Understanding Of The Concept Of Stakeholders, Its Opportunities And Challenges
All around the world, there has been many changes throughout generations of how industries should work together. These changes are brought in part by stakeholders. Stakeholders are important members of an organization. They impact or are impacted by the activities of the organizations. The goal of this paper is to address who the stakeholders are, what opportunities and challenges they bring and pose to an organization, organizational responsibilities to the stakeholders, and appropriate ways an organization can fulfill their responsibilities to the stakeholders.
The Concept of Stakeholders
The question we need to ask ourselves, is who is a stakeholder? A stakeholder are individuals or organizations who are invested in a particular project and who are affected by this project in some way. From the PowerPoint that was discussed in class, Stakeholders may include interest, rights, and ownership. The concept of stakeholders is to get people to come together creating an economic value. This allows the management to decide what the best choice is for the organization and to have the chance to develop interpersonal relationships throughout different types of stakeholders. Management should be capable of persuading stakeholders and to help achieve the company’s goal. By doing so, it’s important to discuss the 5 types of stakeholders and what these 5 types partake in.
Types of Organizational Stakeholders
There are many classifications of stakeholders. Some of the classifications of stakeholders identified 5 categories as Primary, Secondary, and key. This also includes Internal and external which we have discussed from the power point on the “Analysis of stakeholders”. Through these classifications, the audience will engage and learn in a much broader scope of things.
Primary Stakeholders
Primary stakeholders may include customers, employees, stockholders, creditors, suppliers, or anyone else with a functional or financial interest in the product or situation. According to the article, Understanding Primary Stakeholders of a Firm In response to market integration in the European Union (2009), shows a diagram of customers input of proceedings to the system from which are reimbursed from the primary stakeholders. This can affect the people or group of the organization positively or negatively by an effort of the institution or an organization. A regulation that benefits one group may have a negative effect on another.
Secondary Stakeholders
Secondary Stakeholders are those who are directly involved with or are responsible for receivers or target of the effort. According to the community toolbox, these might include individuals and organizations that live with, are close to, or care for the people in question, and those that offer services directly to them. This includes: Parents, Spouses, Siblings, Children, other family members, significant others, and friends.
Key Stakeholders
Key stakeholders are the people who can enforce laws and regulations that may either fulfill the goals of your effort or directly cancel them out. This includes within an Organization, Agency, or institution anything engaging with effort. However, Key stakeholders can be those who influence others such as media, community leaders, and people that are in a position that convey influence. An example that would relate to this scenario is “management boards or steering would fall into category, as they usually have a job to monitor the quality of the project as it develops and to provide advice and guidance throughout its course.
Internal Stakeholders & Eternal Stakeholders
Internal Stakeholders include everyone inside the company such as employees, owners, the board of dictators, managers and investors. However, this consist of higharchey of power, influence, control of strategic resources, position of knowledge and skills, control of the environment and involvement in a strategy implementation within a business. External Stakeholders are entities not within a business itself but who cares about or are affected by performance for example: Consumers, Regulators, Investors, and Suppliers. On that note external also views and experiences by addressing the issues that are important to them as patients, service users, careers and members of the local community.
Challenges
By seeking out the types of stakeholders and who they are, we can all agree that there are challenges and opportunities that are brought to the organization. As we discussed in class, one of the challenges a stakeholder brings to an organization is the lack of communication. Stakeholders that lack communication can tremendously effects the success of your project. One of the two communication skills we studied, is downward and upward communication. In downward communication, managers must explain the reason why a decision is being made. This would tie into primary stakeholders. “ Given that most managers jobs responsibilities have expanded , upward communication has significantly increased to a point that managers will often times feel overwhelmed and discouraged because they become easily distracted”. Other challenges that tie into stakeholders of the organization encompasses organizational politics, disinvestment, greed, resistance and ethical challenges. Perhaps the norm for any human being is often placing their own interest above those of the business they claim to support allowing it to get in the way of progress.
Opportunities
According to Crilly© London Business School 2019, it states “Some managers, who chose to give more narrow scopes of attention to stakeholders, seek to reduce threats to their business, while those who demonstrated wider attention to vary stakeholders were seeking both to reduce threats and seize opportunities”. In addition, opportunities that play a role to the stakeholders is funding, administration, legal, employment, taxes, and CSR. CSR supposes that corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations. Legal responsibilities can’t address all the topics or issues that business may face. They often lag behind more recent concepts of what is considered appropriate behavior. Laws are made by lawmakers, in which reflects personal interest and motivation of legislators rather than appropriate ethical justifications. To conclude, having these challenges and opportunities certainly opens up doors for improved employee relations such as business performance and the enhancement of the company’s marketing efforts.
Ethical Criteria Stakeholders Follow
Truthfulness
The biggest challenge that an organization has to the stakeholders is being truthful. The goal of the organization is to gain trust within the stakeholders. Stakeholders should treat everyone equally, ethical actions must protect the moral rights of the stakeholder. This may include having the right to choose what you want to do with your life, the right to be treated as a human being than material, and having the ability to life, privacy and truthfulness. Sometimes stakeholders will have unethical behavior through self- interest, and outside pressure. By creating an ethical organization, an organization is ethical if the people inside are ethical.
Outside The Organization
According to the article “Organizational Stakeholders and its environment” it clearly states that “As a leader, a manager can promote moral value that results in specific ethical rules and norms that people use to make decisions”. If employees contribute to the ethical climate by their own decisions and actions, this will also help develop norms of behavior that reinforce good ethics in workplace. Outside the organization, if someone is a liaison or a spokesperson, a manager can inform potential customers and other stakeholders about the organizations ethical values and demonstrate those values through behavior towards stakeholders- such as by being honest and acknowledging errors.
Summary
In conclusion, by diving deeper into the understanding of stakeholders, the audience now has a better understanding that a stakeholder is a person with interest or concern in something, especially in a business. Furthermore, understanding the five types of stakeholders such as: Primary, Secondary, Key, Internal, and External ties in the opportunities and challenges that arise to the occasion, as well as the ethical behaviors they bring to the company.
References
- Akpinar, M. (2009). Understanding Primary Stakeholders of a Frim in Response to Market
- Integration in the European Union. Retrieved from https://www.utupub.fi/bitstream/handle/10024/97331/Ae2_2009Akpinar.pdf?sequence=2&isAllo
- Baker, B. (2009) Corporate Citizenship: Social Responsibility, Responsiveness, and Performance. Business and Society: Ethics and Stakeholders Management.
- Crilly, D. (2018). Stakeholders Threat or Opportunity. Retrieved from https://www.london.edu/think/stakeholders-threat-or-opportunity
- Friedman, L. (2017) Identifying Stakeholders and Their Interests. Retrieved from https://www.healthknowledge.org.uk/public-health-textbook/organisation-Management/5b-understanding-ofs/managing-internal-external-stakeholders
- Harrin, E. (2010). 4 Types of Stakeholders in Project Management. Retrieved from https://pmtips.net/article/4-types-of-stakeholders-in-project-management
- Rabinowitz, P. (2019). Identifying Stakeholders and Their Interest. Retrieved from https://ctb.ku.edu/en/table-of-contents/participation/encouraging-involvement/identify- Stakeholders/ main
- Robbins, S.P & Judge, T+A. (2019). Textbook, Chapter 11, Communication
