I recently posted a blog entry entitled “open letter to the CEO” and one of the readers took me to task for posting something with a misspelling because I used the term Stakeholder instead of Shareholder.
While we might be talking semantics here, I thin for every organization there is tremendous potential to change the focus from shareholder to stakeholder. It encompasses a greater audience for the success of the organization. But assuming we are talking just semantics only let’s look at the definitions of the two terms.
According to Dictionary.com, a shareholder refers to one who holds or owns shares of a company. In essence this means that the individual or organization holds a financial interest in the organization and looks at all decisions from a return on investment perspective. Every decision that is made is from the view of the effect on the bottom line.
According to Dictionary.com again, the stakeholder is a person or group that has an investment, share, or interest in the organization.
So here is where I part ways with the comment writer. The global marketplace has changed. Our success as organizations is now dependent on a rapidly growing resource base for our success. The correct term in the new arena is that of stakeholder. The investment does not have to be in the form of shares of stock. Consider these stakeholders and see how they differ from shareholders:
- Your industry
- Your competitors
- Potential talent resources
Stakeholders look at our organizations to determine what is necessary for the organization to make them more competitive in the marketplace. We do this through our policies, our products, our customer service levels, the way we treat employees and how we treat the community in which we function everyday. The stakeholder has a vested interest in the success of our organization. Unlike a shareholder, if we are not meeting their needs they can easily pick up and abandon our efforts for someone who will meet those needs. This global marketplace we are now in demands transparency with all parties to the operations from the floor person to the executive suite to the customer and vendor. It demands a new focus on what makes all better not just one segment of the equation.
So next time you are reviewing the operation of your enterprise, consider broadening your focus to encompass the entire market rather then just those who have put their money where their mouth is in the form of a monetary investment within your organization. Consider that those individuals who help you make, sell and service your product or service are just as important as the shareholders.