The PMI Training Series: Understanding the 5 Steps to Stakeholder Management
Businesses are run by their employees and owners, but primarily pushed by people who have a vested interest. People who want to see it succeed and hit new heights. Such people are referred to as stakeholders.
Stakeholders are directly or externally involved with a company. They may have invested their money, as well as time and dedication, in the company. Their only expectation is that their investment bears fruit. These people can be investors, shareholders, employees, suppliers, or even the government of the country in which the company operates.
Building new relationships and keeping stakeholders happy is paramount for any company that expects to grow and move its business forward. It is what management training such as PMI training will help you prepare for.
Let us discuss some of the management techniques that will allow you to have a strong relationship with the stakeholders.
Identify the Stakeholders
In this first step, you have to analyze your corporate environment and see who your stakeholders are. Who are the people who have something to gain if the company flourishes? There are primarily two categories of stakeholders: internal and external.
Let’s talk about internal stakeholders first. These are the people closest to the company. They have a direct connection in terms of how significant their contribution is and how high an interest they have in seeing the company succeed. Internal stakeholders, such as, board members, CEO, and executives of the company have direct influence over the company’s policies and operations. They are directly responsible for the decision making process.
The other kind of stakeholders are external stakeholders. They are not directly connected to the company in terms of their investment, but they are affected by the company’s operations. Hence, they have their own interests. Suppliers, customers, governments, and communities are all external stakeholders.
Prioritize the Stakeholders
Once you have identified who your stakeholders are, you will have to prioritize them. Analyze who they are, how close their relationship is with your business, and what kind of interest they have in it.
Not every stakeholder is invested in a company the same way as the other, both financially and mentally. A shareholder, an executive, and an employee of the company have a direct relationship with the company. These are the people who have the highest interest.
A CEO wants to see his organization succeed so that it can stay afloat and grow as a business. The investors are people who invest financially and back the idea of the company. While they do not have a hand in the day-to-day operations, seeing the company succeed so that their investment brings a return is what makes them a high priority stakeholder.
The employees are directly involved and have a high interest in any organization because that is their source of income.
Categorize your stakeholders by: High Power, High Interest – High Power, Low Interest – Low Power, Low Interest – Low Power, High Interest.
Create a Management Strategy
After you have categorized the important stakeholders and the not-so important stakeholders, it is now time to establish a management strategy. In this step, you will decide what form of communication you will choose to keep the stakeholders informed.
As we discussed, stakeholders will be prioritized based on their influence and interest in the company. A person with low priority does not need the best form of communication, and of course, your dedication. Hold board meetings, project review meetings, and timely reports to keep the internal stakeholders informed about upcoming projects and progress of current projects. For external stakeholders, use lesser forms of communication like emails.
Create a Feedback Loop
Investors put their money in a business because they see potential. They do not have any other motive. It is important to understand where they stand as critical stakeholders of the company. Often times, the company’s ambitions, strategies, and milestones do not resonate with stakeholders.
The people running the company are highly skilled with immense knowledge of their products and target audience. They are there because of their passion to build the company, and the product, in their own image. The stakeholders may not see that.
Because of that, gathering the mood and general sentiment from your high prioritized stakeholders is necessary. Take timely feedback from them. Try to adopt or change a few things to their liking. In the case of a startup, the CEOs may be new to running a large scale company. So it’s best to keep high prioritized stakeholders such as investors in the feedback loop, especially for financial guidance.
If the feedback is not what seems to be in the best interest for the vision of your project, then elaborate your vision extensively. Make them understand why the project should be done a certain way.
Execute and Monitor Management Plans
Now that you have identified and analyzed all the stakeholders and their behavior, you can move forward with the management plan that you sketched. You will be monitoring the execution of the plan and the progress of your stakeholders.
External stakeholders such as suppliers may run into problems. This is one of the examples of how your stakeholders will need attention from you. It is crucial that there is an action plan in anticipation of such problems.
If there are changes made to a project, then the relevant stakeholders must be informed immediately. Monitor their reaction to the changes and collect any feedback from them. Use the feedback to make amendments, if necessary. Any large scale operation needs to keep a close eye on the state’s laws and any new amendments that could hamper the business model.
As a manager supervising the stakeholder management process, you will have to keep everyone happy. As discussed, high value stakeholders are the most important ones. It is through them, that much of the dream to grow as a business exists. Training programs such as PMI training offer the same advice to corporations.