Effective management of relationships with stakeholders is crucial to resolving issues facing organizations. By using their influence, stakeholders hold the key to the business and social environment in which your organization operates and therefore its subsequent financial and operating performance. Thus the effective management of stakeholder relations should be an essential focus of organizational activity.
A stakeholder is any person, group or organization who can place a claim on an organization’s attention, resources or output, or is affected by that output. They have a stake in the organization, something at risk, and therefore something to gain or lose as a result of corporate activity.
And don’t call it stakeholder management! We can’t actually manage stakeholders. That term is quite misleading. We can only manage the relationship with them.
The aim of stakeholder relations management is to influence stakeholder attitudes, decisions, and actions for mutual benefit. Stakeholders need to gain from the relationship or they may not be sufficiently motivated to cooperate. A skillful approach is required to balance as much as possible the interests of all parties involved. Thorough planning will build you the balance you are seeking.
The benefits of using a stakeholder-based approach are:
The first steps in stakeholder relations management are to identify and prioritize stakeholders.
List the people, groups or organizations who are affected by your project, who have influence or power over it, or have an interest in its successful or unsuccessful conclusion. Stakeholders can be assessed systematically according to criteria such as influence, impact and alignment. For example, these questions can help assess their relevance:
A very good way of finding the answers to these questions is to talk to your stakeholders directly – tactfully of course! They can be internal or external. Research reveals the most important stakeholder group. You can help the thoughts of stakeholders by asking them questions through a process of facilitation. People are often quite open about their views, and so asking them is often the first step in building a successful relationship. Seeking their advice is another good way to strengthen your relationship and add value from their input.
You may now have a long list of people and organizations that are affected by your work. Some of these may have the power either to block or advance your activities. Some may be interested in what you are doing; others may not care. Having identified your main stakeholders, you need to decide which of them are the most important. With limited resources, you should only deal actively with the most important ones.
Stakeholders can be prioritized numerically in a matrix showing a weighting of their importance, for instance out of a score of 10, against each of the most important factors relevant to a particular issue, also weighted out of 10, or a set of factors most important to the organization overall. These are discussed in my article, “How to calculate the value of stakeholders.”
Photo by Christina @ wocintechchat.com.
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