Stakeholder Management – Who are the stakeholders? What and who does this term stakeholder refer to? Are they simply the internal members of the company? Are they supporters of the company? Yes, we understand each question on your mind regarding stakeholder management, and we are going to help you get an answer to these questions. Many people believe that stakeholders are only the investors or the profit makers of the company; however, this is not the care in terms of stakeholders. Let us know and understand the meaning of stakeholder and stakeholder management and then finally see how you can effectively manage stakeholders. To get an answer to your questions, refer to the notes below, as they will guide you through.
Who is a Stakeholder or What is a stakeholder?
Anyone or everyone who is affected by the actions of a business or an organization is a stakeholder for the organization. Stakeholders are people without whom the organization might never exist.
Let’s see the types of stakeholders and how does the company benefit them
The company helps a location in its growth; this, in turn, helps the government a sit pay taxes to the government, pays VAT, follow legislation, creates employment opportunities, reports truthfully to the state government, etc.
The company employees earn their bread and butter from the company, the company rates their wages or salaries, gives them job security, and compensates for their jobs and loyalties; all this gives the employees respect and a fair communication opportunity.
The customers of the company earn value for their money when they buy the organizations goods and services; they spend for the quality of the products they want; the company also gives them good service and ethical products. So yes, even customers are a part of the stakeholders of the company.
Suppliers are people or smaller companies who provide raw material to the company. The end result of these raw materials is the finished goods that they supply to the customers. The company provides business opportunity to these suppliers, which in turn gives creates employments for the suppliers and their people.
The company benefits creditors with their credit scores, their new contracts and also liquidity.
For a community, a company or an organization provides job opportunities, involvements, protection to the environment, share of the company listed or not listed, along with truthful communication.
The concern of a trade union is providing a qualitative work atmosphere, protection for workers, and job opportunities for people.
The company owners are concerned with the profit-making ratios of the company, longevity of the company, its market share and position, its succession planning, capital raising, its social goals, and the company’s growth.
The investors put in their money; hence they will only be concerned with the returns they receive on their investments and how much do they earn through their investments.
Types of stakeholders
Now the above list is divided into two types of stakeholders
Primary stakeholders or internal stakeholders
These stakeholders are usually directly related to the economic transactions of the organization, for example, the company’s stockholders, employees, customers, the suppliers, and the creditors of the organization.
The secondary stakeholders or the external stakeholders
These stakeholders are people who do not directly engage in the economic transaction of the organization; however they are either affected by the actions of the company, or they can affect the actions of the company, for example, the community, the general public, the media, activist groups, communist and also business support groups.
What is stakeholder management?
Each and every stakeholder is a very critical and very sensitive issue for an organization. As they definitely affect the working of the organization, and like said earlier, no company or organization would ever exist without the help and support of these stakeholders. One of the most important parts of project management is developing and controlling relationships with the stakeholder as they are a vital part of the organization. The concepts and the studies state that the majority of businesses fail due to a lack of involvement of individuals who are a vital part of the organization. Involvement can improve by improving relationships with individuals or stakeholders; the better the relationship, the better the involvement of the stakeholders in business and projects. The support and contribution of each stakeholder include support of the executives, sponsorship towards the value of the business, emotional maturity, effective usage of the organization’s ecosystem, for example, the infrastructure, procurement, facilities and legally provided to support the organization.
Why manage stakeholders?
Stakeholder management is a complex process because stakeholders view their roles and allegiances, etc., differ with situations and throughout the company’s life cycle. Hence it is extremely important to manage stakeholders efficiently at every stage of the company’s life cycle. Management of stakeholders needs to be done very effectively as each stakeholder’s powers differ with their importance and their interest in the business. A few stakeholders have the power of either blocking your business or letting it roll successfully. Your business also depends on their interest as some may be interested in what the business is doing and how is it performing; however, some stakeholders will not even care about your business. For example, you are into a project in which your boss will be extremely interested. So will your family; however, an outsider not directly related to you will not be as interested. Similarly, in a business, the owner and the employees will be very interested; however, the community and the media will not really be interested.
Effective Stakeholder Management Steps
With the help of 5 simple steps, we can help you manage stakeholders effectively.
Identify and acknowledge your stakeholders.
