The term "stakeholder" is used almost every day. At the office, in the news media, and on social media, we hear this term. Many of us know it as the interest an individual, group of individuals, or institutions has in a company. This article will introduce you to stakeholders in detail.
Who are the company's stakeholders?
A company stakeholder is anyone or entity who has a stake in a business. The stake is also referred to as interest. This interest can be financial or non-financial. It can affect the company positively or negatively.
Therefore, we can define the company's stakeholders as individuals, groups of individuals, and entities that have a stake in the company either financially or not, and can be impacted by or impact the company. The types of stakeholders include investors, directors, employees, banks, the community, and media.
Financial interest comes in the form of equity and debt investments. For example, Moniepoint received another 90 billion dollars in investment. The entities that contributed to this funding are Development Partners International (DPI), International Finance Corporation (IFC), Leapfrog Investments, Google’s Africa Investment Fund, and Visa.
These and other institutions that have contributed funding in the past make up financial interest parties to the company. Individuals may have made a financial contribution to the company such as its founder and co-founders.
Individuals and institutions with non-financial interests are mainly the media, analysts, and the general public. The media and analysts want to know how the company's results are reported and analyzed. While the general public might want to understand what the business does.
Impact of stakeholders on the company
Certain stakeholders can have a positive or negative influence. Banks have a financial interest in the company. They have a positive impact by providing loans to the company which is used for growth and tax reduction. They can have a negative impact, if the company fails to promptly pay its debt.
The community in which a company is located can be a positive or negative force. They can patronize the company's goods and services, and provide human capital resources. When a business fails to give back to its community, the community can be a negative force on the company. They may disrupt business activities through protests. As a result, the company will lose revenue and profit.
There are ways companies give back to their community. This includes improvement of the community's environment, producing sustainable products and services, providing primary healthcare services, and employing indigenous people.
Directors have a greater impact on the company. They have their own interests. They may pursue this interest instead of the company's. Shareholders suffer from their selfish interests. To avoid this, shareholders pay for agency costs. They align the directors' interests with those of the shareholders and the company.
Employees are another set of stakeholders with the ability to impact the company. Employees provide services to the company. They are engaged in operations, marketing, production, and finance. When the employees have reached their learning curve, their activities will be top-notch for the company.
This stakeholder can also have a negative impact. For example, if their demand for higher pay is not achieved, they can embark on a strike. This may slow down the entity's production activities. Other employees will resign from a company that can pay them a higher salary.
In final words, stakeholders are the bedrock of a company. Without them, the company cannot exist. However, companies can have positive and negative impacts on stakeholders. A well-managed company can be a force for good.