Stakeholder management is identifying, analyzing, and managing the interests and expectations of those individuals or groups who have a “stake” in the outcome of a project or initiative. We’ll learn more about the importance of stakeholder management in leadership and how it affects a business through this blog. If you wish to explore more concepts about leadership, you can also enroll in Great Learning’s Future Leaders Program and upskill today.
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- What is stakeholder management?
- Why stakeholder management matters to your business
- Importance of stakeholder management in leadership
- Steps involved in stakeholder management
- Closing thoughts
What is stakeholder management?
The first step to good stakeholder management is understanding what a stakeholder is. A stakeholder is anyone who has a vested interest in the success or failure of your project. This includes the project sponsor, the project team, senior management, customers, and anyone else who will be affected by the project’s outcome.
Once you have identified all stakeholders, the next step is to assess their level of interest and influence. This will help you to prioritize your communications and engagement with each stakeholder. For example, a project sponsor will have a high level of interest and influence. In contrast, a low-level stakeholder may have a low level of interest but a high level of influence.
Once you have identified and assessed all stakeholders, the next step is to develop a communication and engagement plan. This plan should include how you will communicate with each stakeholder, what information you will share, and how often you will engage. Stakeholder management is an important part of any project.
By taking the time to identify, assess, and engage with all stakeholders, you can ensure that everyone is aware of the project and its objectives and that everyone has a chance to provide input and contribute to the project’s success. Now that you have a basic understanding of stakeholder management let us learn more about why we shouldn’t ignore this aspect as leaders.
Why stakeholder management matters to your business
What your stakeholders say about your company directly impacts the business. Diffusing any negative perceptions of your stakeholders is necessary as it can create a virtuous cycle. If we focus on important issues for the stakeholders, we can create goodwill and expand the business. Being proactive in environmental, social, and governance issues can help grow stakeholder capital.
Committing to sustainability, good governance, and CSR (corporate social responsibility) activities by being a good force to society can redeem companies to their stakeholders. Building trust with your stakeholders is essential as falling into their bad books can cause damage to the company. However, it should not be a PR exercise as there are several reasons why stakeholder management is important for businesses, such as:
- It helps businesses identify and understand the needs and expectations of their key stakeholders.
- It helps businesses develop and implement strategies to effectively engage with their stakeholders.
- It helps businesses build and maintain strong relationships with their stakeholders.
- It helps businesses resolve conflicts and issues that may arise between them and their stakeholders.
- It helps businesses ensure that their stakeholders are kept informed and updated on the latest developments within the business.
Importance of stakeholder management in leadership
The importance of stakeholder management in leadership is to ensure that all stakeholders have a common understanding of the goals and objectives of the organization and that they can work together to achieve these goals. Leaders must also be able to identify and manage potential conflicts between stakeholders.
Stakeholder management is important to leadership because it allows leaders to identify, assess, and manage the interests and expectations of those individuals or groups who have a vested interest in the organization or project. This includes understanding what each stakeholder wants and needs and how their expectations will impact the organization or project. Leaders must also be able to effectively communicate with stakeholders and build relationships.
Steps involved in stakeholder management
Let us learn more about the different steps involved in stakeholder management.
Step 1: Identify the key stakeholders
Identifying who the key stakeholders will be is the first step to starting the stakeholder management process. One of the obvious stakeholders would be your boss/manager. Look for individuals who would play a decisive role in the project or how the team runs during the project. The team would probably work alongside several others during the project. They also become part of the stakeholders. Cultivating a good relationship with all the stakeholders will help in effectively running the project.
During this process, don’t forget about the silent stakeholders who may not be directly involved in the communication but will watch and observe.
Step 2: Understand what the stakeholders want
Once you know the key stakeholders, you must figure out their needs or what they want from you. To do so, you must have an open conversation with them regarding the requirements. Be aware of the stakeholder’s needs and ensure that they are met promptly. Having conversations with the stakeholders will help both parties be in the loop of any progress in the project.
Step 3: Categorize your stakeholders
Classifying your stakeholders can help you interact with them effectively. They can be divided into different categories such as decision-makers, influencers, customers, providers, or interested stakeholders. Each of these has a different role and can affect your decision-making.
Step 4: Develop an approach for each category
Once we know who the stakeholders are and what category they belong to, we can create an approach that works best for them. If the stakeholders need to be informed, involved, or engaged, we can develop a different way of working. Informed stakeholders may require only communication to know what is going on through periodic updates. Involved stakeholders would take part in developing solutions or decision-making by being present during important meetings. Engaged stakeholders are a combination of the two and are the ones who would be closely involved in all the activities. They play a key or influential role in decision-making and impact the team.
Selecting an approach to work with each category of stakeholders will help make the process seamless. Be it through regular one-on-one meetings, email updates, or acquiring feedback, each stakeholder plays a different role in the process.
Stakeholder management is important because it allows organizations to identify and track individuals or groups interested in the organization’s success or failure. Additionally, stakeholder management can help organizations understand how different stakeholders perceive the organization and its activities. This knowledge can be used to improve communication and relationships with stakeholders.