Theoretically speaking, the term 'stakeholders' refers to "any group or individual who can affect or is affected by the achievement of organizations objectives" (Freeman, 2010). It is obvious to expect the differences in stakeholders expectations for a profit business to that of non-profit organizations.
The biggest difference is the monetary expectation. As non-profit organizations don't make monetary benefits from their operations, stakeholders cannot expect financial benefits. The goals of these firms are, usually, providing a charitable and educational service. As such, stakeholders including funders, volunteers, participants, clients and government officials may have different expectations ranging from providing quality service to community well-being to making positive contributions in the lives of the people. Usually, Government remains more apprehensive about the adherence of rules and regulations by the NPOs or NGOs. Participants and volunteers may look for better opportunities to work and might expect a good hands-on experience, in the area they are working. In addition, stakeholders may have higher expectations on the part of CSR( Corporate Social Responsibility) from a non-profit business compared to profit- based organization. CSR, though, has become an important aspect irrespective of the business nature, it is natural to expect more on this part from the organization that is already working for charitable purposes (Werther, 2010).
In contrast, stakeholders(shareholders) for profit business are likely to expect monetary benefits out of the company's operations. They expect the business to make more and more profits so that benefits can be trickled down to them. Employees, on the other hand, require good working conditions and competitive salary packages. Given the higher retention rates, especially in private sectors, it has become substantially difficult for profit-based private sector firms to meet the expectations of this segment. As a result, they are continuously devising the ways of retaining key employees. This problem is not prominent in non-profit businesses as they are basically run by volunteers. Even if they earn salaries for their work, as happens in some NPOs, expectations on salary aspects are not high up.
Succinctly put, the nature and operations of profit and non-profit organizations are radically different, and this is the fundamental behind the differences in stakeholders' expectations. While customers of both, profits and non-profit businesses, expect high quality products and services; for-profits organizations may find it harder to please this section because of the dynamic and competitive nature of business. For NPOs, competition is still under control, and they experience lesser competition as they are engaged in offering charitable services, mostly free of charges.
There is no denying the fact that a non-profit business may have a hard time in meeting their expectations compared to a profit company. The reason is- these businesses do not have income like profit organizations and remain dependent on funders, government officials and people for donations. As financial resources are indelible for smooth operations, the Board needs to ensure these stakeholders remain satisfied and need to meet their expectations duly. It is because of this dependence that many NPOs go non-operative even in their infancy. It is very important that stakeholders for NPOs align themselves to fulfilling organizational mission and vision to avoid any conflict and clash. Also, there is always an uncertainty looming over companies on the part of stakeholders. They get the legitimacy from stakeholders, and these streams are not necessarily controllable (Blaser & McClusky, 2005).
However, it does not mean that for-profit businesses need not meet the stakeholders' expectations. They have to be equally responsive; the only difference is that they are not dependent on them for finances to the extent of non-profit businesses. We can say that the criteria for managing expectations differs for a profit and non-profit business.
Non-profit businesses need to keep the stakeholders motivated through-out so as to retain their interest in a particular project or module. As monetary aspect is absent, there should be alternatives supporting their active and live involvement in company's operations. Research studies have endorsed the need of keeping them well-informed about t
Blaser, D., & McClusky, J. (2005). Managing Stakeholder relationship an nonprofit organization effectiveness. Nonprofit management and leadership , 295-315.
Freeman, E. (2010). Strategic Management: A Stakeholder Approach. Cambridge University Press.
Werther, W. B. (2010). Strategic Corporate Social Responsibility. SAGE.