An internal stakeholder is anyone who has a direct interest in you or your organization. The stakeholder will be directly affected by the success or failure of the organization.
Common examples of internal stakeholders in companies are senior management, project sponsors, and project team members. In the education system, you might look toward teachers, students, and admin staff as internal stakeholders.
Internal stakeholders are at the coalface, so they can provide strong insights and advice. They need to be regularly consulted and performance reports need to be provided so they are kept in the loop about how the project is progressing.
Internal Stakeholder Definition
Stakeholders can be both internal and external. An internal stakeholder is actively involved in the day-to-day operations of the project, while an external stakeholder is interested at arm’s length.
Two scholarly definitions of internal stakeholders are:
- “Those who are directly involved in or affected.” (Beringer, Jonas, Gemünden, 2012, p. 17)
- “Those who are actively involved.” (Oyegoke, 2010, p. 67)
Between these two definitions, we can see that involvement is active and direct in the internal stakeholder relationship. This can be contrasted to the passive and indirect nature of external stakeholders.
Internal Stakeholder Examples in an Organization
Employees are internal stakeholders because they are directly affected by the decisions of management. They have to implement the decisions of the company and explain them to the public.
As a result, employees need to be consistently kept in the loop about changes and, ideally, consulted to get their advice and insights from their unique perspectives.
For example, if a SAAS company increases the monthly price, the employees in the sales department would have to explain the price rises to customers. They may even be able to provide insights into what customers regularly say to
Furthermore, employees have a vested interest in the success or failure of the company. If the company fails, then the employees will lose their jobs. Similarly, if the company succeeds, they may receive a bonus or enhanced benefits.
Management are internal stakeholders because they are directly involved in the day-to-day operations of the company.
As the people in charge of managing the day-to-day operations, they are are central decision-makers. They may have some role in setting the strategic direction but, on a day-to-day operational level, have a greater role in interpreting directives of the company owners and implementing them.
Like the employees below the management level, the managers also have a vested interest in the success or failure of the organization because their income is dependent on the company.
3. Board of Directors
The board of directors is one of the most important groups of internal stakeholders. They are responsible for setting the strategic direction of the company and making high-level decisions.
The board needs to be regularly updated on the progress of the company and any changes which may impact the company’s ability to achieve its objectives. They will also be interested in any new opportunities which could help the company to achieve growth.
As the people setting the strategic direction, the board will also need to closely consult with managers and staff who, as other internal stakeholders, will need to be partners in decisions that are made.
4. The Business Owner
The owners of the company are another important group of internal stakeholders. Toward the beginning of the business, the owners may be extremely actively involved in the day-to-day operations.
As the business expands, the owners may step back and allow managers to take over the day-to-day operations. This is a necessity if the business becomes complex and multi-layered.
Nevertheless, as the ultimate authorities in the business, the owners will continue to play an active role in business strategy and be the most powerful internal stakeholders.
We generally consider customers to be examples of external stakeholders. However, many service and project-based businesses will end up having clients who are internal stakeholders.
For example, if a team works on a project for a client, then the client needs to be an active participant throughout the process. They may come into the office several days a week for consultations, request changes in the staff working in the team, or work hand-in-hand throughout both companies’ growths.
Similarly, if a business is entirely reliant on one or two clients for their income, the clients become important partners who will be called in for a consultation on changes and advice on improvements.
In other words, sometimes clients become partners.
6. Chief Executive Officer
CEOs are charged with the responsibility of ensuring that their company meets its goals and objectives.
In order to do this, they must ensure that all of the company’s internal stakeholders are satisfied.
They are expected to motivate employees and give them a sense that they are part of a team. Employees must be happy with their work and working conditions in order to be productive.
They will also actively work with the board of directors and shareholders to whom they are responsible. Shareholders must feel confident that their investment is in good hands. Furthermore, the board of directors must be kept informed of the company’s progress and feel that they are being given accurate information.
By keeping all of these groups satisfied, the CEO can help to ensure the long-term success of the company.
Shareholders may be either internal or external stakeholders. When shareholders take an active part in the company, such as if they take seats on the board, then they become active, or internal, stakeholders.
