How to use stakeholder theory to develop better business goals

Asset management can be a difficult and very important consideration for a young startup. Many startups operate on limited budgets. And, on top of that, they have to balance the expectations of investors, employees and sometimes even the community. Many startups are built from brilliant ideas and perfect niches in the market, but are liable to flounder and self-destruct when it comes to organizational management.

Organizational management closes communication, Goal-setting, and strategic planning. Taking steps to plan and strategize presupposes that you already have a managerial orientation that you want to take. This means you have already evaluated the elements of your decision and you are ready Start taking steps towards your goals. For those who could use a little more guidance in planning and organizing business goals, an overarching theory of business ethics can help get you on track.

One such theory of business ethics is stakeholder theory. Stakeholder theory has undergone development over the past thirty years, and is commonly used by large businesses and startups undergoing significant growth. Corporate growth, including globalization, runs the risk of placing a company in a contested position, and stakeholder theory helps provide a framework for responsible business practices.

Stakeholder theory helps businesses develop goals that maximize value to everyone involved in the company’s policies. This theory operates under the belief that business decisions not only affect management, executives, and shareholders, but they also affect employees, consumers, suppliers, community members, and even governments.

Who does it affect? And how?

consumers

Stakeholder theory emphasizes the competitive advantage of appealing to multiple stakeholders in the corporate decision-making process. Consumers make up a large portion of a company’s stakeholders.

Company policies not only provide financial value to consumers. It can also represent values ​​that its consumer stakeholders can feel passionately about. In some cases, it may be Environmental Capacity, in other cases it could be equal wages for workers or local supply chains. While consumer considerations can be expensive for the average startup, it can cause big problems to ignore them. The less consumer support you have, the less likely your startup will make it beyond the ground level.

employees

A startup’s employees are its most important asset. Employees generate ideas, solve their problems across bumps in the road, and provide the backbone for good company culture.

Startups ask a lot of people they hire. They ask employees to take a leap of faith in an unexpected or relatively new brand, and they want great talent and strong commitment when they do it.

In general, workers want fair compensation and treatment, and they want to work reasonable hours. Ignoring these factors can be negative Company culture and high turnover rates.

communities

A company’s community can refer to the neighborhoods it operates in, the markets it sells to, as well as the role it plays in development and other environmental concerns. For some businesses, this will bring in neighbors, local governments and even competing businesses. Other businesses may consider future generations and long-term communities as their stakeholders. Community stakeholder groups also focus on global business, global supply chains and sustainable ethics.

These may seem like far-fetched considerations for an early startup, but in many cases community stakeholders can help determine a startup’s success by providing much-needed support.

How can stakeholders help you manage your business?

For businesses to grow rapidly, stakeholder theory can help you define your position on critical points. A company’s ethical code, in part, determines who will work with them, who will work for them, and who will help them by investing or spending.

We live and work in an age where socio-political concerns play a large role in investment strategies for many people. Means the sustainable goal of your policy, because of its value Local community space And the future will often attract stakeholders who believe in or agree with your principles. For example, stakeholder theory has been particularly useful in identifying environmental and social generation as potential stakeholders for businesses, as well as individual consumers who prioritize environmental concerns in their purchasing patterns.

Stakeholder theory therefore recommends that you determine what your values ​​are, what your context is, and what the consequences of your actions are, so that you can begin to understand who your stakeholders are. This strategy allows you to plan responsible steps in your business model. This plan may include increased budgeting and planning for sustainability considerations, not being blinded by the impact of paying competitive employee wages, and looking for positives to help with community events.

In other words, stakeholder theory places a business at the center of an ecosystem. Anyone invested in, involved in, or affected by the company’s operations within this ecosystem, as all stakeholders are interdependent. Stakeholders help a company survive by offering business, services or a viable market, and a Heathy company never loses sight of those involved in its success. If a company’s stakeholders feel disaffected or frustrated, they will not see the point of helping the company survive.

how did it start

Start by defining your company’s core values. Sometimes it’s easiest to do this directly and abstractly. Other times, it may be easier to look at the marketplace, who your company affects, and your primary client or consumer demographic, among other considerations. Remember that your company’s values ​​will partly determine your company’s ecosystem.

The next step is to make a list of all the stakeholders who are going to make your business a success. If applicable, include governing bodies, manufacturers and suppliers, local communities as well as national or international marketplaces that you affect, customers and clients, your own employees and operations staff and don’t forget shareholders and investors.

Note what value your company has to these groups and individuals. Do you have healthy relationships with your stakeholders? Does your plan alienate a stakeholder group that you need to succeed? And if so, what discussion could help increase the value for them?

Companies that base their operations on stakeholder value put stakeholder needs at the forefront of everything they do. This makes the company responsible for delivering value to everyone involved, and it allows for long-term planning and strong growth potential.

Conclusion

Using stakeholder theory, many businesses try to align their goals with the practices that will bring the most value to everyone involved in the organization’s policies. Stakeholder theory attempts to balance the interests of customers, suppliers, communities and shareholders, and can often be linked to a business’s social and environmental sustainability goals.

Many startups struggle with business ethics, as costs, labor, and resources need to be balanced with very limited budgets, and an ethical theory such as stakeholder theory can provide a framework for developing actionable goals.

This article was first published in May 2018 but has been updated and expanded

Rebecca Moses on Twitter
Rebecca Moses

Staff Writer: Rebecca Moses is a creative writer who can’t stop meddling in the real world. While living in Colorado, he developed a special interest in small business manufacturing. He loves a writing challenge, dabbles in illustration, and reads to understand how all things work and grow. Find her at RebeccaMosesWriting.com

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Article Tags:

Business Opportunities · Company Culture · Featured · Find Your Way · Grow Your Business · Sales · Your Mindset

Article Category:

Find Your Way · Grow Your Business · Lead Your Team · Product Development · Sales · Your Mindset

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