Stakeholder engagement is one of the critical components that affect project performance. Stakeholder management strategies are essential for business and project leaders to ensure the best possible project outcomes and more businesses are investing in their stakeholder management processes. The benefits are clear, with 63% of companies already having a stakeholder engagement strategy.

A thorough understanding of stakeholder management can change how you interact with your team, boost stakeholder satisfaction and allow you to access valuable input to drive your project forward.

What Is Stakeholder Management?

Stakeholder management is coordinating, analyzing and enriching your relationship with your stakeholders. The process involves:

Identifying all relevant stakeholders.
Analyzing their needs and expectations.
Determining the best strategy and protocols to engage with them.

An effective stakeholder management process allows you to assess the quality of your stakeholder relationships and coordinate your interactions to strengthen these relationships and benefit from integrating their diverse knowledge and perspectives. Stakeholder management in change management is a powerful tool. With an effective stakeholder management strategy, you can communicate changes effectively and consult your stakeholders on the best implementation.

You often have a legal obligation to engage with your stakeholders. However, stakeholder management has significant strategic benefits beyond regulatory compliance. Taking the time to assess and engage with your stakeholders ensures that everyone knows the project objectives and can provide the appropriate input to ensure success.

What Are the Benefits of Effective Stakeholder Management?

Stakeholder management is essential to any project. Having a strategy in place has significant benefits, some of which include the following:

Greater predictability: Working with your stakeholders can help prevent surprises, such as stakeholders exerting their influence without your knowledge.
Increased engagement: A stakeholder management strategy ensures you know how and when to engage with all your stakeholders, collecting valuable input and increasing cohesiveness throughout your project.
Enhanced awareness: Managing your stakeholders provides them with methods to communicate their needs. An increased understanding of your stakeholder's wants and concerns means you have actionable information on impediments to your progress.
Better focus: Open channels of communication with your stakeholders in the form of input and better feedback ensures you focus your efforts on the elements of the project with the most significant overall value.
Improved communication and collaboration: When you understand your stakeholders' roles and preferences, you can communicate more effectively and manage their expectations to boost stakeholder satisfaction. Through communication and leadership, you can develop healthy relationships with your stakeholders by addressing the issues that matter most to them.
Exceptional results: A robust stakeholder management strategy optimizes your time, fosters collaboration and delivers optimal results.

Why Is Stakeholder Management Important in Leadership?

Stakeholder management in leadership is vital to ensure a detailed and shared understanding of organizational objectives and individual project goals. Establishing trust and strengthening interpersonal relationships with stakeholders fosters strong risk management practices. It also allows leaders to identify and manage any conflicts between stakeholders.

Lack of stakeholder involvement can result in several undesirable outcomes, like failure to meet deadlines and lack of cohesiveness. As a leader, your collaboration focus filters down through your team and the rest of your organization, creating an influential leadership culture focused on attaining your business and strategic objectives.

The Stakeholder Management Planning Process

The following steps can simplify the process of stakeholder management for you and your team:

1. Ascertain Who Your Stakeholders Are

Before you can manage and lead a project, you must identify anyone your project impacts positively or negatively. Lead your team in a brainstorming session and take the following elements into consideration to ensure you have a comprehensive list:

Any individuals interested in your project
People who support your project's objectives
Anyone who has power over your project processes or outcome
People who are investing in your project
Anyone who stands to benefit
Those who feel negatively about your project or would benefit from its failure
Teams you will be working with throughout the project
Silent stakeholders who may not be directly involved in communications but still observe your project's progress

2. Analyze and Categorize

Categorizing your stakeholders is also known as stakeholder mapping. Based on Mendelow's power interest grid, you can map your stakeholders into the following four quadrants:

High power, high interest: Stakeholders who influence your project's outcomes require your full attention as the project leader. This quadrant should include your investors, sponsors and other business leaders.
High power, low interest: This quadrant should comprise stakeholders who are not directly interested in your project but can still incidence the outcome.
Low power, high interest: While this group has increased interest in your project, they can't affect its outcome.
Low power, low interest: This quadrant should comprise stakeholders without direct influence or interest in your project, such as people working in a different department. They may be interested in the outcome but aren't actively involved.

3. Gain a Deeper Understanding

Once you know how all your stakeholders could impact your project, you must determine their needs and what they hope to gain. Delve deeper into your stakeholders' stand regarding your project — do they support or object? Also, consider those who are neutral, undecided or whose support is conditional.

It's essential to identify what motivates them. A financial interest may inspire some, but others may have social, personal, environmental or emotional interests. The more you know about your stakeholders, the better you can engage them with focused communication, facilitating stronger relationships.

4. Create a Communications Plan

Effective communication is the key to solid relations and ultimate success. Use your stakeholder profiles to identify the best approach to engage your stakeholders. Consider the channel best for your goals, message and stakeholder preferences and determine your communications frequency. A detailed communication plan ensures your stakeholders receive constant updates on your project's status so they know you're progressing toward your projected outcome.

5. Engage

Choose an appropriate communication approach based on each stakeholder, first focusing on the high-power, high-influence group. Use your most engaging communication strategies for this group, like in-person meetings. Phase down from there, so you can target larger, less influential groups through channels like email.

6. Monitor and Review

You must monitor your stakeholders consistently to ensure your leadership style and management processes remain effective. Identify any changes in opinion or challenges your stakeholders face. With robust monitoring, you can ensure you identify opportunities for improvement, meet your stakeholders' changing needs and provide constant support.

Stakeholder Management Principles

Stakeholder management is a significant undertaking. As a leader, you should follow robust stakeholder management principles to ensure you approach your stakeholders professionally. The basic stakeholder management principles include the following:

Communicate: Poor communication is often the primary reason projects fail. In stakeholder management, communication is a two-way street. Gathering information about your stakeholders is as important as communicating with them.
Consult: Your stakeholders all have value to add to your strategy. Start consulting early and often to ensure you and your stakeholders have the same goals.
Understand: Stakeholders are people with changing moods, opinions and plans. Understanding what drives stakeholder behavior allows you to adopt processes sensitive to their concerns and determine the best approach to creating a constructive relationship.
Plan: At its core, stakeholder management is about planning. Taking a deliberate approach to communication is critical to achieving the best possible results.
Cooperate: Relationship development is fundamental to building trust. Invest time in building stakeholder connections.
Manage: Stakeholders can add value and represent risk. Identify potential risks early and take the appropriate steps to minimize them.
Compromise: Having multiple stakeholders means you must manage their different goals and expectations. Find a middle ground concerning stakeholder relevance.

How Leadership Pipeline Institute Can Help With Your Leadership Needs

Stakeholder management requires strong leadership and strategies to ensure the best outcomes. As the founders of the leadership pipeline model, Leadership Pipeline Institute is uniquely positioned to meet your leadership and stakeholder management needs. Our customizable, leadership-focused programs can help leaders and project managers at all levels build complete leadership and specialist pipelines and ensure your stakeholder management facilitates your success.

Contact us to learn more about how Leadership Pipeline Institute can help you exceed your stakeholder management goals today.

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