- In this video, we'll answer
the question, what is a stakeholder,
and we'll talk about why this concept matters for you.
So let's get into it.
Hello there, and welcome back, I'm Alex Lyon,
and this channel, Communication Coach,
is here for people probably like you,
emerging leaders in some professional setting.
We do videos on communication and leadership,
and lately we've been slowly building
a library of vocabulary or concept terms
that you can use to think about your leadership
and how you can take it to the next level.
And today's concept is stakeholder.
This is a really important concept
that has been around for several decades
at least, and it's become much more common recently.
So we're going to talk about what exactly
it is, and then what you can do with it
as an emerging leader.
So we take this concept in contrast
to the term stockholder.
The term stockholder briefly defined,
is any individual who has a vested
interest in the financial success of an organization.
So briefly put, a stockholder is an investor.
That's somebody who literally put up money
and wants a return on their investment
from that organization.
So this could be someone who bought
just simply stock in a company, or it could
be a major owner who owns all or most of an organization,
that's a stockholder.
So the term stakeholder is obviously a play on this.
So a stakeholder has a broader definition.
A stakeholder is anyone with an interest
or concern in the organization's overall success.
That's a little more general, and it's deliberately
general because it's going to include
many more types of people.
So let's make this a bit more concrete.
I'll give you a list of the types
of typical stakeholder groups that you might
expect to be interacting with an organization in some way.
So the first group is still the investors.
You're still going to have the people
who actually own a piece of that money.
The stockholders and the owners.
The second group are what we might call the members
of an organization.
This includes the top executives
like all the top leaders, then all the managers
in the middle, and certainly the frontline employees,
those are all members in one type
or another of an organization.
They depend upon that organization for their paycheck.
Outside of that, you have external members
or external groups that connect and count
on the organization as well, for example
you have vendors, suppliers, and customers.
They are doing in some cases daily business
with your organization, and so they matter
quite a bit as well.
Then you have the community, and this could
be the host community where your organization lives,
so to speak.
And it can also be the larger industry
that your organization is part of.
Part of the accreditation organizations
that are above your organization,
they might be a stakeholder,
if you have one of those types of agencies above you.
And certainly the media, and that media
could be local or it could be national,
or even international depending upon the industry
that you are in.
And one level beyond that is the government,
and this can be local, state and national.
So those are a list, a partial list
really of the types of stakeholders
that we are talking about.
Now I want to give you a definition of stakeholder theory
provided by R. Edward Freeman.
Edward Freeman, he has a video on this on YouTube,
and I'll put the link to that
in the description below the video,
I encourage you to look at that.
It's a 50-minute video all about stakeholder theory,
he's done a lot of thinking, and a lot of writing
and talking about this, so he really is an expert.
But here is my paraphrase of stakeholder theory
based upon Freeman's.
Stakeholder theory explains that to be successful,
an organization has to provide value
to all stakeholders, all of the relevant individuals
and groups who help determine
the success or failure of an organization.
That's really my paraphrase of Freeman's definition.
I encourage you to look at the original video
as soon as you get the chance.
So having defined this and talked
a little bit about what it is, let's talk
about why it should matter to you
as an emerging leader, and I'd like
to talk about three ways that you can apply stakeholder
concept and the stakeholder theory to your job.
So the first reason is that you have
to think beyond just the financial investors.
You have to reframe the way you think about leading.
A lot of my friends and associates
when you ask them what their real job is bottom line,
they will often talk about money.
They'll say, my job is to make my boss money.
And it sounds kind of edgy, and it sounds
kind of like wow, you really know what you're doing,
but it's a very narrow and even superficial
way to think about the role that the organization
is playing in the larger community.
So when you adopt stakeholder theory,
you start to think about all of the other
potential stakeholders that you could
be working with, exchanging value with,
and really thinking about your organization
much more as a system, instead of just a bottom-line
organization that's focused purely on efficiency.
You have lots of different interest
groups that you could be working with
to make the organization successful.
And by the way, if you neglect these stakeholders,
it can really cost your organization severely.
So if you take too much of a bottom-line
approach for example, you might have some
friction with a supplier or a vendor
who is not cooperating with you
in a way that's completely favorable to you.
Years ago I worked in the restaurant business
when I was in college part time,
and I worked for a huge restaurant bar,
and they could not get along with one
of their major suppliers, which happened
to be Anheuser-Busch, so as a result
they stopped paying the bill to Anheuser-Busch,
and then we could not get Budweiser
on the bar or in the restaurants anymore.
Now let's say you're a server, you try
to explain to your customers why you
don't have Budweiser to sell them,
and it was this kind of restaurant
where you really would expect that.
So they had this difficult relationship
with a major stakeholder.
If you're in the restaurant bar business
and you can't get along with Anheuser-Busch,
then you've got a serious problem.
They were very bottom-line managers,
and they were good at what they did
in a way, but they had a very limited
view of their role as a leader.
They needed to think more about stakeholders,
not just about stockholders and the bottom line.
The second way we can apply this is that you
as a leader have to play a bigger game,
in other words you can't just think
about the pyramid and the hierarchy,
and who's above you and who is right below you,
you have to start thinking about stakeholders
and learning how to do things like collaborate,
build positive relationships with them,
and have a positive influence on your stakeholder
relationships because you can't simply
tell them what to do.
There's a back and forth, a mutual exchange
of value, and that requires a higher level
of leadership skills, not just managerial skills.
And a third way that you can put this into practice
is really step one, is to do a stakeholder analysis,
that's a great place to begin looking
at who your stakeholders are.
So you literally just get out a pencil and paper
and start making a list of all the potential
stakeholders that interact with your organization
on a regular basis.
And then you start to figure out,
what do they need from you as an organization,
from you as a leader, and how can you
begin to exchange that value in a mutually-beneficial way?
The other part of this is when you're
doing a stakeholder analysis, you very quickly realize
that there are primary stakeholders
and secondary stakeholders.
A primary stakeholder are typically
the people that count on the organization financially
for a paycheck, but it could include other groups.
And those are the kinds of stakeholders
that have to be involved in discussions
from beginning to end.
If you're gonna make a big decision,
or launch a big project, your primary stakeholders
have to be in the loop the entire time,
otherwise you can get really get jammed up
if you move too far ahead without getting people
involved because they can put a halt
to an important project later if they didn't
understand it from the beginning.
And then you'll have your secondary stakeholders.
The secondary stakeholders certainly need
to be involved, but you might involve
them when it makes the most sense
for that particular project.
Now I can't really give you a concrete
list of primary and secondary stakeholders
for your organization because it's going
to be different every time.
If you work for the FBI for example,
you're going to have an entirely different
list of primary and secondary stakeholders
than if you worked for the Boston Celtics,
the basketball team.
It's a different industry, different players,
a whole different set of priorities.
Nevertheless, these are really important
concepts and ways that you can put stakeholders
and stakeholder theory into practice.
And so question of the day for you,
what value do you see in thinking
about stakeholders over stockholders?
How does this open up your thinking?
I would like to hear your response
to that question in the comments section
below this video, and I look forward
to reading that comment.
I read almost every single comment
and respond to almost every single one.
So I look forward to that.
So thanks, God bless and I will see you in the next video.
Hey there, before we go, I wanted
to offer you a free resource.
It's my PDF download that I've created for you.
It's a quick guide to essential professional
communication skills, so you can check
on that in the link below this video
in the description, and I'll pin it
in the first comment in that comments section.
And then you put in your email,
and I email that to you.
So thanks, God bless, take care.