Not too long ago, the term “stakeholder” was not in wide usage. It wasn’t even coined until 1963, when an internal memo at the Stanford Research Institute first put it into writing as a corporate business term. It wasn’t for another couple of decades, however, before the term really became commonly recognized. Its acceptance has taken off since that time frame, and now you’d be hard-pressed to find anyone even remotely familiar with business terms who hasn’t heard the term on multiple occasions. If you are one of those people who was not familiar with the term, but you know you want to become more well-versed in business matters, you can get started today with an Introduction to Business course at Udemy.
An internal stakeholder is simply an individual or entity of some kind that has a vested interest in the success of an organization. These are primarily people who stand to be directly affected by the profitability of the company, such as employees and stockholders, although they might also be board members, donors, and trade unions.
The more income the company generates, the better off these individuals are as a result. Employees may receive increased wages and other bonuses when the company’s bottom line is looking good, for instance, and stockholders can watch as their initial investments grow to sizeable amounts, possibly even resulting in the occasional dividend payment. On the other hand, if the organization begins to lose money, the employees may find themselves out of a job, and the stockholders may find themselves out thousands of dollars.
Internal vs External Stakeholders
The easiest way to define the difference between an internal and external stakeholder is that an organization cannot survive without the efforts of those on the inside. The investors, employees, volunteers, and donators all play a critical, irreplaceable role in the organization’s success; remove them from the equation, and the business will cease to exist.
External stakeholders, while involved with the company in some form, are not directly involved within it. Even so, these stakeholders are invaluable as well. These are the individuals and other organizations that are directly affected by the work your organization does. Examples include customers, community partners, suppliers, creditors, the government, and even society as a whole. It’s important to have a good relationship with external stakeholders, and this blog at Udemy has some excellent tips on how to build the external stakeholder relationship. If you run a business and are looking for tips on how to motivate the employees, your most prized internal stakeholder, consider this course detailing ways to keep employees motivated.
Keeping Internal Stakeholders Happy
When it comes to developing and keeping a good relationship with your internal stakeholders, a vital practice in business, the best thing your organization can do is act with good, sound ethical practices. If a corporation is unconcerned with today’s social issues and makes no effort to tie in with the local community, it is unlikely to receive much public support, and it’s pretty difficult to build a strong customer base (and generate revenue, consequently) without a positive image.
By investing in the community and showing in interest in social issues, an organization is showing a strong ethics code, and this will not go unnoticed by the internal stakeholders. To learn more about the importance of business ethics, check out this Udemy course entitled Business Ethics and Code of Conduct.
It is not uncommon now for businesses to draw up extensive, specific ethics programs and issue an ethics manual to every employee on the date of hire. Ethical issues will always arise in business settings, but by having a basic outline on how the company should handle certain moral situations, major disasters are much easier to snuff out before they have a chance to take place.
It’s when an organization’s ethical theories and their actual ethical practice that problems can come up, and that’s the fastest way to ensure alienating your internal stakeholders and bringing down the core of what makes any business successful.
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