What is Stakeholder Management?
Stakeholder management is the process by which you organize, monitor and improve your relationships with your stakeholders.
It involves systematically identifying stakeholders; analyzing their needs and expectations; and planning and implementing various tasks to engage with them. A good stakeholder management process will be the means through which you are able to coordinate your interactions and asses the status and quality of your relationship with various stakeholders.
Most definitions of stakeholder management tend to focus around the idea that you can “manage your stakeholders (in order to get them to do what you want)”. The emphasis is placed on creating a stakeholder management plan that maps the level of interest and influence of stakeholders and list various levels of engagement for the different groups. A plan that is usually created at the start of the project and then filed away to gather dust.
This guide takes a different focus. We’re not going to show you how to herd sheep, put them in neat little pens and then pretend that they are all heading in the direction you want.
In most cases there is a legal and a strategic objective to undertaking stakeholder engagement/consultation/management. You might have a statutory or legal requirement to consult. And you hopefully have a clear idea of the strategic benefits you might derive from doing it well. This guide will show you how you can achieve both those objectives.
Interested in learning more about what stakeholder management actually is? Check out our Introducing Stakeholder Management Guide for a closer look at what it is, who does it and other terms you should know.
Why is Stakeholder Management Important?
A vital part of running a successful project is to develop and maintain good relationships with those communities who will be affected and other stakeholders.
Investing time in identifying and prioritising stakeholders and assessing their interests provides a strong basis from which to build your stakeholder engagement strategy. An in-depth understanding of your stakeholders supported by a sound engagement plan that is strategic, clear and prioritised help you develop and maintain relationships with those affected, mitigate risks, align business goals and eliminate delays.
In these days of increasing legislation around protection of privacy and the right to information, it is even more critical that an organisation or project has a clearly defined Stakeholder Management plan and protocols in place. The risks of not taking a systematic, controlled approach to stakeholder management are high and increasing along with community expectations.
Benefits of Stakeholder Management
Companies that have grasped the importance of actively developing and sustaining relationship with the affected communities and other stakeholders are reaping the benefits of improved risk management, increased stakeholder support, and better outcomes on the ground.
Good stakeholder management also brings in ‘business intelligence’. Understanding stakeholder concerns and interests can lead to ideas for products or services that will address stakeholder needs; and allow the company to reduce costs and maximise value.
- Competitive advantage
- Corporate governance
- Risk management
- Social license to operate
How to Create a Stakeholder Management Plan
A Stakeholder Management Plan is a document that outlines appropriate management strategies to effectively engage stakeholders throughout the lifecycle of the project, based on the analysis of their needs, interests and potential impact on project success.
Be strategic and clear about whom you are engaging with and why, before jumping in. It not only helps save time and money, but also helps manage expectations and gain trust.
Questions to be asked before developing the plan:
- What are the strategic reasons for consulting with stakeholders at this stage?
- Who needs to be consulted?
- What are the priority issues (for them and for you)?
- What will be the most effective methods of communicating with stakeholders?
- Who within the company is responsible for what activities?
- Are there any other engagement activities that will occur in the proposed timeframe (perhaps with other sections of your organisation)?
- Are there opportunities to collaborate to ensure key project messages are consistent and avoid consultation fatigue?
- How will the results be captured, tracked, reported and disseminated?
Complete our template for building your own Stakeholder Engagement Plan
Want a better understanding of the whole stakeholder management process? In our Introducing Stakeholder Management Guide, we share 5 steps to managing stakeholders (the stakeholder management plan is step #3).
Understanding your Stakeholders
The key to a successful stakeholder engagement or public consultation program is to start with a good understanding of your stakeholders. And make sure you are testing and refining that understanding throughout the process.
- What other information can you collect on stakeholders that will help you understand their needs, priorities, preferences and concerns? Consider:
- Demographic data – make sure you are engaging with a broad cross-section of the community and stakeholder groups
- Social networks – focus on the important, yet often undocumented, social connections between stakeholders
- Stakeholder Mapping (see section below)
- Salience model – examine the power, urgency (need for immediate action) and legitimacy (appropriate stakeholders) and the interaction or groups of stakeholders this creates
- Identify Stakeholder expectations and compare them with the scope and expectations of the project or organisation for which you are running the engagement program. Is there a gap or mismatch of expectations and how will these be managed? Also consider:
- What information do they want from you, how often, and in what format/channel?
- What financial/social/emotional interest do they have in the outcome of your work? Is it positive or negative?
- What are the key motivations that will drive their perceptions of your project or organisation and their interactions with you?
- What is their current opinion of your organisation and project? Is it based on good information?
- Who influences their opinions, and who they influence in turn?
How to Select the Right Stakeholder Management Software
Trying to decide between a CRM (Customer Relationship Management) product and a SRMS (Stakeholder Relationship Management System) can be tricky if you haven’t been exposed to any of these types of software before. You may not be sure if you need a stakeholder database or what the difference is between the various consultation tools out there. Or perhaps you’re wondering if you should stick to Excel as it’s worked well for you in the past? How about all the fancy new products popping up all over the place, focusing on one type of consultation, be it mapping or online forums, where do they fit in?
