Explain why employees are often considered to be the key stakeholders in an organization.
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Building a business is difficult. Building a business in which all stakeholders benefit from your actions or the actions of the business entity is even more challenging. A stakeholder is anyone who is affected by your business in one way or another. Stakeholders are not necessarily stockholders, although stockholders are stakeholders.
Customers are stakeholders too, especially if they rely heavily upon your product or business to purchase items that they use regularly. Considering your employees as stakeholders can also benefit your company in the form of improved morale and performance.
Employee Compensation Issues
Employees are primarily affected as stakeholders in terms of their economic well-being. Employees share a common concern regarding how much and how often they are paid by the company. The decisions of management that affect these concerns are especially important for these stakeholders.
Whether the business owner decides to offer benefits and other compensatory packages to employees also affects employees in this sense. Therefore, the continued economic health of the company is of utmost importance to the employee.
Employee Job Security
Employees are also affected by your business decisions on the basis of how those decisions affect their job security. If you continually make risky business decisions that harm the bottom line of the company, this may be putting the job security of the employees at risk. This could cause employees to take an interest in your decisions and possibly jump ship if they sense that you're doing things that will hurt the company in the long run. Employees need long-term job security and stability to thrive, in most cases.
Corporate Culture and Internal Stakeholders
Employee job satisfaction and fulfillment are also tied to your decisions as a business owner. The way that an employee perceives of himself within the company is tied to his pay and sense of job security, but it is also tied to other factors such as business culture. The culture that you create for your company will have an impact on the socialization of the employee and how he perceives himself as part of the organization. Employees who feel that they are a part of a larger and more important purpose that they share with other employees are more likely to feel this sense of satisfaction.
Profit Sharing and Stock Options
Employees who are offered benefits packages that include stock options have an additional stake in the company and its finances. As shareholders, employees are stakeholders affected by your business decisions in the way that the decisions affect your company's bottom line or profitability. Offering employees these types of benefits in which they too have a stake in the company's financial well-being can serve as a source of motivation and can inspire innovation among employees.
Organisation for Economic Cooperation and Development: Employees as Stakeholders
Forbes.com: Why Employee Stakeholders Are The Secret To Your Organization's Transformative Success
About the Author
Jared Lewis is a professor of history, philosophy and the humanities. He has taught various courses in these fields since 2001. A former licensed financial adviser, he now works as a writer and has published numerous articles on education and business. He holds a bachelor's degree in history, a master's degree in theology and has completed doctoral work in American history.