In any business, shareholders and stakeholders are important. But in a family business, the distinction between the two becomes even more critical — and more personal. Understanding how to support both is key to building a sustainable enterprise that lives up to its values and lasts across generations.
My own perspective comes from growing up in my family’s business, Monarch Hydraulics, founded in 1856 in Grand Rapids, Mich. Over the years, the company evolved from building sawmill equipment to road scrapers and, eventually, hydraulic power units and ergonomic lift systems. While the business was sold several years ago, the values and experiences shaped how I think about ownership, leadership and responsibility in a family enterprise.
Defining the Terms
Shareholders are individuals or entities that own equity in the company. Their primary concern is often the financial performance and value of the business, since it directly impacts their dividends and long-term returns.
Stakeholders, on the other hand, may not have ownership, but they have a vested interest in the business’s success. Employees, customers, suppliers and even the local community are all stakeholders. So are family members who are involved in or impacted by the business — even if they don’t hold shares.
The difference lies in focus: shareholders tend to concentrate on financial returns, while stakeholders care about the health and direction of the business in a broader sense.
The Shareholder Experience
In our business, we had both active and inactive shareholders. Active shareholders could vote; inactive ones could not. Dividends were distributed based on ownership, but voting was managed carefully to reflect engagement, not just inheritance.
We also had a rule that only one family member could vote on behalf of each branch. If that branch had an engaged member of the rising generation, the vote could be passed to them. If no one was active, the branch lost its voice until someone stepped up. This approach helped ensure that those influencing decisions were actually involved in the business. It also encouraged rising generation participation and accountability — two things family businesses need to thrive.
The Stakeholder Experience
Stakeholders came in many forms, and some of the most meaningful relationships we built were with people who didn’t own a single share.
One day, a man with muscular dystrophy showed up at our factory. He drove a modified postal vehicle outfitted with a hydraulic system he had designed himself. He had a business plan, a vision for mobility solutions and a deep passion for helping others gain independence. That meeting — completely unplanned — turned into a partnership that helped create one of the largest mobility vehicle companies in the country. His determination, paired with our team’s engineering expertise, produced results neither of us could have achieved alone.
Another example was a local metal fabricator. At one point, we decided it no longer made sense to manufacture our own tanks in-house. My summers spent welding in the factory helped me understand and support the decision to outsource. The founder of the fabricator had been mentored by my father. Our families had a history. We trusted each other. The success of both businesses became intertwined — and both grew stronger because of that mutual reliance.
Employees, too, were essential stakeholders. We didn’t offer equity, but we created a gainsharing program that rewarded productivity with monthly bonuses. Every employee — not the shareholders — participated. It was a way to recognize contributions, build culture and share success beyond just dividends.
One of our second-shift workers was a college student by day and factory leader by night. Her dream was to become a volcanologist. She eventually did — and while we were proud to see her go, we were prouder to have supported her journey. Our business gave her more than a paycheck; it gave her a foundation.
We also built connections through small acts. Every week, one of the active shareholders personally handed out paychecks to employees at both factory sites. It wasn’t about formality—it was about getting to know people, understanding their lives and staying in touch with what made the business run.
Why Both Matter
A successful family business needs both engaged shareholders and empowered stakeholders. Shareholders bring capital, stability and long-term vision. Stakeholders bring ideas, execution and community connection. If one group is prioritized at the expense of the other, the business starts to wobble. But when both are respected and aligned, the business becomes something greater than any one interest.
Final Thoughts
Our company held quarterly board meetings. Charitable giving was always on the agenda. We discussed community needs alongside business strategy. For us, it wasn’t an add-on — it was a reminder that our responsibilities extended beyond our balance sheet.
In family businesses, it’s easy to focus inward — on your branch, your dividend, your vote. But true stewardship requires looking outward. Shareholders must recognize that their decisions impact far more than their own financial future. They influence the livelihoods of employees, the stability of supplier relationships, the trust of customers and the well-being of the community.
When shareholders embrace that broader responsibility, they earn the right to lead. And when stakeholders feel seen, heard and valued, the business becomes stronger and more resilient.
In the end, shareholders and stakeholders form the fabric of a family business. The goal is not to choose between them, but to create transparency, respect and accountability for all involved.
That’s how you build a legacy worth passing on.