Stakeholders

In one paragraph

A stakeholder is anyone affected by what a business does, or who can affect it: owners, employees, customers, suppliers, lenders, the local community, government.

The useful part is not the list, it is the conflict. Stakeholders want different things and cannot all be satisfied at once.

Owners generally want profit and return. Employees want pay, security and conditions. Customers want quality and low prices. Suppliers want to be paid promptly and fairly. Lenders want the business to stay solvent. The community wants employment without noise, traffic or pollution.

Where they collide

Raising prices helps owners and hurts customers. Cutting wages helps owners and hurts employees. Paying suppliers faster helps suppliers and hurts cash flow. Opening on Sundays might please customers and displease staff and neighbours.

A decision is rarely 'good for stakeholders'. It is good for some and costly to others, and the skill is being able to say which and by how much.

How to actually use it

• Before a significant decision, list who gains and who loses. The losers are where your resistance and your reputational risk will come from.
• Weight them by power and interest. A stakeholder with a lot of both — a major customer, your bank — gets managed closely. One with neither gets kept informed.

Where it breaks down

• Stakeholder analysis describes tensions; it does not resolve them. Somebody still has to decide whose interests take priority, and that is a judgement, not an output of the model.

If you are being examined on it

Never write 'this affects all stakeholders'. Name two, say what each wants, and explain why the decision cannot satisfy both.

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