Who’s At Stake?

As I mentioned yesterday, I’m smack dab in the middle of a new course now on Management Accounting. I’ve already taken home enough to make the course valuable, and I imagine that value will at least triple through the process of our project (a draft business plan) and another weekend of class later this month.

One of the topics from last weekend’s class was organizational stakeholders.

A corporate stakeholder can affect or be affected by the actions of a business as a whole.

via Stakeholder corporate – Wikipedia, the free encyclopedia.

Managers need to be concerned about all of the stakeholders as they make decisions with long term impact. Stakeholders in a typical corporation or organization are:

  1. Equity Investors. These are the owners of a company. In a public firm this is the stockholders. In a private firm it’s the investors. In both cases, the concern of the equity investor is a return on the investment.
  2. Customers. Customers for a firm are who nebulous sometimes. Customer loyalty is important sometimes, and others not as much. Customers require service and value to be delivered in order to be satisfied with the company.
  3. Employees. Employees are the human capital through which value is delivered. Managers who fail to consider how decisions will affect employees will suffer in some way. Employees will be satisfied through a combination of wages, culture, and mission.
  4. Suppliers. Suppliers need to be considered because what they deliver to a firm makes a difference in that firm’s ability to deliver its own value. It’s a two way street (any firm is its supplier’s customer) but your supplier vendors are a key component in success vs. failure.
  5. Lenders. Lenders are concerned about two things. Getting their money back (the principal) and making money on the money (interest). They’ll be able to veto actions (see here) and make things difficult. Most lender agreements hamper managers’ freedom to make some decisions. As a side note, this is an additional reason why Samaritan Ministries has made a commitment to operating debt-free.
  6. Community. This is the community around your firm. Community stakeholders could include anything from your neighbor to a little league team the firm sponsors.
  7. Regulators. Can’t forget the government, can we? Firms have failed miserably by not considering what government regulations they might run afoul of by making a particular decision. Whether it be the health department for a restaurant or the building inspector for a firm adding on to its building, companies need to consider regulators when making plans and decisions.

As I considered this during class, I think the Samaritan Ministries members are something of a combination of equity investors (they really own and drive the organization through electing the board), customers (they’re our source of revenue) and community. And we need to consider them in all of those aspects.

Who are the stakeholders for your company?

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