Stakeholders vs. Shareholders: Is There a Difference?

By Tom Sponsel, CPA/ABV, CFF
Managing Partner
tsponsel@sponselcpagroup.com

Recently, the Business Roundtable, a group of chief executive officers from major U.S. corporations, issued a statement redefining the “purpose of a corporation.” This new definition drops the age-old idea that a corporation should primarily focus on serving shareholders. This article was a bit controversial for the many capitalists that own businesses. Setting aside the social issues implied within this statement, those CEOs are just supporting what small businesses have recognized all along!

Including all stakeholders (including shareholders) to the value-add equation makes sense given their long-term importance to an enterprise. A shareholder can voluntarily dispose of their stock at any time, but a stakeholder is usually much more dependent on that relationship for their own success.

Stakeholders include:

  • Business owner(s)
  • Employees
  • Customers
  • Banks that lend you money
  • Suppliers and vendors
  • The community in which you operate

As you can see, these people have made a significant investment in your company’s success. If the company fails financially, it could interrupt services of vendors in its supply chain, employees could lose their jobs, their families would go without, and their bills would not get paid. For a current example, look at the heartache and disruption that is being experienced as a result of the current strike that the UAW has leveled against General Motors?

Businesses that seek proactive relationships with all stakeholders are bound to prosper in the long run, as they cast a wide net of impactful relationships. Suppliers and vendors will hustle for a company that deals with them fairly and ethically. Employees will handle rush orders and go the extra mile in a myriad of other ways if they are fairly compensated, encouraged, supported, and treated with respect and dignity. Helping them climb the ladder of success will compel them to carry out your company’s vision.

Last but not least, employees will remain loyal and keep your business booming if you continue exceeding their expectations and providing a personal touch. As motivational speaker Zig Ziglar once said, “You will get all you want in life if you help enough other people get what they want.”

Treat stakeholders as members of your team, your family. This is just smart business.

If we can assist you further with achieving success in your business or personal affairs, please contact Tom Sponsel at (317) 608-6691 or email tsponsel@sponselcpagroup.com.

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