ORGANIZATIONAL STAKEHOLDERS

Organizations exist because of their ability to create value and acceptable

outcomes for various groups of stakeholders, people who have an interest,

claim or stake in the organization, in what does, and in how well it

performs. In general, stakeholders are motivated to participate in an

organization if they receive inducements that exceed the value of the

contributions they are required to make. Inducements rewards such as

money, power, and organizational status. Contributions are the skills,

knowledge, and expertise that organizations require of their members

during performance.

There are two main groups of organizational stakeholders: inside

stakeholders and outside stakeholders.

Inside Stakeholders

Inside stakeholders are people who are closest to an organization and

have the strongest or most direct claim on organizational resources:

shareholders, managers, and the work force.

Shareholders: Shareholders are the owners of the organization, and, as

such, their claim on organizational resources is often considered superior

to the claims of other inside stakeholders. The shareholders' contribution to

the organization is to invest money in it by buying the organization's stock.

The shareholders' inducement to invest is the prospective money they can

earn on their investment in the form of dividends and increases in the price

of stock. Investment in stock is risky, however, because there is no

guarantee of a return. Shareholders who do not believe that the

inducement (the possible return on their investment) is enough to warrant

their contribution (the money they have invested) sell their shares and

withdraw their support from the organization.

Mangers: Managers are the employees who are responsible for

coordinating organizational resources and ensuring that an organization’s

goals are successfully met. Top managers are responsible for investing

shareholder money in resources order to maximize the future output of

goods and services. Managers are, in effect, the agents or employees of

shareholders and are appointed indirectly by shareholders through an

organization's board of directors to manage the organization's business.

Managers’ contributions are the skills they use to direct the organization’s

response to pressures from within and outside the organization. For

example, a manager’s skills at opening up global markets, identifying new

product markets, or solving transaction-cost and technological problems

can greatly facilitate the achievement of the organization’s goals.

            The Work Force: An organization’s work force consists of all non

managerial employees. Members of the work force have responsibilities

and duties (usually outlined in a job description) that they are responsible

for performing. An employee's    contribution to the organization is the

performance of his or her duties and responsibilities. How well an

employee performs is, in some measure, within the employee's control. An

employee's motivation to perform well relates to the rewards and punish-

ments that the organization uses to influence job performance. Employees

who do not feel that the inducements meet or exceed their contributions are

likely to withdraw their support for the organization by reducing the level of

their performance or by leaving the organization.

Outside Stakeholders

Outside stakeholders are people who do not own the organization, are not

employed by it, but do have some interest in it. Customers, suppliers, the

government, trade unions, local communities, and the general public are all

outside stakeholders.

Customers: Customers are usually an organization's largest outside stake-

holder group. Customers are induced to select a product (and thus an

organization) from alternative products by their estimation of what they are

getting relative to what they have to pay. The money they pay for the

product is their contribution to the organization and reflects the value they

feel they receive from the organization. As long as the organization

produces a product whose price is equal to or less than the value

customers feel they are getting, they will continue to buy the product and

support the organization. If customers refuse to pay the price the organi-

zation is asking, they withdraw their support, and the organization loses a

vital stakeholder

Suppliers: Suppliers, another important outside stakeholder group,

contribute the organization by providing reliable raw materials and

component parts that au the organization to reduce uncertainty in its

technical or production operations; thus reduce production costs. Suppliers

have a direct effect on the organization's efficiency and an indirect effect on

its ability to attract customers. An organization that has high-quality inputs

can make high-quality products and attract customers turn, as demand for

its products increases, the organization demands greater quantities of high-

quality inputs from its suppliers.

The Government: The government has several claims on an organization

wants companies to compete in a fair manner and obey the rules of free

competition. It also wants companies to obey agreed-upon rules and laws

concerning the payment and treatment of employees, workers' health and

workplace safety, nondiscriminatory hiring practices, and other social and

economic issues about which Congress has enacted legislation. The

government makes a contribution to the organization by standardizing

regulations so that they apply to all companies and no company obtain an

unfair competitive advantage. The government controls the rules of good

business practice and has the power to punish any company that breaks

these rules by taking legal action against it. Thus its contribution is to leave

a company alone. Sometimes, however, it may leave companies too alone.

Trade Unions: The relationship between a trade union and an organization

can be one of conflict or cooperation. The nature of the relationship has a

direct effect on the productivity and effectiveness of the organization and

the union.

Local Communities: Local communities have a stake in the performance of

organizations because employment, housing, and the general economic

well-being of a community are strongly affected by the success or failure of

local businesses.

The General Public: The public is happy when organizations do well

against foreign competitors. This is hardly surprising, given that the present

and future wealth of a nation is closely related to the success of its

businesses and its economic institutions.

A nation's public also wants its corporations to act in a socially responsible

way which means that corporations refrain from taking any actions that may

injure I impose costs on other stakeholders