Importance of appreciating stakeholders

UNDERSTAND: WHO THEY ARE AND WHAT THEY CONTRIBUTE TO YOUR BUSINESS

As a business owner, it’s in your best interests to listen, acknowledge and work with stakeholders.

‘Shareholders first” is a term we constantly hear from corporations and directors, clearly showing us where their loyalties lie. They are certainly not wrong. Directors, at the end of the day, are elected by shareholders, answer to shareholders and therefore work for shareholders. It is just as any employee would be loyal to their boss, only in this case the bosses of a listed corporation are over a million owners who hold a company’s stock.

But does that mean directors and or even entrepreneurs should not consider other stakeholders other than shareholders?

A business does not consist only of shareholders but requires other stakeholders for it to function and at times, companies forget that they need the participation of stakeholders to function. Therefore, who are stakeholders and what do they contribute to the successful running of a business?

Stakeholders are defined as an individual, group of people and/or organisation that has any material interest directly or indirectly in a company. Employees, shareholders, creditors, customers, suppliers, government (such as Sars) and communities of operations are generally considered stakeholders, with society at large being recently included in that list.

The importance of stakeholders cannot be overstated. Sometimes businesses behave as if they operate on an island and fail to recognise the crucial role played by stakeholders.

Companies need financiers like banks to fund their operations, employees to produce their goods and services, suppliers to supply raw materials, customers to buy their goods and services, government to draft policy conducive for business activities and so on. Without these key roles, businesses would not be able to operate.

Shareholders play a crucial role by initially putting up their money to start businesses, but it doesn’t end there.

The era of not acknowledging stakeholders has long gone and we have seen in recent times how stakeholders have played a massive role in rooting out corruption and holding businesses accountable for their actions. Stakeholders have a voice today and as a business owner it is in your best interests to listen, acknowledge and work with stakeholders.

Don’t wait for your employees to strike – constantly be in talks with them hearing their grievances and find a solution before they strike.

Don’t wait for your bank to call you after defaulting on your business loan – engage with it to avoid liquidation. If you owe Sars tax, engage with it.