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Organizational stakeholders refer to parties interested in and directly affected by the company’s performance. They include employees, managers, and directors.
Organizational stakeholders are strategic for the company in fulfilling its strategic objectives. On the one hand, they contribute their labor, knowledge, and skills to make the business successful. They also influence businesses through their decisions and the quality of their work.
On the other hand, they have interests related to salary, career, and job security. They also want a conducive work environment. Other interests are opportunities to satisfy personal needs, such as the need to be recognized and to self-actualize.
Difference between organizational stakeholders and business stakeholders
Apart from classifying stakeholders as external and internal stakeholders, other classifications exist. It groups them into:
- Organizational stakeholders
- Product market stakeholders
- Capital market stakeholders
We refer to these three as business stakeholders. Organizational stakeholders include employees, management, and directors.
Meanwhile, product market stakeholders include customers and suppliers, while capital market stakeholders include creditors and shareholders/share investors.
Organizational stakeholders are interested in obtaining benefits commensurate with their contributions to the company. These benefits include salary, benefits, facilities, work environment, and power. Meanwhile, what they contribute depends on their skills, knowledge, and expertise.
Why organizational stakeholders matter
Employees and managers love it when companies provide generous salaries and benefits. The compensation package excited them.
Managers and employees expect companies to provide a comfortable and safe work environment in addition to salary. They also like it when companies give bonuses and offer promising career paths.
These benefits contribute to employee and manager satisfaction. In addition, providing space for self-development and self-actualization is also an essential factor for their happiness.
For companies, satisfaction is the key to success. Satisfied employees are motivated and more productive, and they are also willing to give their best to the company.
High satisfaction among employees facilitates the company’s achievement of its goals. Employees contribute to creating value for customers, which means more money is made in the future.
Employees serve customers with pleasure to satisfy them. They are also eager to innovate and synergize to support the company and gain a competitive advantage.
While employees carry out routines and implement strategies, company managers and executives are responsible for allocating resources, designing strategies and tactics, making strategic decisions, and setting company targets.
Managers and executives manage resources to create value. They take strategic steps to exploit opportunities and minimize threats, considering internal resources and capabilities. How they organize the company can significantly affect its ability to compete in the market.
Foundation for competitive advantage
Human capital is the foundation for building competitive advantage (resource-based view). They are often more difficult to imitate because they generate an intangible resource by, for example, establishing an innovative work culture and environment.
In addition, human capital also creates capabilities in utilizing tangible assets. These intangible resources and capabilities are embedded in organizational routines or practices and cannot be transferred externally.
Organizational stakeholders’ interests and influences on the business
Management and employees have different roles and responsibilities, as does their influence. However, they share roles and tasks in operating the company and interests within the organization.
Employees and management must work together for business success despite their different roles. Managers set targets and make decisions while employees carry them out.
Management
Management influences the company through its roles and responsibilities to lead and direct the organization. It is also responsible for planning, organizing, and controlling resources within the company.
Management includes those who occupy managerial positions. They include directors and managers. They have the power and official authority to rule and are obeyed by others under them.
Director
The director is the most influential to the company. They hold the highest authority and are responsible for the company’s performance. They are what we often refer to as corporate executives.
Directors influence the business through their strategic decisions. They also direct the organization and allocate resources to achieve the vision and mission. The decisions, strategies, and business plans that they design become the basis for implementation and decision-making in lower management.
Long story short, directors impact the business through their role in:
- Defining business direction and goals
- Designing corporate strategy
- Making critical decisions at the corporate level
- Developing policies and rules
- Making organizational changes
Meanwhile, the director is interested in obtaining bonuses and a secure position. Their interests are usually associated with business performance. The better the business performance, the higher the chance of getting a bonus or being promoted back to a director position.
In addition, the director also has an interest in power. They want others to respect them as leaders by obeying them and making their decisions.
Manager
The manager is under the director. They include middle-level managers and lower-level managers.
The manager implements the director’s decisions. They influence businesses through their responsibility for setting goals and managing resources in their area. In addition, they also play a role in motivating staff to achieve the set goals.
