A stakeholder is a general term that refers to anyone with a legitimate interest in an organization, strategy, or project. These can either be individuals or organizations and are generally grouped into internal and external stakeholders and exist at different levels of management.
However, our primary focus is on internal stakeholders. Who are these, and how different are they from external stakeholders? We can define internal stakeholders as those directly involved in running an organization or a given project and who have a legitimate interest.
These consist of everyone involved in management, marketing, designing, manufacturing, assembly, and general sales. On the other hand, external stakeholders are not involved in direct production but mainly focus on or are affected by the end product.
Internal stakeholders are often critical to the business because they are the key to success. The satisfaction of the internal stakeholders often judges the success of a company, strategy, or department. Every organization must therefore find and engage these individuals to drive success.
These stakeholders are directly involved in production and often shoulder most of the work. Therefore, for easier identification, one needs to look within the immediate team and then look at the people or groups he/ she connects with during the lifecycle of the project.
Types of Internal Stakeholders and Their Roles
This is a general term that refers to anyone using a specific product, service, tool, machine, or technology. For example, users who form part of internal stakeholders can be employees utilizing a tool or application and any other person operating a machine within the organization.
Users also refer to everyone in the business, such as the business manager, marketing manager, or business analyst who uses information to make vital decisions. As a result, they ensure that the business stays profitable through proper decision-making.
Users, therefore, play important roles in the lifecycle of different projects as their input may come in handy. Remember, vital decisions have to be made as the project progresses. Therefore, they may be called upon to offer information that the project team may use to arrive at such decisions.
2. Business Unit
A business unit is a department or team within the organization that produces revenue and accounts for costs. It usually has strategic objectives separate from the parent company. It also refers to any team that manages products and services. It can also be referred to as the strategic business unit or profit center.
These units allow senior management to see things more clearly and aid in management through micro-management. They also help in proper decision-making and the setting up of new units within the business.
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Business units are headed by business unit managers who plan and direct the administrative services of the company. Through the business managers, these units may be called upon to work closely with project managers to realize certain deliverables and execute key projects.
The business unit manager also empowers, selects, coaches, and retains qualified employees who may form part of project teams and help the organization meet its goals.
3. Operations Team
Another crucial internal stakeholder is the operations team. Given that their relevance relies on business success, they have a legitimate stake in the company. The operations team ensures that the business runs profitably by managing and optimizing the necessary details. This means that their input will help successfully execute an organization’s project to ensure profitability.
They deliver the right resources to allow different departments to do their job and work on intended projects. They also promote interdepartmental communication and supervise other teams’ activities. Even though they rarely associate directly with customers, they ensure that the company offers quality goods to them promptly.
Operation teams can also work as project teams in given circumstances. They may therefore devise schedules and have milestones that need to be achieved. As a project team, the operations team is expected to contribute to the overall objectives of the project and the given deliverables.
They must also ensure that the project activities are planned accordingly and execute tasks assigned to them in such circumstances. In addition, however, they offer the organization business or technical expertise needed to execute different project tasks successfully in normal cases.
The owners of the organization or business are essential stakeholders, given their stake in the success and general performance of the business. Most of the time, unless in a sole proprietorship, the roles of the business owners are strategic instead of managerial.
Business owners are rarely engaged in the day-to-day running of the business. Instead, they are often considered initial investors who are mainly interested in the business value and profitability. All other roles are done by employees at different levels of the organization.
Business owners focus on the bigger picture and what can be done differently. Most owners started the business themselves and therefore have the right vision and roadmap for the business. As a result, they are not only knowledgeable but can also make strategic decisions and do away with both political and financial obstacles facing different projects without getting clearance from anyone within the organization, unless in particular situations.
Like investors, a business owner can either be an individual, a group of individuals, or even an organization. This stakeholder communicates closely with other key stakeholders and has a strong relationship with the service owner, charged with creating a roadmap that aligns the business to the vision.
In project settings, it is normal for the business owner to be the operational owner of the project. When undertaking a given project, the business owner is expected to make the first decisions, making him/ her an essential part of the organization and project as a whole.
The business owner is also, in some cases, mandated with appointing a project owner who has vast knowledge on project-related business. With the owner’s authorization, the project owner will use his/ her experience in project management to ensure that the given project is successful.
Also, note that in most cases, th business owner will fund the projects, especially in sole proprietorships.
