As a business grows, the number of people involved in that business grows as well. From the day an entrepreneur forms a new venture, there’s at least one person invested in that company’s success. From there, that number increases as workers, partners, shareholders and others join in. Project managers and investors identify these people as “stakeholders,” with those who are instrumental in the business’s success designated as “key stakeholders.”

What Does Key Stakeholders Mean?

A stakeholder has an interest, or “stake,” in the success or failure of a business or its projects. If a business folded tomorrow, these people would be affected in some way. Stakeholders aren’t limited to those who work directly for or with a company, though. A business’s influence can go through several layers, affecting employees of vendors, for instance, or other companies in the same community. But having a stake in the business’s success doesn’t necessarily entitle a person to the same consideration as someone who is closely connected to the business itself.

When somebody is labeled a key stakeholder, it simply means that person is one of the top stakeholders in the business and its projects. Determining which stakeholders are key can be tricky since a business may feel that everyone attached to its goings-on is critical to its success. But there are questions you can ask that can help identify who goes at the top of the list. Once the hierarchy has been established, a business can better determine who needs to be looped in on important decisions.

When You’ll Need Stakeholders

Although it’s important to be aware of your business’s stakeholders, there are instances where you’ll need to make a clear decision as to which parties are key stakeholders and which aren’t. Stakeholders can vary from one situation or project to the next, so don’t feel as though your choices are set in stone. You can determine key stakeholders for something as simple as a project meeting. By only including those who have a stake in the topic at hand, you’ll avoid inviting people who won’t be able to contribute anything to the meeting.

For documentation purposes, you’ll need to identify key stakeholders when you’re creating a business plan or pitch a presentation for investors. Project managers will also list key stakeholders in their project plans. In the case of a business plan or pitch, your stakeholder list will be those who have an overall stake in your business, while project plans will list stakeholders specific to that project. These are the people the project manager often involves in discussions of the project and its progress.

Internal Versus External Stakeholders

It can help, as you’re trying to determine your business’s stakeholders, to separate them into those who are internal and those who are external to your day-to-day activities. Your leadership team and workers each have a stake in your business and are internal. This includes not only your employees and freelancers but also your board members and investors. Your business has a responsibility to its internal stakeholders since they often have both a financial and a personal interest in whether it succeeds or fails.

External stakeholders aren’t actively involved in the day-to-day activities of the organization. The business’s impact on them is generally indirect. One way to determine external stakeholders is to consider all of the people who would be affected if the business suddenly folded. These would be, of course, customers or clients, but they would also be your suppliers and creditors, who financially benefit from your existence. Those who are external to your organization won’t be among your key stakeholders. Even the clients whose payments you rely on won’t be involved in the crucial business decisions you make.

A List of Key Stakeholders

If you’re trying to find general key stakeholders – as opposed to key stakeholders attached to a specific project – you’ll need to look at your leadership team first. Your Chief Executive, Chief Operations Officer and department heads will likely be circled at first glance, since they sit in on meetings and make major business decisions. But added to this will probably be investors and government agencies that fund your products, especially if they expect you to consult them on decisions or report back to them on your progress.

If you have borrowed money from a bank or credit union, that creditor also serves as a key stakeholder, since its support is essential to operations. Any government agencies that provide grants or regulate what you do can serve as key stakeholders, particularly if losing that support will shut your business’s doors for good. Most of your other employees will be stakeholders, but the level to which they are key to your overall business’s survival depends in large part on what they do.

How to Identify Your Key Stakeholders

It can be easy to rely too heavily on the impact your business has on its stakeholders. But when determining those who are key to your operations, take a minute to ask what effect that person has on your organization. If his support for a major project were withdrawn, would that project be able to move forward? Key stakeholders are either crucial to a particular project or to your day-to-day activities as a business.

A key stakeholder doesn’t just influence the success or failure of a business venture. Her approval is vital to the business’s success. Someone to whom you report on a regular basis is likely a key stakeholder. For instance, public companies have quarterly earnings calls that are accessible to all shareholders. However, often these calls are geared toward the board of directors and others who are key stakeholders in the organization, with shareholder accessibility used for transparency purposes.

What Do the Key Stakeholders in a Company Do?

Key stakeholders don’t just exist to be put on a list that you show to potential investors. They play a direct role in your business’s success. Some come into the office every day and work by your side to make sure your business is a success. Still, others serve in more of an advisory capacity, whether they pour their own money into your business or not. You may only see some of your key stakeholders a few times a year, but they may check in at any time to ask questions or request progress updates.

You’ll generally see key stakeholders sitting in on planning meetings. When an important decision needs to be made, they’ll either call in or show up in the conference room. If a crisis comes up, they’re the ones who summit to determine how to manage the situation best. While the many employees who work hard each day to support operations are essential, they won’t be seen as key stakeholders unless they’re the ones whose decisions determine the success or failure of a project.

Why Companies Need Key Stakeholders

Even one decision can make a difference in a business’s success, especially if a business is at a turning point. Key stakeholders are the ones who make those determinations. If an organization needs to change the way it processes applications, for instance, the key stakeholders will be in those early development meetings, explaining to the designated project leaders precisely how the new process should look. Although the project manager may work with other employees to get a feel for the work they do each day, the key stakeholders will be the ones who monitor progress and sign off for things to move forward.

As a business grows, it becomes more critical to have a leadership team in place who can make those decisions that drive things forward. Key stakeholders can convene to discuss ideas, then agree on the best course of action. Having a robust and capable leadership team lets a business’s customers and employees know that things are in good hands.

Are Customers Key Stakeholders?

Although customers don’t drive the overall direction of a business, they can serve as key stakeholders in a specific project. If you’ve developed a new product, for instance, you’ll likely keep customers in mind throughout the process. You may even consult the customers during development. As your project reaches completion, a subset of your customer base may be involved in testing and providing feedback on it.

Even if you don’t think of customers as key stakeholders in your overall business, that may change if for some reason you alienate some of them. A widespread protest of your business or even a surge of customer complaints can destroy your business’s reputation, forcing you to realign your priorities to win back customer trust. In the absence of controversy, you’ll probably find that customers don’t participate in the significant decisions your leadership team makes, even if you’re anticipating their reactions during the planning process.

Other Possible Stakeholders

Once your company goes public, you’ll consider shareholders a vital part of your operations. The investments they make in your company keep it operating. If something your business does alienates investors, they’ll speak using dollars and cents, driving your stock prices down, which makes them key stakeholders in your business. If you rely on legal counsel or a public relations professional for advice on a regular basis, they also become key stakeholders in your business.

On a secondary level, your competitors can become key stakeholders in your business, mainly if their response to your activities leads you to change direction. If you monitor their popularity with customers and adjust your tactics in response, they’re making a direct impact on how you run things. You may also find, to a lesser degree, that your industry as a whole is a key stakeholder since you’ll likely track trends and adjust your activities accordingly.

How Does a Company Keep Stakeholders Happy?

Sometimes it can feel as though keeping stakeholders happy is a losing battle. This is especially true if your leadership team is always at odds. But if you want your projects to succeed, you need to be able to show that their feedback matters. It may seem that keeping some of your key stakeholders out of the loop for a while will help move things forward; however, there are consequences to that. You might put months of work into a project, only to have it shot down when a few key stakeholders finally see what you’ve been up to and refuse to sign off on it.

In many instances, businesses find that keeping stakeholders happy means compromising. Stakeholders may not care that to get what they want; the project will take twice as long or cost double what you have budgeted for it. Instead of battling until things shut down completely, it can help to work with project managers to find a way to make stakeholders happy while still meeting all of your other goals.