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University of Sunderland

Stakeholder engagement: why is it important and how is it achieved?

Posted on: June 12, 2023
the word stakeholder wooden cubes with burnt letters, business development in favor of shareholders gray background top view, scattered cubes around random letters

We’ve all been involved in projects that didn’t run smoothly. Perhaps the team was working off unreliable data. Maybe the resources or budgets were insufficient. It could be the case that it  wasn’t the right time to take a product to market. Or  individuals involved in the project weren’t aligned in interests, approach, or desired outcomes.

This is a common challenge encountered by project managers. According to research conducted by Geneca, only 23% of stakeholders and project managers are in agreement when a project is completed. As project stakeholders are required to ensure overall success, it can be catastrophic when there are breakdowns in communication, agreed approaches and consensus regarding project objectives.

Is it possible to guarantee project success? How can stakeholder influence be appropriately managed? Is there an ideal stakeholder engagement strategy?

What is stakeholder management?

Organising, monitoring and maintaining good relationships with stakeholders is a critical aspect of project management. This process of juggling various stakeholder groups and handling their competing perspectives, priorities, expectations and ambitions is known as stakeholder management.

Who counts as a stakeholder? 

Stakeholders are individuals or entities who are affected by, have influence over, or are interested in the outcome of a business and its work. As such, who exactly the stakeholders are will vary from business to business.

Generally, key stakeholders fall into two categories:

  • internal stakeholders: team members, management, shareholders and board of directors
  • external stakeholders: customers, distributors, competitors, investors, suppliers, trade associations, industry regulators, and unions

In order to design a successful project, stakeholder management must be built into the project plan.

What are the benefits of good stakeholder management?

Managing the needs and expectations of stakeholders is foundational to project success. They play a number of critical roles in business ventures and, depending on the level of power they possess, can influence decisions and methodologies related to the project for both good and bad.

Effective stakeholder management will not only make your life much easier over the duration of a project, but also brings with it numerous benefits:

  •   reduced conflict and risk
  •   increased stakeholder engagement and project support
  •   increased clarity of role and focus
  •   better communication and collaboration
  •   increased opportunities
  •   increased competitive advantage
  •   better overall project outcomes

With this in mind, taking the time before a project launches to identify, prioritise, and assess your stakeholders will pay dividends.

Developing a stakeholder management plan

A project or venture that gets off to a positive start is more likely to remain positive across its lifecycle. A solid stakeholder management plan helps to ensure business and stakeholder goals are in alignment, facilitating smooth progress and goal achievement. Any plan will be unique for each business, and developed in line with a company’s purpose and stakeholder priorities. Here’s an example of a stakeholder management plan and approach:

  1. Stakeholder identification. Who are the key stakeholders in the project team and what are their needs and requirements? This initial classification and information-gathering stage is known as stakeholder analysis.
  2. Understand the role and impact of each stakeholder. You’ll need to assess their role in the project and their impact on the project’s execution and overall success. Ideally, you would meet with each stakeholder individually and determine their interests and influence.
  3. Identify priority stakeholders. Determining the relative influence and interest levels of each stakeholder helps you understand who the key decision-makers are and where resources are best allocated.
  4. Develop a stakeholder communication plan. Ensuring all stakeholders are up-to-date, on track, and feeling informed is key to project momentum and progress. Work out how to document and relay project communications, taking into consideration frequency, format, communications owner, participants and the final deliverables. Reporting back to stakeholders and establishing – and then adhering to –  agreed modes of communication is key.

Strategies for handling different stakeholders

How do you maintain good relationships with stakeholders?

CIO– experts in business strategy, innovation and leadership– believe great stakeholder management comes down to three core values: clarity, transparency and inclusivity.

Clarity across the board is essential, and refers to communication, roles, expectations, approaches and project activities. In short, it applies to all aspects of a project. Ensuring all aspects of the project are well-understood keeps those involved focused and accountable while keeping the project on track.

Transparency helps establish trust. Stakeholders who feel confused or distrustful, will be highly detrimental to progress and alignment. Project managers who act transparently – and are clear and open about their intentions and the ways in which they operate – make it easier for individuals to decide whether they want to be involved in a project or not.

Inclusivity demands fairness across the board, across the entire project, and its participants. Stakeholder interests are not the only variable; backgrounds, beliefs, experiences and opinions will all vary as well. Inclusivity is therefore critical, especially with increasingly remote, distributed ways of working.

Additionally, stakeholder theory suggests project managers should also ensure they:

  •   manage stakeholder expectations and practise open communication and messaging consistency
  •   establish rapport and build trust into partnerships
  •   take time to listen to and understand stakeholder needs
  •   work cooperatively and recognise the interdependence of efforts
  •   deal with conflicts in a timely and sensitive manner – don’t ignore or avoid problems
  •   acknowledge that stakeholders may be subject-matter experts in their areas
  •   leverage a stakeholder relationship management platform, where appropriate
  •   use evidence, data and insights, where relevant, to explain decisions and approaches.

Develop your skills in stakeholder relationship management. 

Develop the expertise and skills to excel on the international business stage – and learn how to manage stakeholder relationships to the benefit of your ventures – with the University of Sunderland’s online International MBA programme.

If you’re ready to take the next step in your career and progress into senior leadership roles, our flexible course can help you achieve your goals. Your learning will have cross-industry, real-world application, from handling complex workplace challenges, to navigating fast-paced environments, to developing your strategic decision-making skills. Blending the theoretical with the practical, your studies will cover topics such as leadership and management strategy, international marketing and trade, organisational behaviour, corporate strategy, finance, and more.

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