The flowchart below can help you navigate through some of the basic considerations in selecting the right tool for your needs.
A few brief points of explanation:
- Qualitative analysis refers to the need to analyse and report on text-rich data such as responses to open text questions in a survey, or formal submissions
- We’ve distinguished between Basic SRMS which don’t offer true qualitative analysis and more Advanced SRMS that have specific functions and reports for qualitative data
- We’ve distinguished between a CRM and SRMS in terms of how well each can track and analyse the content of interactions with
CRMs versus SRMs
Customer Relationship Management (CRM) Software
CRMs are generally designed around a sales process, which is fundamentally quite different to an engagement process.
If you want to manage your engagement and understand your stakeholder’s needs, concerns and feedback, using a CRM is going to make things trickier, if not impossible.
There is a big difference between customers and stakeholders!
For a start, customers are people who receive or consume products and can choose between different products and organisations. Not people who are affected by, have an interest in, or the ability to influence a project – i.e. your stakeholders.
It is also important to note that customers generally have to be interested in the product for it to impact them; whereas stakeholders don’t have to be interested in your project at all. And even if they are interested, they might not even have a say in the project – a whole new can of worms…
The approach of how you engage and build stakeholder relationships will differ from the process of engaging with customers.
Have a look at the primary stages of the Sales Process below:
As you can see the sales approach of tracking people through stages in a sales pipeline isn’t the same as a stakeholder engagement process.
CRM software was developed specifically to cater to the sales steps and is not adept at conforming to the management of your data.
Stakeholder Relationship Management (SRM) Software
Stakeholder Relationship Management (SRM) software is designed specifically for community and stakeholder engagement.
While both a CRM and SRM can track stakeholders and their contact details well, an SRM is also designed to track and analyse the purpose and content of the engagement with the stakeholders. A CRM is designed around tracking where a contact is in a sales pipeline. A SRM is designed around understanding the engagement with the stakeholder – what they are saying to you, their needs, priorities and concerns.
An SRM like Darzin gives you the organised, segmented, up-to-date list of your stakeholders, as well as the ‘one source of truth’ visibility of all of the interactions anyone from your team is having with your stakeholders.
With an SRM you can log essential questions about the stakeholder engagement activities – Who’s been contacted about a particular issue? Where and when did consultation events take place? What were the results?
But more importantly, you can commence with qualitative analysis and advanced reporting on your engagement activities. You’ll always have your finger on the pulse of your stakeholder relationships and engagement!
The video below gives you a little insight into how Darzin handles some of the core tasks of Stakeholder Management.
If you’d like to see more of Darzin or learn about our approach to Stakeholder Management, please get in touch. We’d be happy to give you a demo of the software, or even just have a chat about your Stakeholder Management issues.
Stakeholder Analysis involves four key steps:
- Identify your stakeholders
- Analyse their needs, interests and preferences
- Map (visualize) the relationship to other stakeholders and key criteria
- Strategize how you will prioritize and approach either individual, organisation or group of stakeholders.
“Stakeholder Mapping” is a term often used to describe the process of assigning values that shape priorities and strategies for each stakeholder based on their ranking against some set criteria. Sometimes stakeholders are simply assigned a rank against each criteria. Often they are plotted on a matrix to provide a visual depiction of the range of stakeholders in your program.
There are a number of standard frameworks used for Stakeholder Mapping. It is a part of Stakeholder Analysis that many organisations do, particularly for their strategic stakeholders.
Stakeholder Mapping usually involves rating a stakeholder on the following criteria:
Most people use a High-Medium-Low ranking or a 1-5 rating system for each of these criteria. Stakeholders are then plotted on a grid of Influence/Interest or Influence/Impact.
After you have ranked your stakeholders or plotted them on these matrices, you need to consider how this information will influence your engagement plan and strategy.
Another popular model for Stakeholder Mapping – the Power/Urgency/ Legitimacy model from Mitchell, Agle and Wood is used to anticipate stakeholders behaviour.
- Power – to influence the organisation
- Legitimacy – of the relationship and actions with the organization in terms of desirability, properness or appropriateness.
- Urgency – of the requirements being set for the organisation. In terms of criticality, time-sensitivity for the stakeholder
Stakeholders that fit into area 1, 2 or 3 are called Latent Stakeholders. With only one of the three characteristics they are considered less critical for success. Stakeholders in areas 4,5 or 6 are called Expectant Stakeholders. These stakeholders often have a direct financial stake or impact from your project. The stakeholders that have all three characteristics in area 7 are called Definitive Stakeholders and would generally take top priority.
We’re not advocating that you follow any of these models in a prescriptive fashion. For example a “latent” stakeholder could easily derail your project if they get enough traction on social media for example. The power-influence relationships are shifting, particularly with the easy access to social media, the higher community expectations and risk-averse nature of governments when it comes to political damage. Instead we see them as a useful way to understand your stakeholders and ensure that your strategy and engagement plan adequately caters to all stakeholders’ needs.
