As illustrated in the photo below, this train has a front car, a passenger car and a caboose. Stakeholders, in my opinion are the “passenger car” of this train and should not be forgotten in the middle. [Year] Dash Corning [Company name] BUSINESS-CICS What Drives At-NCAA BUSINESS-Its What Drives At-NCAA As a senior level accountant, I am often given the daunting task of identifying candidates for accounting positions and bringing them on board upon finding their suitability to the position.
I have found time and time again that one of the trickiest questions in the accounting interview is not to boggle a persons’ brain with complex theory or an accounting term that is sure to stomp them, having them stare across the interview table in a conference room that could swallow the average nervous person whole. I shy away from questions of that nature and head straight to one that surprisingly stumps the unworthy candidates and separates, if you will, the boys from the men. The question is this: What is the purpose of business?
Very surprisingly, many people are stumped on the thought of answering this question, hinging that it has nothing to do with accounting, finance, procurement or the like. In some cases, however, a shining star will reflect on their biggest moment and business and relate this to what they think business is all about. It is common knowledge that businesses are not formed overnight and that the heart and soul of the business stems from the vision of its owner, in the midnight hour, when others are dead to the world.
First and foremost, the thoughts were of success, growth and sustainability. After that is established, other things come to play, such as a mission ND the goals of the business. Each successful business has a model. It also has a goal and a mission that service the needs of the general public or some other identified group of persons, whose demographics fit the services offered by the business tremendously well. In my opinion, before all of these previously listed items comes into play, the business owner wanders into the basis of profitability.
From there, the business owner knows that in order to profit and gain maximum potential in this business, I must make the customers happy by running my business effectively and with purpose. When all of these components are taken into effect, profit is sure to be knocking, if not intruding by banging, at your door. There are of course with these philosophies, wrong ways and right ways to run a business, to generate a profit, but the bottom line is without a pronto you are not in business so all bets are off.
If you want to create change, it is much easier to do if you have a profitable business. In recent years, non-profit companies have taken off, providing services to the masses with no hopes of profiting off of others successes. This, forever, even in a non-profit environment does not stand a chance unless it is profitable. Unless the owner is starting it off with personal funds ranging in the millions, the business may be able to contemplate a soar, but will not take off in the direction that it needs to, or the way that the goal was perceived by the owner.
To quote someone who knows a bit more about profit than I do, Jack Welch says in the introduction to the book “Winning”. The text reads as follows: “I think winning is great. Not good – great. Winning in business is great because when companies win, people thrive and grow. There are more Jobs and more opportunities everywhere and for everyone. ” – Jack Welch (Washington Business Journal) The concept ‘stakeholder’ is a variant of ‘stockholder’, which relates to ‘investors in’ or ‘owners in’ a firm or business.
Stakeholders can be defined as ‘individuals and groups who are affected by the activities of an organizations. The most important stakeholders can be seen as those with most to lose from the organization’s actions, but this does not always reflect their relative power. ‘. (Hangman, T (2002), ‘Management: Concepts and Practices’ IPPP. Their goals and objectives vary immensely, but all must be considered. In the past it had been the common conception that businesses fundamentally rely upon, and in turn effect their economic capital, which is represented in the form of stockholders.
The rise to prominence of stakeholders (through studies and reports) has allowed firms to realize that there are people and infrastructure beyond the company which are necessary to it and who must have their interests protected. An organization’s stakeholders are all parties who can reasonably be understood to be affected by its decisions. They can be deemed to represent the businesses’ social and environmental capital as well as economic. Stakeholders can be of very different and varied guises and also harbor conflicting interests.
In the main they can be categorized into three major groups: Internal, Connected and External Stakeholders. Internal stakeholders include managers and employees and are those that are situated within the company and affect the ‘day-to- day’ running of the organization. Connected stakeholders cover groups such as shareholders, suppliers and customers, and are parties which invest or have dealings tit the firm. The third group, External stakeholders, are those not directly linked to the organization but who can be influenced or influence activities of the firm through various meaner.