Just like directors, managers are also interested in bonuses and job security. In addition, they also have an interest in being promoted to occupy a higher position.
Employee
Employees carry out day-to-day business operations. They do not occupy managerial positions. Therefore, they have no power over other people.
Employees work under managers in return for wages or salaries. They carry out orders and daily work to achieve the targets set. They affect business performance in several ways.
First, they affect the company’s achievement of targets. For example, if all employees don’t hit their targets, neither will the business.
Second, employees affect customer satisfaction. In a service business, they are the ones who face the customer directly. How they do their job and the quality with which they provide service to customers can significantly impact a business.
In addition to these two aspects, employees influence the business through:
- Their knowledge, skills, and abilities
- Their productivity at work
- Their contribution to the work environment
- Their actions, such as tardiness or strike action
Meanwhile, employees have an interest in business related to:
- Wages
- Promotion
- Job security
Employees want companies that offer higher salaries and opportunities for promotion. When applying, they consider the salary offered and the promising career opportunities in a company.
In addition, employees also have an interest in job security. Company performance affects employee income and job security, which in turn is also determined by their performance. If they perform well, they may be promoted to a managerial position.
On the other hand, if they perform poorly, employees are often the first to be fired. Likewise, they are also commonly targeted for efficiency, such as a reduction in pay or layoffs.
In addition to the three aspects above, employees are interested in better working conditions and opportunities for self-actualization. Thus, they want the company to provide generous compensation, satisfy their social and personal needs through social interactions at work, and provide opportunities to meet their needs for self-actualization, self-development, and value.
Building a strong stakeholder relationship
A strong organizational stakeholder relationship is a two-way street built on mutual understanding and shared goals. Employees, as key internal stakeholders, have natural interests that align well with the company’s success. Businesses that prioritize these interests can create a more engaged and productive workforce.
Here’s how companies can align with employee interests:
- Competitive compensation and benefits: Offering fair salaries, bonuses, and a comprehensive benefits package demonstrates the company’s value for its employees. This not only attracts top talent but also motivates existing employees to stay committed.
- Career development opportunities: Employees want to feel like they’re constantly learning and growing. Providing training programs, mentorship opportunities, and clear career paths shows that the company invests in its workforce and supports its long-term goals.
- Positive work environment: A safe, comfortable, and respectful work environment fosters employee well-being and satisfaction. This includes factors like work-life balance, open communication channels, and a culture of collaboration.
By aligning with these interests, companies create a win-win situation. Happy and motivated employees are more likely to be productive and innovative and contribute to the company’s overall success.
Fostering collaboration and communication for increased productivity
Effective communication and collaboration are essential for building strong organizational relationships with stakeholders. When employees feel informed, heard, and valued, they’re more likely to be engaged and contribute their best work.
Here are some ways to foster collaboration and communication:
- Open communication channels: Encourage employees to share ideas, concerns, and feedback openly. This can be done through regular meetings, surveys, or suggestion boxes.
- Transparency and visibility: Keep employees informed about company goals, strategies, and important decisions. Transparency builds trust and allows employees to feel invested in the company’s success.
- Teamwork and collaboration: Create opportunities for employees from different departments to work together on projects. This fosters a sense of community, breaks down silos, and leads to more innovative solutions.
Employee interests and impact on competitive advantage
Employee interests are not just about individual well-being; they directly impact a company’s competitive advantage. A motivated and engaged workforce can be a significant source of differentiation in today’s competitive landscape.
Here’s how employee interests contribute to a competitive advantage:
- Innovation and creativity: When employees feel empowered and valued, they’re more likely to think outside the box and come up with innovative ideas. This can lead to the development of new products, services, or processes that give the company an edge over its competitors.
- Customer satisfaction: Engaged employees are more likely to go the extra mile to provide exceptional customer service. This translates to higher customer satisfaction, loyalty, and a positive brand reputation.
- Reduced costs: A happy and healthy workforce experiences lower absenteeism and turnover rates, which translates to reduced recruitment, onboarding, and lost productivity costs.