5. Board of Directors
The board of directors is usually made of the top-most management of the organization, including the Chief Executive Officer. These individuals are the policymakers of the organization. They are rarely involved in the management of the business as part of their job is to hire the CEO or a general manager, who is then responsible for staffing and overseeing the overall day-to-day running of the business.
Their primary role is to assess the overall direction and the strategy of the business. They do not meddle in the company’s day-to-day running as this may present lots of conflicts that are better avoided.
The board establishes a policy-based governance system for the business as guided by the articles of governance. These include policies that guide their actions and those of the manager responsible for the company’s day-to-day running. It must ensure that these policies are broad and not shallowly defined to allow the organization’s goals to be easily achieved.
They also govern the organization as well as the relationship with the Chief Executive Officer. Again, this is in line with developing a governance system. The way the board interacts with the CEO should therefore be closely spelled out. Mostly they only engage the CEO during board director meetings, which happen once a month or even 3 to 8 times a year.
It is also concerned with monitoring and control as it is involved in the auditing process and hires the auditor. It must ensure that the audit is done within the time limits, year in, year out. The board also has a fiduciary role. It is expected to protect the assets of the organization as well as the investment of the members.
It therefore represents and protects all the interests of the members or investors in the company. This means that it has to ensure that all the company assets are kept well and in good order. These include the plant, equipment, facilities, and even the human capital. The board must also ensure that the interest of these investors is taken care of before the commencement of any project, which explains why they ar often consulted.
Lastly, the board recruits, supervises, retains, compensates, and evaluates top most managers such as the CEO and the general manager. Members, therefore, look for the best candidates who can steer the business to the next level. They can do this by actively searching within the industry, which reveals lots of capable candidates.
The management of a company is part of the internal stakeholders. They are usually greatly affected by the overall performance, given that most of the time, they make decisions in consultation with the top management, to who they report. Their roles are geared towards ensuring that the business remains afloat and everyone is satisfied. In addition, they manage other internal stakeholders such as employees who are part of project teams, ensuring that they do not lose sight of the organization’s goals and are motivated enough.
These stakeholders further ensure that everyone enjoys the company’s culture and feels vital in their teams. They, therefore, increase internal stakeholder motivation, which is an essential recipe for increased productivity and the successful execution of projects.
Managers at different levels must therefore understand their position and how each project affects them and others before coming up with ways to go about different instances. They must also be ready to consult with other internal stakeholders before deciding on issues that may affect them. For example, before acquiring any supplies for a given department, they have to consult with the employees in the department about what they feel that they lack.
Managers also play an important role when it comes to the successful execution of projects. A key player in project management is the project manager, whose roles are to plan, organize and ensure that specific projects are completed.
These managers oversee challenging projects, right from inception to completion, making them a vital part of the organization. In addition, they can change the direction of a given company owing to the power that they yield.
However, note that the project manager’s duties may vary depending on the industry, organization, or the projects to be overseen.
Employees are essential internal stakeholders. They have a direct stake in the company since they earn an income and are entitled to several benefits from it, which can either be monetary or non-monetary. Employees can also have a health and safety interest in the organization, depending on the nature of the business.
Now that you understand how employees are internal stakeholders let us look at their roles. These individuals are normally directly involved with the production even though they occupy different levels in the organization and play different roles.
Some of the typical roles include meeting all the duties and responsibilities captured in the job description. Every job applicant is usually furnished with a job description, which details the duties and responsibilities they are intended to perform once they are absorbed into the organization.
Employees also form part of the project teams mandated with the realization and successful execution of different projects. They may also occupy positions within these project teams. In the project setting, these employees contribute to the desired objectives, provide expertise, complete deliverables, work with users, and document the process.
Shareholders are at times considered the business owners. They own shares in the company and thus offer financial footing, getting dividends in return, payable in the company’s lifecycle. One can become a shareholder by subscribing to the company’s memorandum of association at its formation, buying new shares, or purchasing them from an existing shareholder. The shareholders also ensure that the companies are accountable for their actions and are represented by a board of directors who act as custodians of their interests.
Being internal stakeholders, shareholder’s voices must be hard before the commencement of a given project. Most shareholders, especially those with voting rights, wield lots of power and can, therefore, negatively or positively influence a project.
The board of directors must also ensure that their welfare is taken care of before the commencement of any project and that they stand to gain.
These are some of the most common internal stakeholders who play an essential role in every organization. They are all needed to properly run the business and achieve the business’s goals, objectives, and missions.