An organization is made possible by its human component, its human capital. Sociologically speaking, a business or a company is a social group, secondary or referential in nature, made up of the people that consider themselves as members of the organization. Beyond membership however there is another human component. These are the stakeholders. Stakeholders are individuals and groups that can affect or be affected by the actions of the organization as a whole.
The notion of ‘stakeholders’ had been introduced in 1963 by the Stanford Research Institute to describe and explain the importance of considering and factoring into any plan or strategy elements and concerns that would affect “individuals or organizations who stand to gain or lose from the success or failure of a system” (Nuseibeh & Easterbrook, 2000). Broadly, it means anyone who has an interest in any matter or element in the organization’s purview. As an example, let us take a sample organization – a school. So, who would be the stakeholders? First-off, it’s students, pupils, teachers and support staff.
Then we have the parents of the children, their families, the school board and the greater Academic organization that oversees the school for the county and for the state. Then we have the community that the school is a part of (since the school is the academic and social training ground that shapes the behavior and knowledge of their young) and in the broader view, we have the greater society who will be affected by the actions of the school in that the children that it educates will take part in their adult life via the varied roles and actions they will have and perform in society.
As such, the greater American society has a stake in the quality and kind of education American kids receive in grade school and high schools across America. After all, the children are the future of this country. Now, for instance, if a public school closes down in a county due to budget cuts, all its stakeholders will be affected. The kids must be placed elsewhere; it will strain their families and the education system that must find locations and areas to accept them.
The staff and the teachers are going to be out of a job affecting their ability to support themselves and their families economically and the county, the community, the school board and the greater academic system will be saddled with responsibilities over pupils and students to place them in schools and to provide professional and financial support according to contract to staff and teachers. The community will feel the strain of the closing of the school and the discontent and social collective feelings/opinions, either negative or positive will affect local politics.
The displacement will affect the socialization of the children and the formation of their personalities for the rest of their lives. The greater impact then will be long term as the abrupt change in their education will shape their future selves, selves that in their adult life will take over from their parents in the varied roles important to their communities. With the example above, I hope that the idea of ‘stakeholders’ is already clear. Now, Let us consider a business or a company.
The following are general ‘types’ that many private commercial organizations can identify with: •Owners/Capitalists – they are interested in the success of their investment/business. •Creditors/Investors – like the above, they are interested in the success but they look at the bottom-line – liquidity, credit score and new contracts, for example. •Employees/Staff – they are interested not only in the success of their organization but focus on their job security, rates of pay, compensation, communication, and the way that they are treated by the organization altogether. Clients/Customer – they are interested in the value of the products and services, ethical practices, quality of service and costumer care. •Suppliers & Partners – they are interested in providing the raw materials as well as support and services for the organization as well as for their own equitable business interests which will be affected by the organizations actions and decisions,
•Trade Unions – their interest is in the protection of the rights, benefits and interests of their union members, •Greater Community – their interest is in the provision of jobs to community members, transparency, CSR, environmental rotection, shares, ethical practice, etc. •Government – the government’s interest is in the legality of certain practices, equal opportunity, taxation, VAT and related legislatory concerns. From the above, we can see how and why and organization’s health as well as its practices will be of interest to the listed stakeholders. For example, if capitalists are concerned that the business has lost its profitability, it can pull out from the arrangement resulting to its closure or failure of the owners and other stakeholders will be unable to take over and resolve the pull-out of primary capitalists.
Additionally, if a company or organization fails, its staff will lose jobs affecting their economic capacities. If a company does not provide satisfactory client support, clients are going to be unhappy and might not go back to use the company for its services and goods in the future. Entrepreneurship is about taking risks, going for innovations and undertaking finance and business challenges to introduce new products and create new businesses.
The challenges of ensuring stakeholders are not taken for granted requires an entrepreneurial mindset, the need to continually innovate so that all concerns are referenced in essential decision making. The reform element of entrepreneurship then is important in making the actions and decisions of an organization relevant to the needs and demands of its stakeholders.
Courtney from Study Moose
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