Internal Stakeholder - Who Are Considered As Internal Stakeholders Of The Organization?

Internal stakeholders are the most integral part of the business because, without internal stakeholders, a company would stop functioning and even lose its existence.

Who Are Internal Stakeholders?

Internal stakeholders are individuals or groups of individuals who have direct and/or financial involvement in the operations and management of the organization. They exist within the business. Usually, the internal stakeholders have a vested interest in the company, and thus they can directly affect or get affected by the company’s success or failure.

Internal stakeholders comprise those working for the organization, such as the employees, the managers, the board of directors, the investors, and the individual or group who have a direct interest or stake in the business.

What Is The Role Of Internal Stakeholders?

The internal stakeholders have a direct interest in the company, its services, finances, and management. Also, they are responsible for both positive and negative outcomes of the business. Internal stakeholders have many different roles within a company, depending on the responsibilities, titles, and rules laid out either during the establishment of the business or as the business grows. Below are some of the significant roles of internal stakeholders.

1. Voting Power: Voting right is one of the primary roles of internal stakeholders. Based on their shareholding or the percentage of ownership in the company, the internal stakeholders may be responsible for voting on essential changes in the company. For example, the internal stakeholders such as the board of directors may vote for electing the organization's management that’s to be entrusted for making all the major future decisions on their own.

2. Management: The internal stakeholders can hold significant positions in the organization's management where they may directly report to the CEO, chief financial officer, or president. In some specific departments, the manager may be an internal stakeholder because their decision may affect that department's performance positively or negatively. Management may also be responsible for hiring personnel within a particular department, providing them training, and keeping them informed of any changes or updates in the policies and procedures of the business.

3. Decision Making: Internal stakeholders also consist of the board of directors. They may also intervene if the performance of the business is unsatisfactory. Therefore, they can take decisions along with the other board members, and also they have the power to disrupt the decisions.

4. Investing: Internal stakeholders also comprise large investors who can anytime invest or take out money from the company. Depending upon the financial performance of the company, they can change their investment decision. Internal stakeholders also review the company’s financial data to ensure that the business is doing well and their investment is not losing. Also, they may be responsible for voting on specific fund allocations.

5. Responsibilities Towards The Society And Environment: It is the responsibility of the stakeholders to ensure that their decisions are not harming society and the environment. Moreover, internal stakeholders can donate money to any country that needs it or may decide to limit the depletion of resources or use alternative resources if the current resources get scarce. So, they are responsible for making major environmental and social decisions. They make sure that public interest always stands first before profit.

6. Other Responsibilities: Other than the above major roles, the internal stakeholders play many other major roles like identifying new areas for increasing sales and market penetration. They attract more investors and bring in different marketing ideas. Also, they can be a part of the company’s selection board.

What Are The Types Of Internal Stakeholders?

Internal stakeholders can be divided into the following major groups:

• Owners - Owners of an organization are the internal stakeholders who bring in capital or equity and have a say in the business operations. For example, a business might have multiple owners, and each owner has equity in the business. Owners are interested in profit maximization and achieving a return on their investment.

• Employees -With a direct stake in the business, employees support smooth business operations and directly interact with customers. Employees typically expect benefits like better pay, job security, incentives, insurance, career growth, good working hours, job satisfaction, etc., for supporting themselves. They carry out supervisory, managerial, and other functions. The business wants its employees to be committed, creative, punctual, and loyal to the profession.

• Board Of Directors And Managers - This includes the directors and managers of the company. The directors and managers expect high packages, insurance, bonus, medical benefits, perks, and promotions. While the business wants the directors and managers to achieve excellent financial results, high productivity, and meet the set targets.

• Investors - One of the most common internal stakeholders, investors have a direct stake in the company. Thus they are greatly impacted by the positive or negative outcome of the business. The main concern of the investors is getting income from their investment. Therefore, internal stakeholders are often extended to both shareholders and shareholders holding some internal stake in the company in accordance with some perspective.

Different Examples Of Internal Stakeholders

Anyone directly contributing to the internal functions of the company is considered an internal stakeholder. They are entities within business-like employees or teams who have concern or interest in the company’s strategy, project plan, program, process, or product. Some of the common examples of internal stakeholders are:

• Board Of Directors - An internal investigation may be conducted by the board of directors for which they may require information or the involvement of teams or employees.

• Auditors - Information in areas like risk management and internal controls may be required by an internal auditor.

• Executive Managers - This includes the CFO or CEO of the company. For example, the status of a project or program may be informed to the CEO.

• Internal Customers - Teams and employees who are using an internal service as customers. For example, functions of IT are often served to internal customers as services.

• Operational Teams - This includes the teams who are responsible for core business processes like manufacturing.

• Business Units - This includes teams with responsibility for costs and revenue.