Building societies and other types of organisation
A Building Societies Association case study

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Page 4: Shareholders and stakeholders

Shareholders

The shareholders in a plc own shares which pay dividends; shareholders are able to vote on major company decisions. Shareholders may include customers, employees, other businesses and the wider public.

Stakeholders

A business' stakeholders include anyone with an interest in the company and its activities, financial or otherwise. 

Banks set their strategy to maximise profit to increase the share value and give shareholders the best dividends. They aim to achieve this by giving lower interest rates for savers and taking higher rates from borrowers. Customers of course would prefer high saving rates and low borrowing rates. This can mean a conflict of interest between the bank's shareholders and its customers.

A building society's primary stakeholders are its members.  Members collectively own the business and are entitled to information on the business and to vote on important issues, such as who is on the board of directors, or whether to merge with another society.

Members want the highest possible interest rates on their savings and the lowest possible interest rates on their mortgages. Building society rates are carefully set for each type of customer account. Their level depends on interest rates in the economy (set by the Bank of England) and the rates and terms offered by competitors.

Because they are run for their members, building societies also have a focus on corporate social responsibility (CSR) that is integral to their business. Most societies have a strong regional identity and many are committed to assisting community initiatives and local charities.


Building Societies Association | Building societies and other types of organisation
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