However, if the shareholders own a small number of shares and do not have sway or an active role in the operations, then they become passive, or external, stakeholders. They will have a hands-off interest and may follow the decision-making, but not be involved.
Interests that shareholders take may include an interest in dividend payments, new stock issuances, mergers, or the hiring of a new CEO.
8. Admin Staff
While admin staff may not be directly involved in projects or operations, they’re sometimes considered internal stakeholders if decisions made within the business directly involve them.
For example, staff layoffs, new negotiated contracts, and even changes in standard operating procedures directly impact the admin staff. As a result, administrative staff may be considered internal stakeholders with a direct ‘stake’ in the success or failure of the organization.
Examples of Internal Stakeholders in Education
As the people who will be directly affected by the education they receive, students are essential internal stakeholders in the education system. They have a vested interest in receiving a high-quality education that will prepare them for success in their chosen field.
As a result, students should ideally be consulted on their own educational experience.
Progressive educators, for example, advocate that students be democratic participants and voters in the classroom, making decisions in collaboration with the teacher on how they learn best and, at times, what they should learn.
In addition, students also serve on school boards and committees, providing input on decisions that affect their education. By collaborating with educators and other stakeholders, students can help to
Teachers are experts in pedagogy and play a vital role in the education of students, and as such, they are considered to be internal stakeholders in a student’s education process.
They also serve as mentors and role models for students, and they can have a significant impact on the way that students view themselves and the world around them.
Thirdly, teachers often work closely with other internal stakeholders in education, such as administrators and school counselors, to ensure that students receive the best possible education. Often, the teachers are advocates for students, working to ensure decisions are in the students’ best interests.
3. Head Teacher and Principal
Principals strive to create an environment where all students can thrive academically, socially, and emotionally. In doing so, they play a vital role in shaping the future of their community.
A school principal is also responsible for hiring and supervising teachers, developing curriculum, and managing budgets. As a result, they are deeply invested in the education process and evidently active stakeholders.
Principals may be exposed to some accountability measures and KPIs that are central to their role. A principal’s goals may be to raise test scores, move up league tables, or increase revenue. In private schools, the principal also finds themselves accountable to fee-paying parents.
In each of these situations, the principal is a pivotal person whose decisions will impact the success or failure of their students’ education.
Parents have a strong stake in their children’s education. Parents hold hopes about their children’s future jobs, want them to have the best education possible, and aspire for their children to be well-educated members of society.
A common way parents are kept informed and get to give input is in the parent-teacher conference, where they can talk with the teacher and hopefully form a partnership on best teaching practices and individualized plans for their child.
In public schools, parents often feel like they don’t have much sway over school policy despite the fact they are strong stakeholders. However, in the private education system, parents are paying customers, so they have a much stronger sway over school policy and its direction.
5. Support Staff
Support staff can include teachers aides who help with students with disabilities, specialist teachers, and teacher’s assistants. Like the teachers, the support staff have a vested interest in the students’ development.
They will need to proactively check-in on students’ development (in a process called formative assessment), make adjustments to teaching plans, and assess development over time.
As they are paid by the school, they’re also internal stakeholders in the sense that wage and conditions agreements will directly affect their livelihoods.
All of the above groups and types of people are considered internal stakeholders because they are affected by and therefore have a vested interest in the success or failure of the organization or project. Their vested interest is a reason we often call them special interest groups. They are also directly and actively involved in the processes of the business, school, or other organizations. This differentiates them from external stakeholders who have a passive and distanced stake in the organization.
Beringer, C., Jonas, D., & Gemünden, H. G. (2012). Establishing project portfolio management: An exploratory analysis of the influence of internal stakeholders’ interactions. Project Management Journal, 43(6), 16-32. doi: https://doi.org/10.1002%2Fpmj.21307
Oyegoke, P. (2010). The Contextual Approach to Stakeholder Management. In Finland In Chinyio, E. & Olomolaiye, P. (Eds). Construction Stakeholder Management. Malaysia: Wilwy-Blackwell.