees impact the business in many ways, including:
- The knowledge, skills, and abilities they have
- Their productivity and willingness to work hard and smart
- Their quality in doing tasks and work
- Involvement in their work and motivation in performing tasks
- Ability to provide services and satisfy customers
- Their discipline, including regarding their presence in the office
Contribution to revenue and costs
Contribution to revenue and costs
In summary, employees affect the value created by the business. They affect revenue as well as costs.
The first is related to income. Employees are the people who make products or provide services to customers. If they produce a product or provide a high-quality service, money will continue to flow to the company.
The second is related to costs. Companies spend money to pay and provide benefits to them. In addition, companies also spend money to train them. Thus, what is provided by employees should be at least equal to the costs incurred.
Employee-business relationships can also come with costs. For example, industrial disputes between employees and management may arise if interests are not accommodated.
Such disputes can incur costs, such as legal costs, to resolve them. In addition, employees may also carry out negative campaigns about the company, which can damage its reputation.
Influence on business productivity
Businesses are productive if their employees are also productive, supported by supportive organizational systems and structures. For example, a company has 10 employees in the production area.
Previously, 1 person only produced 10 units of output. However, after the company restructured the production area by specializing, 1 person could make 12 units. Thus, employees in the production area can produce 120 units of output, 20 more units than before.
The examples above show how systems – in this case, I’m using restructuring and specialization as examples – are not enough to make a business more productive. It requires employees to stay motivated, and the reverse is true.
An increase in motivation without a change in the system also may not increase output. Although motivated, employees may still rely on old ways to produce output.
In addition to the system, adequate equipment support is also important. For example, a company buys more technologically advanced machines. Motivated employees will be eager to learn how to use the machine optimally. On the other hand, if they are not motivated, they may be reluctant to learn and change because they have become accustomed to the old machine.
Cultivating motivation requires companies to increase employee involvement in their work. High engagement makes them more focused and responsible for their work. And they are driven to provide the best for the company.
Influence on the work environment
How employees behave will affect the work environment. Good behavior will encourage a positive work environment.
Positive behavior creates positive energy in interactions in the work environment. It fosters healthy synergy and competition.
On the other hand, toxic behavior can create a bad work environment. It doesn’t just impact one individual. However, it also affects other employees and lowers their morale. Lower morale and higher absenteeism are other impacts.
In addition, a toxic work environment also contributes to a high increase in turnover. For businesses, that is an increasing cost because recruiting new employees can involve more costs than retaining existing employees.
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