The very 1st part of managing your stakeholders is to know them. You need to first know the stakeholders and their concerns, for example, people who can affect your business like people from all around the organization and people who can be affected by your business like the community, the suppliers, etc. as an organization, you will have a huge list of stakeholder hence you have to prioritize every stakeholder who is interested; however efficiently. Priorities are given below.
- Stakeholders with high power and high interested
You need to make sure that you keep this lot of people happy, they must be completely engaged, and you must put in all your efforts to keep them satisfied or content.
- Stakeholders with high power and less interest
You need to keep even this lot happy and content, and hence you need to put in a good amount of efforts in this lot of people; however, make sure that you limit your efforts somewhere or else they will be bored or irritated by your messages.
- Stakeholders with low power and high interest
To keep these people happy is also important, keep this lot well informed and keep talking to them to make sure that there are no issues cropping up. Besides this lot can be very useful as they can offer helpful details for your business.
- Stakeholders with low power and less interest
This group of people needs to be monitored so that issues do not crop up; however, do not message these stakeholders as they will easily get bored of your messages.
The purpose of management needs to be defined.
Obviously, before you execute a job, you need to know the purpose of executing it. A key purpose will help you engage stakeholders effectively as it gives meaning to your management. The purpose that you want to achieve with your stakeholder engagement will vary with the sector or the industry and, of course, with your individual organization. However, the common purposes for a public sector organization will include.
- Development of policies
- Planning of shared services
- Planning travel
- Initiative towards the environment
- Development and encouragement of curriculum
- Arranging campaigns of health care
- Risk protection
The purpose of a retail sector organization will include
- Development of the product
- Refining the line of product
- Issuing special offers
- Planning new retail outlets
- Working on pricing strategy
- Working on the improvement of service levels
- Working on the store interiors and its interiors
These purposes can help you use the list of these stakeholders and manage their involvement in the venture in the best possible way. Making them work together, showing how considerate they are, and keeping them informed or satisfied completely depends on how interested, active, and influential the stakeholders are.
Choose the right tool to communicate with them.
Now that you know your stakeholders and how interested who is, and you also know your purpose of their involvement, you need to also know how to communicate with them. You need the right tool here. In this digital era, you need to make sure you choose the right digital tool to communicate with your stakeholders. Now to engage with each group of stakeholders we recommend you to create a map. Create a map with 4 blocks of stakeholders according to their priorities. And on the map, jot down the types of engagement and the types of communication you would want to use to inform or engage the stakeholder. Remember, for every lot according to their priorities; you will choose the right way to communicate with them. Also, the level of engagements will be different for each group.
Create a plan of action and also activate the plan
Once the stakeholder analyses are done, you then need to focus on the key personnel associated with them; besides knowing the key people, you also need to know their level of interest along with their importance. This is the best way to interact effectively with the stakeholders, especially in planning proactive communication. In your plan of action, you will also identify the obstacles you might face while executing business and communication plans. Your next step will be to serve and to eliminate or minimize the cropping up of these obstacles. Identification of problems is not an easy task; you need to practice it to identify and remove them. These problems can be:
- Missing knowledge and information
- Planning and decision making with less engagement
- Not informed to participate
- Not available due to other responsibilities
- Unavailable due to location and duration
- Does not agree with the changes and the proposition
- Inefficient skills
- Conflicts with the other stakeholders
- External provider with no formal agreement in place
- Potential doubts of the stakeholder
Based on the stakeholder’s position on the map, you can communicate with them. Now that you are aware of their obstacles you can face, you need to get the right information and the right solution for the same. You can now activate your plan by
- Communicating with them about their matter of interest
- Gaining information relevant to the project
- Managing the expectations of the stakeholders again according to their priorities.
- Involving them in the all-important decision.
Managing the plan and monitoring it
Once you set any plan managing it and monitoring it is extremely important. You can assess each stakeholder’s position and check on their requirements and if the process needs any action. Keep on checking their determination and commitments, and check if you require adding a management plan. Check on how well are the stakeholders managed. Focus on front and performance management to understand what amendments and adjustments need to be made. Take feedback from stakeholders; it will help you understand the situation and the additions and subtractions you need to make. Once all the processes are in place, and once all the stakeholders have been allotted their jobs and duties, you must continue to monitor the processes if important apply management process all over again.
Here are some articles that will help you to get more detail about the Stakeholder, so just go through the link.
- Types of Communication
- Competition Level
- 12 Major Principles of Brand Management
- Funding Requirements