Dinesh Divekar
Business Mentor, Consultant And Trainer

Dear colleagues, Please help in making a policy to make an employee a stakeholder. Eligibility must have been worked for 3 years. Suggest other criteria.
From India, Belgaum
Dear Jay,

The definition of stakeholder is a person or organization with an interest or concern in something.

As per the definition, employee is already a stakeholder. He/she is expected to show interest or concern in the wellbeing of the company. If the employee does not show concern then company will not grow which, in turn, would affect his/her personal growth as well.

However, this is a theoretical aspect of being a stakeholder. In the real sense the real stakeholders are shareholders only. They do the financial investment and the investors are always interested in accruing muliple returns to their investment. By contrast, an employee does not do any kind of investment. For the knowledge, skills he/she uses to generate output, he/she gets the returns immediately in the form of salary. Therefore, compared with the shareholders employee's risks are far lesser.

Not that the company does not share profit with their employees. By distributing "allocable surplus", which in normal language we call it as "bonus" to the employees is the company not making them stakeholder?

If you wish to make employees also as stakeholder then you need to distribute the share of the company to the employees. This option is called "Employee Stock Option Plan" (ESOP). Is your company ready to do that? But then it can happen best in the public limited company and not in the private limited company. A couple of years ago, the maximum shareholders in a private limited company allowed were only 200. What if your company has more than 200 employees?

I recommend you giving more details about your company, number of employees and why the need was felt to make the employees "stakeholders". What benefits the company will have and what benefits the employees will have if they become stakeholder? One needs to be clear about it.


Dinesh Divekar

From India, Bangalore
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