We all know that if a business lacks a board of directors, then it has failed to provide shareholder value.
Stakeholder management is a concept that is being increasingly practiced in the corporate world. In recent years the need for successful business organizations to change how they relate to stakeholders has become clear. However, if a business fails to recognize its stakeholder base, then it is likely that it will be headed for failure.
There are two concepts that I believe should be considered when evaluating how to approach a stakeholder base. First, we need to define what a stakeholder is. Then we need to examine how we can benefit from having a stakeholder management program.
Stakeholders are defined as the people who have an interest in a business. For instance, a mortgage lender may have an interest in a commercial property but do not own it. When someone is not a shareholder, they are still considered a stakeholder. A stakeholder is interested in the actions of a business and the results it achieves. They are a part of the team of people and their needs should be a consideration for a business’s success.
Understanding how a stakeholder relationship works can make it easier to manage a business. If the structure of how the business works and the way it is run are not understood, then the business may fail.
A well run, new business is likely to have a large number of stakeholder relationships. These are the people who have an interest in the business but do not own the business. Any business with this setup will most likely see a good amount of profit for their shareholders. It is important to understand how these relationships operate so that the corporation can manage them in the best possible way.
This can be accomplished by a management needs analysis. This can be done by creating a survey of your shareholders. It is important to understand what the current needs of your stakeholders are so that you can focus on the areas that need the most improvement.
Next, an effective business strategy is implemented to help with managing these relationships. Management teams must realize that their strategy should be based upon the actions and results of their stakeholders. Instead of attempting to cover every possible area, the team must be organized and focused on one goal.
The overall management strategy is determined by how the business is run. Any decision made should be in accordance with this main management philosophy. Investors will be grateful for the change that is brought about by this philosophy.
As shareholders, each will be able to participate in decisions making that impact their particular management strategy. Many owners may find that they now have a voice within the business and therefore a great deal of influence on how it runs.
So many different management principles can be implemented to help achieve the goals of the shareholders. However, it is important to remember that only the management team should be making decisions regarding these aspects. This gives them the ability to ensure that they are not only meeting their needs but also the interests of the stakeholders that are involved.
Theories of corporate governance can be difficult to comprehend.However, they are very important to the future of stakeholder vs shareholder any business. Effective management strategies are crucial to the success of any business