Why is it important to view employees as stakeholders? Finance writer Sarah Iqbal explains the importance of employee stakeholders within the business and how to value employees as stakeholders for increased motivation and productivity.
When you start and build a business, one of the critical elements of success will be making sure all stakeholders within your business benefit in some way from your or your business's actions. Any shareholder in your company is a stakeholder, but there are other stakeholders you’ll need to consider who do not hold financial shares in your business.
This can include both your customers and your employees. Customers who rely heavily on the goods and services you supply are also considered stakeholders, and there are several good reasons why your employees should be viewed as stakeholders in your business as well. This article will look at who your business stakeholders are, why your employees are some of your most valuable stakeholders, and how to treat them as such.
Who are your business stakeholders?
By definition, a stakeholder is anyone who has a vested interest in your business. They either affect or can be affected by the actions of that business, and can be either internal or external to your business. Typically, the stakeholders of a corporation include:
Traditionally, there is a strong focus from financial investors or shareholders on a solid financial performance to see a return on their investments. However, today businesses understand the benefit of focusing more on other key stakeholder groups, such as employees. By treating them as stakeholders, you will improve morale and likely see improvements in performance and productivity.
Wonderful things can be achieved when your employees feel valued. Viewing employees as internal stakeholders is an excellent way to accomplish this.
Why employees are important stakeholders
Your employees are the ones who create, manufacture, sell and deliver your products. They are crucial to your businesses’ success or failure. They are invested in your company as you pay their wages and offer them job security. Your actions as a business owner have an impact on their economic wellbeing and happiness at work.
Their interest as stakeholders in your business is not only tied to their compensation package and job security; their job satisfaction is also an important factor. Fulfilled and happy workers will perform better and interact with each other and your customers positively because they feel they are valued team members. When businesses operate a top-down hierarchy, they risk slowing down and preventing them from growing to their full potential.
Managers and HR leaders who see their employees as stakeholders and support those who create the most value for your business are more likely to see improved business results and employee relations. Conversely, employees who are not treated as an organisation's greatest asset tend to have lower morale. This can have a negative knock-on effect felt by every other stakeholder in the business, including investors.
Learn more: How does employee happiness improve customer retention?
Employee job satisfaction and the way they feel while working relate not only to how they perceive their job security in your business and compensation package, but also other factors such as the company culture. For example, the culture you create will affect how employees interact with each other and socialise, as well as how much that employee feels valued as part of a team.
How to treat employees as stakeholders
Many businesses still treat their employees as resources, not assets who work in the service of the company’s stakeholders. As a result, their value is taken by the business but not given back. This can make them feel like replaceable commodities.
For your employees to see themselves as actual stakeholders, they need to understand how their role delivers a higher purpose and that they will share the benefits of your company’s success.
Having a shared business vision
If you have put together your business's vision and purpose without your employees' input, it becomes harder to instil. By revisiting and reimagining your business values with your employees from their point of view, this will help them really believe in and stand by your business values and purpose.
Working on company culture
Converting a business from a top-down managed corporate culture to employee-centric isn’t an easy task, but nothing purposeful ever is. It requires changes at all levels, from your front-line employees to the business owners and shareholders.
As a starting point, you’ll need to get your employees to buy into your company culture. This will take more than an inspiring speech. All employees want to do work that matters and has purpose beyond receiving their wages. They want to understand how their contributions are critical to the success of the enterprise.
Stock as a benefit
In addition, if you don’t already, consider offering your employees a benefits package that includes an option to buy stock in your business. When your employees become shareholders, they become more engaged in how the business decisions affect your bottom line and profits. In addition, it can boost motivation and increase innovation amongst the workforce, who have a vested interest in the business performing well.
There's no doubt that investing in and viewing your employees as internal stakeholders has enormous benefits. Every other group of stakeholders affected by your business will feel the value of a company that has employees at its heart who hold a real stake and understand the importance of their role within your business.
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Written by Sarah Iqbal
Sarah Iqbal is a fully CIM qualified marketing executive and copywriter who specialises in business and finance writing. She regularly writes about how businesses can make profitable investments and use strategies to save on costs and boost revenue.