What Is an Internal Stakeholder?

Stakeholders give your business practical and financial support – and sometimes a lot of grief – and they all have a vested interest in the company's success. However, of the two types of stakeholders, internal stakeholders are arguably more committed. That's because internal stakeholders in business are those who are involved in the inner workings of the company.

Tip

An internal stakeholder is someone who contributes to the company's execution or who makes decisions on behalf of the company.

Internal stakeholders include employees, board members, company owners, donors and volunteers. Anyone who contributes to the company's internal functions can be considered an internal stakeholder. On the other hand, external stakeholders include customers, clients, business partners, suppliers and shareholders. You can even consider potential customers as external stakeholders. External stakeholders also include the communities in which you operate your business and the governments that receive your business taxes. Anyone who is affected by your company but who does not contribute to internal operations is an external stakeholder.

Managing the internal stakeholders of a company involves making sure they are engaged in the company's goals, enjoy the company's culture and feel like an important part of the team. These factors increase internal stakeholder motivation, thereby increasing productivity. It falls to upper-level management to ensure that internal stakeholders feel valued. This often begins by simply understanding their position when a project will affect them, rather than blindsiding them with changes without consulting them first.

For example, before purchasing new supplies for a department, be sure to ask the employees who work in that department about the supplies they feel they lack. There's nothing more frustrating for employees than seeing company money spent "unwisely" to give them things they don't need. By giving them input, they can feel like their opinion is valued and that management trusts them to know how to do their job. Little actions like this can increase internal stakeholder motivation and involvement.

On the other hand, external stakeholder management falls to various internal teams. They build relationships with suppliers and investors, for example. Advertising and marketing teams devote themselves to creating new clients and customers, and the customer care team strives to make these external stakeholders feel valued and appreciated at all times. Knowing who your company's stakeholders are, whether internal or external, helps guide effective decision-making. When these two groups are managed appropriately, the success of the company can only increase.