At first glance, the terms “shareholders” and “stakeholders” may appear to be the same- after all, they both refer to people involved in a business’s success, right? Well, the two areactually quite different in the roles they play.
In this article, we’ll look at the different definitions of these two terms, the difference between them, what rights and responsibilities come with being a shareholder or stakeholder, and how these groups benefit from corporate success.
Defining Stakeholders and Shareholders
Before delving into the differences between shareholders and stakeholders, let’s define the two terms.
What is a Stakeholder?
A stakeholder is typically anyone with an interest in the success or failure of a company. These parties could be employees, customers, suppliers, members of the local community, or any other group the organization does business with.
What is a Shareholder?
A shareholder, on the other hand, is a person or company that owns shares in a company. It can range from owning a few shares to be a majority shareholder.
The Differences between Shareholders and Stakeholders
With the definitions of shareholders and stakeholders out of the way, let’s look at the differences between the two.
Rights and Responsibilities
The primary difference between shareholders and stakeholders is their rights and obligations to the company. Shareholders own part of the company and, as such, can vote on important issues related to the organization. On the other hand, stakeholders have no ownership rights and, as such, are excluded from voting.
Profits
Another key difference between shareholders and stakeholders relates to their potential financial gain. Shareholders who own a certain percentage of a company’s stock are allowed to receive dividends from the company’s profits. Stakeholders, on the other hand, have no direct income from the company and have no financial claim to the profits.
Benefits from Company Success
Finally, one of the key differences between stakeholders and shareholders and their influence on the company’s success is that stakeholders only benefit from the company’s success indirectly.
Stakeholders benefit indirectly through job security, competitive salaries, and increased profits if they’re customers. Shareholders, on the other hand, directly benefit from the company’s success as they’re entitled to receive dividends and capital gains based on the company’s success.
The Benefits of Having Both Shareholders and Stakeholders
Having both shareholders and stakeholders can play a vital role in the success of a company.
For starters, a company’s stakeholders can help to advantage them in all sorts of ways, from providing a pool of talented employees, to offering valuable insights. They can also act as brand ambassadors, influencing potential customers and raising the organization’s profile.
Shareholders, on the other hand, can help to provide financing for the company, as well as offering a sense of ownership and accountability.
The differences between shareholders and stakeholders are quite clear. Shareholders are the direct owners of a company, and have rights such as voting and receiving dividends from the profits. Stakeholders, on the other hand, are those that have an interest in the performance of the company but no direct ownership rights, and they benefit from the company’s success in a more indirect way.
Having both stakeholders and shareholders is a great way to ensure the success of a company. Stakeholders can provide a pool of talented employees and offer valuable insights, while shareholders provide a sense of ownership and help to provide financing.
