52 How can stakeholders be prioritized?

Choosing which stakeholders to prioritize depends heavily on the situation, but stakeholder theory offers some guiding principles.

First, recognize that it is generally impossible to give each stakeholder everything they wish. Employees will always wish to be paid more, customers will always want lower prices and higher quality, shareholders will always want a greater return, and so on. Due to the constrained resources which businesses face in their operating environment, not all of these needs can be satisfied at once.

Second, in a resource-constrained environment, it may make sense to prioritize high-power, high-interest stakeholders first. In our four-quadrant division of stakeholders, we referred to this group as “keep engaged, managed closely.” Thus, if a business depends on a crucial supplier or buyer, prioritizing that relationship over the demands of relatively low interest / low power stakeholders may make sense.

Third, it may often make sense to prioritize internal / functional stakeholders over external / diffused stakeholders. For instance, the needs of shareholders and employees may be more important to satisfy than those of social media influences. This is because shareholders and employees enable the existence of the business itself.

Fourth, when trying to prioritize stakeholders, it may be helpful to remember the series of fiduciary duties we considered in Part 2. Prioritizing stakeholders in a way that will, in the long-term, help fulfill that duty may help in stakeholder prioritization.