The internal stakeholders of a business—employees, management, board members—are much more easy to govern than outsiders who are not subject to a corporation’s by-laws. External stakeholders can be very challenging to manage, but they do share a commonality with their internal counterparts which provides a foundation: they have a stake in the success of the company.
What Are External Stakeholders?
External stakeholders in a general sense are any individuals or entities that are affected by a business’ decisions and practices. In turn, they can have an effect on the business that can be beneficial or deleterious. A few examples of external stakeholders are suppliers, local communities, investors, and customers.
A segment of a community may depend upon a company for employment. In turn, community regulatory laws can affect how the company operates. There is a shared interest in the company’s success. Customers may not seem to share such a common interest, but keep in mind that they depend on the availability of certain products that your company provides.
Managing External Stakeholders
To manage external stakeholders, a company must first have a clear understanding of who they are and what their most pressing concerns are. A Cambridge business management attorney can help you develop a strategy for managing these individuals and entities, but from the outset communication is key.
- Have an understanding of the concerns of each stakeholder when your company is making decisions about its business practices. In some cases it may be useful to hire specialists to work with them so that a good rapport is developed and mutual needs are understood.
- Work to alleviate placing disproportionate burdens or benefits on a particular stakeholder. This includes distributing contracts fairly.
- Avoid business practices that may cause potential harm to external stakeholders, or lead to conflicts. This can include high risk investing, and also poor inventory and distribution practices. If a conflict arises, meet with the individual(s) affected to work out a solution, if possible.
We Can Help
Focusing on the needs and expectations of external stakeholders may seem secondary to a company’s internal stakeholder issues, but keep in mind that those outside your company have considerable influence on the well-being of your company. Alienate suppliers, and you will place your company in a serious bind.
If you need assistance with managing external stakeholders, or have another business concern, call Cambridge business management attorney David Ionson for a consultation at (781) 674-2562.