The Dutchman, along with Paris Saint-Germain head coach Mauricio Pochettino, is one of the frontrunners to be installed as United's next permanent manager ahead of next season.
"Ten Hag is doing very well at Ajax; he makes the team a difficult opponent for everyone in Europe and Holland," Stam told Sky Italia. "He is very good at showing the players what to do and also at improving individual players.
"At Ajax, he obviously has the finances to grow the team with young players.
"For him, Man United would be another thing compared to what he is experiencing in Holland. He has to take this step forward in his career."
Meanwhile, Stam has also underlined the importance of United using Cristiano Ronaldo as a key figure within the dressing room. After missing the 4-1 defeat to Manchester City, he returned in style against Tottenham Hotspur on Saturday, netting a superb hat-trick.
The former defender continued: "Ronaldo didn't play in the derby, then scored three goals against Tottenham. It's always difficult to understand what goes on in a dressing room, but Ronaldo showed his strength.
“You have to involve someone like him in decisions; you have to talk to him. He's fundamental for the locker room; he helps you raise the level of the team."
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