External stakeholders include the Government, neighbors, pressure groups, local councils and the surrounding community. As well as stakeholders, organizations and the people involved with them are expected to adhere to written and unwritten ethical boundaries. The degree to which these are adhered depends upon as varied a mixture as government enforced action to simply the moral fiber of manager or employee. On occasions only the ‘eye of the beholder’ can truly acknowledge whether the moral considerations were taken on board when making a decision.
This makes gauging an organizations ethical stance very difficult as the image they portray to the public may not match the internal reality. ‘The ethical environment refers to Justice, respect for the law and a moral code. The conduct of an organization, its management and employees will be measured against ethical standards by the customers, suppliers and other members of the public with whom hey deal’ ( HEN / HAND BITE (2002) ‘BUSINESS COURSE BOOK: organizations, Competition and Environment’ IPPP).
Stakeholders are found in all organizations, businesses or firms – from a local grocery store to huge multinational companies such as Coca-Cola, McDonald’s and Microsoft. The number of stakeholders per business will vary as will their importance and influence. The type of organization or product / service it supplies will also determine its stakeholders. A Public Limited Corporation may have far more stakeholders than a family owned business due to its vast numbers of shareholders.
The arrival of a new stakeholder often provides the company with an ethical dilemma of how to (or how not to) satisfy this new member’s needs, whilst avoiding conflict with the present stakeholders. In an ideal world a fine balance could be achieved to satisfy all stakeholders whilst obtaining the organizations goals in profit and sales (often profit minimization and / or sales minimization). However certain stakeholders may have completely conflicting measurements of success, resulting in one stakeholder being rewarded having a detrimental effect on another stakeholder.
Perhaps the main form of stakeholder approach / management is the “Stakeholder Corporation” concept. Its authors, Wheeler and Sicilians, argue that ‘In the future, development of loyal relationships with customers, employees, shareholders, and other stakeholders will become one of the most important determinants of commercial viability and business success. Increasing shareholders value will be best served if your company cultivates the support of all who may influence its importance’.
This firmly supports the concept of ‘stakeholder symbiosis’ which believes all stakeholders are dependent pond one another when achieving success and financial well-being. While this may appear as an ideal scenario theory, it takes little account of conflicting stakeholders, whose personal perspectives of success may be situated at complete opposite ends of the spectrum. In a theoretical situation it may seem viable to appease all stakeholders with a fine balance of benefits and concessions, but human behavior tends to diversify over time – with certain parties deeming themselves Winners’ or ‘losers’ in the scale of organizational fairness.
The Premiership footballer is a prime example of a stakeholder in an organization (club) who carries extreme power and often gets what he wants even if it has a detrimental effect. Despite his obvious privileges over other stakeholders such as fans, ground staff and the local community, he will often not be content unless his financial gains are on a par with fellow team-mates, and the finance is in the hands of this select minority. Operations and activities at the club may be designed around satisfying the present ‘high profile’ stakeholders with little consideration for the long-term effect.
The key is to prevent heir fall from grace’. It is their view that organizations must be proactive in their approach to relationships with potential stakeholders in order for the stakeholder to want a relationship back. In order to achieve this the framework suggests the organization / stakeholder relationship should pass sequentially through the four gates’ of Awareness, Knowledge, Admiration and Action. Each time a gate is passed, the relationship gains attributes, hopefully ultimately resulting in an Action relationship where the two strive towards multi-beneficial goals and aims.
Similarly to ‘The Stakeholder Corporation’, in theory it appears common sense, but for firms with many stakeholders, as with any relationship, the more groups or individuals involved the higher the possibility of conflict. In conclusion, I believe that stakeholders are what drives and moves business forward. Without them, there is no- one to stand “in the gap”. *The attached article is based on a healthcare research firm. It talks about the need and assessment of stakeholders and the part that they play in business. It has been attached as a resource.
