9 Types of Stakeholders You Need To Know

A stakeholder is a broad term often used in businesses, but what does it really mean? There are several ways to answer this question! So, in this guide, we will take the time to define a stakeholder and share some examples of the types of stakeholders common in businesses.

What is a Stakeholder?

A stakeholder is a person or a group with a vested interest in a business. Stakeholder interests differ; some are interested in business operations or project success, while others have a financial interest. Hence, a stakeholder is a person or group that can impact a project or strategy in your business.

Generally, a stakeholder’s level of engagement in a business venture is vital, as it can positively or negatively impact the business.

So, effectively managing project stakeholders is essential in getting the most from your entire stakeholder management strategy. It's often a challenge for most businesses to manage their stakeholders, but knowing the different types of stakeholders makes it a lot easier, and we will be discussing that below.

Type of Stakeholder: A Quick Classification

Effectual stakeholder management starts by knowing the different stakeholders in the business. The primary role of a stakeholder is to help a business meet a strategic objective. However, there are different types of stakeholders, as listed below.

Internal Stakeholders vs. External Stakeholders

Internal and external stakeholders are the simplest class of stakeholders. Internal stakeholders refer to inside parties that are directly affected by business activity. Internal stakeholders are interested in a business through a direct relationship, such as ownership, employment, or investment. In the absence of internal stakeholders such as project managers, a project’s success will be challenging or impossible.

On the contrary, external stakeholders are parties outside business activity. However, they are somehow affected by the actions and outcomes of the business.

Primary Stakeholders vs. Secondary Stakeholders

Primary stakeholders are those entities, groups, or individuals involved with the monetary transaction of a company. They directly participate in the daily operation of a business. Employees and customers are examples of primary stakeholders.

Secondary stakeholders are not directly involved in the day-to-day operations of a business. Charity associations, environmental groups, communities, and competitors are examples of secondary stakeholders.

Direct Stakeholders vs. Indirect Stakeholders

Direct stakeholders are individuals that are involved in a business's day-to-day activities. These stakeholders perform several tasks daily. The interests of direct stakeholders are mainly the projects of a business.

Indirect stakeholders focus more on the finished project than the process of completing the project. For this reason, an indirect stakeholder is more interested in status reports like availability, packaging, and pricing. For example, customers are a typical example of an indirect stakeholder.

Types of Key Stakeholders

There are many stakeholders in a business. Below, we will discuss the duties of some key stakeholders in a company.

1. Customers

Often considered major stakeholders of a company, customers are the ones who buy the company’s products or services. This key type of stakeholder is more concerned about the quality of a product/project and the price. As such, customers expect to get the best quality from your company but at a fair price.

Customers are interested in a company's performance because they get its products or services. Hence, it is vital for companies to ensure they meet their needs. Meeting customers' needs is an extremely important area of concern for ensuring the success of any company.

2. Employees

Employees are a type of direct stakeholder in a company as they create, manufacture, sell, and deliver the product or service of a company. Hence, employees or project stakeholders interact directly with customers, making them a crucial part of a business's success. In essence, employees perform diverse tasks for a company, such as major decisions, supervisory, or other groups of functions.

As a type of direct stakeholder, employees expect a financial return for their services. Note that employees’ interests as stakeholders in a company are not only tied to financial returns, but job security, career growth, and job satisfaction are also important. A happy and fulfilled project manager and workers will perform better and interact with each other more positively. An employee is a typical example of a primary and internal stakeholder.

3. Investors

Investors are a typical example of an external stakeholder, as they do not directly participate in the daily activities of a business. However, investors may contribute ideas and advice, encourage business leadership, promote the brand, bring connections, and so on.

A challenge with having investors is that if the interest of the investor does not align with that of the business's management or employees, there will be a conflict. What an investor wants above all is profit. Investors can also be primary and direct stakeholders.

4. Owners

Owner stakeholders can be an individual, group, or entity that owns a business. Because of owners' invested capital or equity in the business, they have a say in how the business runs. Generally, owner stakeholders have several responsibilities and rights in a business, depending on the type of ownership interest they hold.

Some owner stakeholders or project stakeholders have the right to vote on vital business decisions like making a major investment or electing directors. Note that the owner stakeholder is an internal, primary, and direct type of stakeholder.

5. Suppliers and Vendors

Suppliers and vendors are individuals or businesses who sell goods to your business. This type of stakeholder relies on your business for revenue generation from the sales of those goods. Suppliers and vendors exist outside a business, making them indirect and external stakeholders.

Suppliers and vendors are secondary stakeholders because they provide resources, materials, and expertise that does not exist within a company. They help improve the company’s actions to meet its customers' and stakeholders’ needs.

6. Communities

The local community of a business is a secondary stakeholder. As such, the business's success is an asset to the community, contributing to its development through job creation.

Furthermore, local communities are indirect stakeholders and can be on the losing end if the business fails. Since a majority of the business employees are from neighboring local communities, business failure will cause a loss of jobs and sources of income. Also, a community is a type of external stakeholder that has an influence on the safety of a business.

7. Trade Unions

Trade unions or labor unions are an organization of workers in a particular industry that ensures pay increments, safe working conditions, benefits, and social and political status by bargaining collectively. Most trade unions are independent of any employer, making them indirect stakeholders.

8. Governments

Government entities are major stakeholders with multiple roles, which include collecting taxes and issuing business licenses or certifications. Corporate governance agencies also ensure corporate social responsibility, such as minimum wage laws, workplace safety regulations, etc.

We can also say they are an example of secondary stakeholders because they regulate how businesses impact communities within the jurisdiction. For example, government agencies may regulate a business's environmental impact, such as what they put into the water and air.

9. Media

The media provide an avenue for businesses to advertise their products or services. A typical example is the media publication helping with advertising, which promotes stronger customer relationships. Businesses must interact with the press to make important announcements or advertise their products or services.

Stakeholder vs. Shareholder

Stakeholder and shareholder are often used interchangeably, but they don't mean the same thing. While they are closely related, a stakeholder is an individual that has a vested interest in a business or particular project goals. In comparison, a shareholder's interest in a business is financial gains.

We can say that shareholders are a subclass of stakeholders, considering that shareholders invest money in a business. In a case of a business foreclosure, the stakeholders will likely suffer significant financial loss.

Stakeholder analysis is vital, as it helps you identify and organize stakeholders relevant to your business on a consequential scale. Not all stakeholders have the same level of impact on your business's success. And for most businesses, the customers are the major stakeholder or most important stakeholder.

Come to think of it, what’s a business without customers? Customers are the ones buying the products and services of a business. Without satisfied customers, each stakeholder in a business will suffer, from employees to investors and so on.

Pleasing every stakeholder is challenging, considering stakeholders have different interests, which may sometimes conflict. So if there is one strategic management tip that will benefit any business, it is to place a preference to favor your customers, as they are the source of the business's success!

Explore Further

• Essential Roles in Project Management
• 5 Stages of Team Development
• 12 Key Benefits of Using Project Management Software
• 10 Effective Tips on How to Manage A Project from Start to Finish

Was This Article Helpful?