How to Build a Stakeholder Management Strategy in 4 Steps

Stakeholder management is the process of maintaining good relationships with those involved in a project. To effectively manage stakeholders, companies must take input from stakeholders, assess that information against the project’s current status, and decide whether or not to implement it. Be sure to communicate your decisions to everyone involved. In business ethics, stakeholder theory states that a company’s management strategy must consider all stakeholders involved for the company to be successful. While a company may survive in the short term by focusing solely on profits, this ethical theory believes it's essential to acknowledge all parties who have an interest or concern in the company, i.e. its stakeholders, to succeed long term. Stakeholder theory, also called stockholder theory, was first detailed by University of Virginia business professor and philosopher R. Edward Freeman in his 1984 book *Strategic Management: A Stakeholder Approach*. A stakeholder is any person or group who impacts or is impacted by a company's actions. There are two primary types of stakeholders: 1. __Internal stakeholders__: Internal stakeholders operate in direct relationship to a company and can include investors, top management, project managers, and project team members. 2. __External stakeholders__: External stakeholders are not part of the company, but are affected by the company's actions. Examples of external stakeholders can include project sponsors, consultants, customers, governments, and people who live in areas where the company is based. Stakeholders are involved throughout a company’s life cycle and can start, delay, or halt its growth, so it is imperative to keep stakeholders satisfied from start to finish. Some benefits of engaging stakeholders include: - __Shared value creation__: Business leaders who factor stakeholder theory into the decision-making process create a shared value between the business and society's ethical responsibilities. - __Financial gain__: When all stakeholders in a project feel valued, a company's public reputation may improve, which can lead to financial profit. Employees are more productive, customers are more loyal, and financiers are more trustworthy of the company. - __Societal gain__: Practicing stakeholder management can encourage scientific innovation, increase the socio-economic level of a company's local community, and create a healthy competitive market for other companies. Categorize each of your stakeholders into one of four squares on a power/interest grid and follow the corresponding instructions. - __High Power + High Interest = Manage Closely__. Stakeholders who fall in this category are your most important stakeholders, and you should make it your top priority to support their desires. An example of a stakeholder in this category might be your project's financier. - __High Power + Low Interest = Keep Satisfied__. Due to their level of influence, these stakeholders require you to put in enough effort to keep them content, but since they don't have a strong interest in your project, you don't need to go above and beyond to please them. An example of a stakeholder in this category might be the government. - __Low Power + High Interest = Keep Informed__. Maintain a constant flow of information, so this group of stakeholders are in the loop and feel heard. While they may not have enough power to boost or derail your project significantly, they can contribute excellent knowledge to your cause. An example of a stakeholder in this category might be an individual consumer of your project. - __Low Power + Low Interest = Monitor__. These are your least influential stakeholders, and they typically require the least attention. An example of a stakeholder in this category might be a local community member. You can create a stakeholder management strategy with project management software or by simply using a spreadsheet. Below are some steps on creating a stakeholder management plan: 1. __Identify the project’s stakeholders__. The stakeholders are anyone who is directly contributing to the project or affected by its outcome. List anyone internally or externally who will be involved throughout the project lifecycle. 2. __Conduct stakeholder mapping__. Identify the critical stakeholders and their level of influence on the project through stakeholder analysis. Put each person into a stakeholder group using a power/interest grid that groups stakeholders by the power they hold and how much interest they have over a project. Key stakeholders, such as funders, have high power and high interest in the project. 3. __Interview the stakeholders__. Have group conversations or one-on-one meetings with each stakeholder and ask them about why they’re interested in the project and what their expectations are. Other questions include: What does the success of the project look like for them? What information do they want, and how often? What do they see as a potential risk or pitfall in the project? What deliverables most interest them? These questions will be a way for you to manage expectations. 4. __Establish a communication plan__. Not every stakeholder will be involved in every aspect of the project. Identify which stages each stakeholder will be involved in and who will need feedback. Also, set up a stakeholder communication schedule to track updates with stakeholders. Be sure to clarify that you are open to feedback at any point, not just at a predetermined date. Get the [MasterClass Annual Membership](https://www.masterclass.com) for exclusive access to video lessons taught by business luminaries, including Daniel Pink, Anna Wintour, Chris Voss, Robin Roberts, Sara Blakely, Daniel Pink, Bob Iger, Howard Schultz, and more. The key to building a successful stakeholder management strategy is to create a stakeholder map, which will help you figure out what each stakeholder needs and how you can best communicate with them.