At Darzin, we take a multi-dimensional approach to Stakeholder Mapping. Some of the ‘industry standard’ grids are a bit dated and don’t take into account shifting power relationships and stakeholder expectations. Our approach to stakeholder mapping includes:
- Segmentation based on interest and function
- Mapping connection between stakeholders
- Custom fields to track additional information such as demographics
- Mapping Stakeholders on a scale from very low to very high for the criteria of:
- Influence – the level of influence a stakeholder has over the project
- Interest – the level of interest a stakeholder has on the project
- Impact – the level of impact the stakeholder has on the project
Depending on how relevant these mapping fields are for your organisation, they can also be used to measure the level of influence, interest and impact your project has on the stakeholder.
- Criticality – how important is it to engage with this stakeholder?
- Position – what is their current sentiment towards your project?
- Effort – how much time and energy are you expending to engage with the stakeholder?
Importantly, we also track how these stakeholder mapping values change over time.
If you’d like to know more about the Darzin approach to Stakeholder Mapping, get in touch with one of our team.
Best Practice Stakeholder Management
Having clear, well documented processes for your Stakeholder Management are getting more important with increasing legislation and concerns around privacy and use of personal data.
Some key priciples of best practice Stakeholder Management include:
- Compliance – if you are working in or providing services to the European Union and the United Kingdom you must take particular note of the GDPR requirements that came into play in May 2018. Most other countries have increasingly tightened requirements for:
- What data you can legitimately collect and store
- How you seek permission for collecting that data
- How you use that data – is it for a legitimate purpose and consistent with the reasons you gave for collecting the data
- Where you store that data (and where the team accessing your data for providing support services is located)
- What security measures you have in place to protect that data
- Making it easy for the public to request a copy of the data you store on them, and providing it in a machine-readable format.
- Comprehensive – ensure that your stakeholder lists adequately represent the whole range of stakeholders. Your needs assessments and engagement programs are all dependent on you having up-to-date and representative stakeholder lists.
- Transparency – what you are collecting, why, and what you will use the data for
- Collect the right information at the right level of detail
- Honest about purpose – seek permission to collect information (including when you are tracking social media)
- Segment into groups by interest, needs, stakeholder mapping fields of influence, interest, impact
- Use segmented stakeholder lists to provide a more relevant ‘customer experience’ for your stakeholders.
- Evaluate frequently
- Audit your data management processes frequently
- Seek feedback
- Fair metrics
Easy Ways to Improve Your Stakeholder Management
Shared stakeholder lists
Getting a shared, up-to-date contact list that can be worked on by multiple people simultaneously is often a big win for an organisation that has been managing their stakeholder lists in multiple spreadsheets. Just knowing that you have access to the ‘latest’ and most up-to-date list can be a huge time saver. (Be aware of privacy and other legislation around the use of personal information – make sure you are still compliant with the legislation in your country).
Collect the right information right from the start
If you have a sign-up form on your website for example, make sure you collect all the fields that you have decided are important to track. This will save you time, and also give you much richer information on a stakeholder, than just their name and email address. Of course you do need to balance out having an onerously long form to fill out vs making it quick and easy for people to sign up.
Does your stakeholder management software make it easy for you to ‘clean’ up your data? Look for duplicate stakeholder records for example and merge them.
Better yet, if your system allows for sophisticated sharing of stakeholders across projects, you should have much cleaner, easier-to-manage stakeholder lists.
One way to vastly improve your engagement activities is to group and analyze your stakeholders to examine key factors including demographics, level of relevance, influence, impact and interest.
Through stakeholder mapping and categorisation, you will be able to gain a good understanding of your stakeholders and will be able to gauge your engagement and ensure you are targeting people who are relevant, influential, impactful or of interest to your project.
Influence, Interest and/or Impact
Establishing a level of interest, influence and/or impact will enable you to interact more efficiently with a particular stakeholder.
To measure the possible influence of your stakeholders, identify their level on a scale from high, medium to low:
- High: Stakeholder with strong ability to impact your project.
- Medium: Stakeholder with a significant interest in, but a lower level of power to affect the project.
- Low: Stakeholder with little ability to affect the project.
A well-functioning grievance mechanism provides a transparent, credible, and fair process to all parties. It enhances outcomes and gives people the satisfaction that their complaints have been heard, even if the outcome is less than optimal.
A good complaint handling process helps build trust as part of the broader community relations activities and contributes to the overall success of the company’s social performance.
When creating your stakeholder management plan and deciding on what activities you should include, think outside the box — and consider new, tech-enabled methods that may not have been previously available. Get inspired by looking at our latest case studies or check out some ideas on how to create a One-Page Stakeholder Plan in Simply Stakeholders’ Latest eBook
Get in touch
We’re always happy to share our knowledge and expertise. Get in touch and let us know what you think of the resources on this page. If you are interested in some advice, having us create more useful resources, or to find out more about the terrific software we have created for public consultation, please get in touch!