What Are Stakeholders: Definition, Types & Examples
Every project needs stakeholders, whether they are financiers or clients. Stakeholders play a vital role in the project’s success, but what are they, and what exactly do they do?
Read on as we take a deeper look at the definition of a stakeholder. We’ll look at the types of stakeholders and how they help projects. As well as decipher the difference between a stakeholder and a shareholder.
Table of Contents
How Do Stakeholders Help a Business?
Different Types of Stakeholders
What Is a Stakeholder?
A stakeholder is a person or entity who may influence or be influenced by a business. A standard corporation’s investors, clients, employees, and suppliers make up its main stakeholders.
But the idea has grown to include governments, communities, and trade organisations. This results from the growing focus on corporate social responsibility.
How Do Stakeholders Help a Business?
Stakeholders are crucial for any business. The operations of the company depend on their cooperation in achieving the objectives. Or they may have an indirect impact on the company. Customers can alter their purchasing patterns. Suppliers can alter how they manufacture and distribute their products. Governments can alter the laws and regulations.
Different Types of Stakeholders
There are two different types of project stakeholders: Internal stakeholders and external stakeholders. They both have an interest in your project, but they have different needs. You have to consider how your project affects them to predict the ways you can keep them happy.
Internal and External Stakeholders
Let’s inspect the differences between internal and external stakeholders.
Internal stakeholders are people who work for the company. An internal stakeholder is often a key stakeholder as the company’s activities immediately affect them. They’re more interested in project success because of how it’ll affect the company.
Internal stakeholders include:
- The board of directors
- Project managers and project team
External stakeholders contribute to the project but are not part of the organisation. Despite not being employees of the organisation, the business affects them.
An example of an external stakeholder may be the town where the firm is located. This is clear when the company does something that may affect the people who live there. An example of this is exceeding the permitted threshold of carbon emissions. This affects the community because the increase in industrial pollution affects them.
Outside parties with no obvious connection to the company may have a direct impact on it. A prime example of an external stakeholder is the government. Any organisation with higher carbon levels may experience business operations impact. This is when the government alters its policies on carbon emissions.
External stakeholders include:
- Rival competitors
- The government
The key to a company’s long-term success is nurturing relationships with your stakeholders. Maintaining a positive and productive relationship with your key stakeholders is most important.
Key stakeholders have the greatest influence on a project’s success and are most affected by the outcome. They have the authority to take the project in a different direction if it serves their interests. It’s extremely important to keep these major stakeholders happy.
Examples of Stakeholders
There are a variety of different types of stakeholders. Each has their own specific requirements. They need to be taken into account when executing a project. Let’s examine the most prevalent categories of project stakeholders. As well as the particular requirements each of them has.
Customers often have an interest in the value and quality of the goods and/or services. Many would contend that companies are there to serve their clients. Customers are company stakeholders because the products and services provided affect them.
The stake of an employee is based on their income and job security, as well as health and safety. Employees receive benefits, both monetary and non-monetary, and a salary to support themselves. So employees have a direct tangible stake in the company.
Employee stakeholder interests in health and safety may also differ. This depends on the characteristics of the firm. For instance, in the construction, mining, oil and gas, and transportation industries.
Both debt holders and shareholders are investors. Investors put money into the company and expect to receive a rate of return. The idea of shareholder value concerns investors. All capital providers, such as lenders and potential buyers, fall under this category. Although project stakeholders are not always shareholders, all shareholders are by definition stakeholders.
Suppliers and Vendors
The stake of suppliers and vendors is their income revenue and their safety. Suppliers and vendors depend on a firm for income through selling goods and/or services to it. Suppliers may be intimately involved in business activities in various industries. Thus putting their safety and their health at risk.
The community plays a significant role in the success of a large firm based there. A variety of factors affect communities, such as job production, health, and safety. A corporation moving into or out of a community has a dramatic influence on jobs, wages, and spending. It may also affect the health of the community.
Governments are also significant stakeholders in businesses. This is because they collect corporate income taxes from them. The corporation collects payroll taxes from every employee. As well as sales taxes from other expenses. The Gross Domestic Product (GDP) businesses contribute is beneficial to governments.
Stakeholder vs Shareholder
Only one kind of stakeholder is a shareholder. Every stakeholder has a relationship with a firm because they have a vested interest in it. Shareholders have a monetary stake. But they also have the option of selling their stock at any moment. So they’re not committed to the company for the long term and can leave.
For instance, if a firm’s financial performance is poor, its vendors may struggle. This would be if the company reduces production and stops utilising its services. The company’s employees also risk losing their employment. But firm shareholders can sell their shares and cut their losses.
Stakeholders play a key role in running a business or working on a project. Do a stakeholder analysis to identify the internal and external stakeholders. Keep them happy, as it’s an important part of running your business. Inform each stakeholder of the project’s progress and listen to feedback. It will allow you to better execute your project planning.
FAQs on Stakeholders
What Are Project Stakeholders?
Project stakeholders are people or organisations that participate in the project. Or whose interests the project’s execution may impact. Key stakeholders are especially affected by the project and can influence the way it’s managed.
What Are Positive Stakeholders?
A positive stakeholder sees the advantages of the project and benefits from its success. These participants support the project team in accomplishing its task. A negative stakeholder observes the project’s negative effects.
What Do Stakeholders Do in Agile?
“Agile stakeholders” are individuals and organisational entities that communicate with the product owner. This is to offer them input and ease the development of the project’s products and services. Thus affecting the project throughout its development.
What Is an Example of Stakeholder Engagement?
A critical engagement tactic is to share the firm activity with stakeholders. This could mean relaying information about a product launch.
What Is a Stakeholder vs Client?
Clients are external stakeholders. They may or may not be the same as the user, and they may or may not have any input on the technical aspects of the project. The client’s main goal is to get the project completed as quickly and cost-effectively.
Clients serve as the organisation’s reason for existing. Stakeholders are any parties with an interest in achieving a common goal.