Stakeholders are essential to any business, whether they be investors or customers. But what exactly is a stakeholder? That question has more than one answer. Let’s define a stakeholder, look at some examples of stakeholders, and look at some free stakeholder templates to help with stakeholder management.
What Is a Stakeholder?
A stakeholder is a person, group, or organization who is affected by the outcome of a project or business initiative. Stakeholders have an interest in the project’s success and can be from within or outside the organization that is supporting it. Stakeholders are crucial because their decisions can have a good or negative impact on the project. There are also crucial or key stakeholders who must support the project in order for it to exist.
A stakeholder is a person, just like any other project member, and some are simpler to manage than others. You’ll need to learn how to apply stakeholder mapping strategies to identify your key stakeholders and ensure you meet their needs.
Stakeholder vs. Shareholder
Stakeholders and shareholders are not the same thing. A stakeholder might be anyone who is impacted or invested in the project. A stakeholder, for example, can be the owner or even the shareholder. Employees, bondholders, consumers, suppliers, and vendors are all examples of stakeholders.
Stakeholders can include shareholders. A shareholder, on the other hand, is someone who has made an investment in a company. That corporation may launch projects in which the shareholder also has a stake. Simply put, shareholders are stakeholders as well, but stakeholders are not always shareholders. This is because a shareholder purchases shares in a public corporation and thereby owns a portion of it. A stakeholder is interested in the entire performance of the organization, not the performance of the stock.
Types of Stakeholders
Stakeholders might be anyone who has influence over the project or anyone who can be influenced by it. We’ve previously seen that there can be a lot of stakeholders, which we’ll go over further below. Internal stakeholders and external stakeholders are the two types of stakeholders. Let’s have a look at both of them.
1. Internal Stakeholders
Internal stakeholders are those who work within the organization. The project has a direct impact on them because they serve and are hired by the organization in charge of it. Employees, owners, the board of directors, project managers, investors, and others are examples of internal stakeholders.
2. External Stakeholders
External stakeholders are people who are not part of the organization but are affected by the project in some way. They are affected by the activities of the organization but are not employees of the organization. Suppliers, customers, creditors, clients, intermediaries, competitors, society, government, and others are examples of these people.
As mentioned before, there are different types of stakeholders, many of whom fit into the internal or external stakeholder categories. Let’s look at some of the more common stakeholder examples.
- Investors: These are shareholders and debtholders who are searching for a financial return. They have invested money in the company and expect a return on that investment.
- Employees: These stakeholders rely on their jobs and their job security. They have a direct stake in the organization since it supports and benefits them.
- Customers: These stakeholders want the project’s product or service, and they expect it to be of high quality and valuable.
- Suppliers and Vendors: These stakeholders’ revenue is linked to the project because they offer goods and services to the company in charge of the project. Success in the project means more business for them.
- Communities: These stakeholders are concerned that the project will have a negative impact on their health, safety, or economic development. Organizations based in their communities or working on projects in their communities can have an impact on creating jobs, spending, and other factors.
- Government: A project generates taxes and gross domestic product for these stakeholders. They are significant stakeholders because they collect taxes from both the corporation as a whole and from each individual employee.
A stakeholder, like any other project member, is a person, and some will be simpler to manage than others. To know the project goals you’ve been recruited to fulfill, you’ll need to learn to deal with a variety of personalities and maintain a positive relationship. But first, who exactly is a stakeholder?
How to Manage Project Stakeholders
Managing stakeholders is simple if you follow the proper stakeholder management procedures. Here are the measures that any project manager should take while dealing with stakeholders.
1. Stakeholder Identification
Identifying the stakeholders in your project is critical because the success of the project depends on it. If your stakeholder is dissatisfied, the project will not be considered a complete success. You should begin this procedure as soon as the project charter is created.
Reviewing the project charter, which specifies the reason for the project and hires the project manager, is an excellent place to start determining who your stakeholders are. The stakeholders can be identified among the information concerning objects, budget, schedule, assumptions, limitations, project sponsors, and senior management.
Make sure to read the contracts thoroughly because stakeholders may be named in them. Are there environmental factors or other groups having important ties to the project? Examine them because they may contain the names of stakeholders. For example, if the government dictates environmental factors, the government is a stakeholder. Maintain excellent relations with them by reviewing their policies and requirements.
2. Stakeholder Analysis
The stakeholder analysis step begins once your project stakeholders have been identified. This is the time when you will collect information and requirements from them. You’ll also need to start measuring their level of involvement and influence in your project in order to plan and prioritize stakeholder communication tactics.
3. Stakeholder Prioritization
A critical question for everyone in the role of managing a project is how to manage a project stakeholder. To make matters more complicated, there may be multiple stakeholders, which you should prioritize like you would any other work on your to-do list.
Over the life of a project, one stakeholder may be more valuable in terms of project objections than others. When creating your project schedule, make sure to clarify who such people are and when in the project phase you might need to pay more attention to them.
4. Stakeholder Engagement
We’ve reached the second section of our question. When we talk about stakeholder management, we mean creating a positive connection with your stakeholders by achieving their expectations and whatever project objectives they agreed to. This bond, however, is not given to them. It must be earned. Proactive communication and listening to stakeholders’ demands can help you earn their trust and develop a strong connection.
One approach is to interview the project stakeholders—not all of them, but the most significant ones. You may need to consult with specialists to gain background information on specific fields or organizations so that when you meet with stakeholders, you are well-informed and productive.
Like everything in project management, there’s a process for this:
- Document Stakeholder Communications. Create a comprehensive plan for stakeholder communication. Take note of their names and jobs in the organization they represent. Document every conversation you have with these critical project partners, not only to capture their interests and requests, but also to be able to review their information later on for accuracy.
- Enforce Process. Following that, you should stick to a communication strategy with stakeholders and ensure that process is transparent so that everyone knows what to expect. This contains requests for projects or feedback. A formal review and approval process should be used to document and respond to those requests. This informs stakeholders that requests are subject to review and that you have a formal request process in place.
- Provide Frequent Status Reports. It is critical to provide regular and timely status reports to stakeholders, but be sure to personalize the reports to the audience. You can go into detail with team members, however executives usually want a high-level perspective. Follow up with stakeholders and ask questions to see if they have any feedback.
- Dispel Myths. Your stakeholder may be working on different projects, which means they will not be as invested in the project as you are. But it doesn’t mean they’re not collecting more information on your project from other sources. You don’t want them to be subjected to gossip or receive incorrect information that could impact their opinions on the project.