8 Keys for Effective Stakeholder Management
Each day entrepreneurs everywhere set out to make a difference to the world around us, with new innovative ideas that translate into increasingly effective products and services for consumers. These entrepreneurs or stakeholders (for the most part), don’t start projects just to maximise profits. They do so because they’re passionate about their field of innovation, and the potential of their product or service to positively impact the community. Now, it’s certainly not that profits are bad; we all know businesses need them. However, for most entrepreneurs, driving profit is not the primary purpose of starting a new project.
“to say the purpose of business is to make money, is a lot like saying, well I need red blood cells to live, so the purpose of life is to make red blood cells” – R. Edward Freeman
When starting up a new project; it is likely to be exciting, as well as extremely challenging. Entrepreneurs constantly encounter situations where it seems impossible to stay true to their original purpose while faced with the complex reality of manifesting it. As a concept develops into a project, the number of people involved both directly and indirectly will increase dramatically; introducing new opinions, desires and expectations that need to be considered, in order to create a successful project.
This is the plight of the entrepreneur; to stay true to their purpose as well as drive value for stakeholders without tradeoff. You see, if we consider the only path forward to be a tradeoff between various stakeholders desired outcomes, then we restrict our ability to innovate and find a more effective path forward for everyone involved. Of course, there will also be times where stakeholders need to adapt their expectations and overseeing this delicate balance of opinions is known as stakeholder management.
With these complexities in mind – here are 8 keys for effective stakeholder management:
1. Clearly define the purpose of the project
To be successful at anything, you first need to understand exactly what it is you’re trying to achieve. A clearly defined scope of work will not only set the runway for your own personal involvement in the project, but also allow you build valuable understanding of the stakeholders and how they may interact, as well as assist these stakeholders to remain aligned in their understanding, providing them the best opportunity to contribute with their own personal strengths.
2. Evaluate who all of your stakeholders are
Once you’ve got a tight grip on what you’re setting out to achieve, it’s time to evaluate who the stakeholders are in the project. A stakeholder is any individual or party that has an interest in the company that can either affect or be affected by the company. The intension of stakeholder management is to form and maintain a mutually beneficial relationship between the project purpose and the stakeholders. To be effective at this process, it is essential to familiarise yourself with anyone who falls in this category.
3. Derive who the key stakeholders are for success
While it is important to consider the opinions of all stakeholders,there are always particular stakeholders who possess strengths of vital importance to the project’s success. It is essential to derive these key stakeholders early and build intricate understanding of their involvement as the project develops. Every team has strengths and weaknesses and it is important to identify these success factors and prioritise objectives that involve the key stakeholders.
4. Know the expectations of all stakeholders
Every stakeholder in a project has different motivations; for investors this motivation is often purely financial, for business owners it is usually the impact of their innovation on society, regardless each stakeholder is vastly different from the next and will have varying expectations. In order to effectively manage these stakeholders, you should be an expert of their expectations. By knowing exactly what it is each of your stakeholder’s desire to ascertain through their involvement, you can effectively balance the direction of the project to best fit them as well as smoothly handle any conflict that may arise between the stakeholder community.
5. Build and maintain strong and trusting relationships with stakeholders
We all know that the people we trust the most have earnt that respect through a great number of shared experiences, and that this mutual trust makes our collaboration with these people more effective. Shared experiences of any kind are an opportunity to learn about one another, and often there is more to be learnt from conflict than seamless collaboration. The lesson here is that engaging with your stakeholders to build and maintain trusting relationships, will assist increase their individual efficiency as well as the efficiency of the overall development process. Maintaining strong relationships with stakeholders will also allow you to more easily monitor changes to their various expectations as the project develops.
6. Understand methods of effective communication with different stakeholders
Effective communication is at the center of every successful project and the best leaders are able to adapt their communication style to suit the party receiving the information. Misunderstandings between stakeholders often results in conflict, or misaligned progress that is detrimental to the development of the project, and it is essential to understand the mindset of different stakeholders and methods for effective communication with each of them. Yes, this does require a huge amount of additional effort. It is no mean feat to first consider all the varying mindsets of stakeholders, and then create different channels of communication to match; but it will absolutely increase the effectiveness of the individual relationships and therefore the project overall.
7. Measure the effect of engagement
In order to steer a project towards success, it is important to continually seek validation from stakeholders and measure the effect of engagement. This will not only uncover valuable information to be utilised when iterating engagement methods, but also promote a culture of transparency between stakeholders that views conflict as an opportunity to learn as opposed to an indication of instability.
8. Continually improve methods of engagement
Every engagement with a stakeholder of a project provides a valuable opportunity to learn something about their desires and expectations, strengths and weaknesses, and their overall mindset. It is essential to critically evaluate these experiences and use them to identify ways to improve upon current methods of engagement. There is always room for improvement when it comes to engaging with stakeholders, as we know human interaction is complex and business even more so. Promoting a culture of open-minded exploration and active discussion is the best way to discover valuable improvements to engagement methods, while always considering and valuing the opinions of all stakeholders.
For too long, stakeholder management has been approached with the old fashion ‘carrot n stick’ method of engagement, that rewards stakeholders who share the ‘desired’ opinion, and punishes those who dare to object against it. This methodology is proven to negatively affect relationships, becoming detrimental to project development, as stakeholders learn through experience to fear the stick and edge towards the carrot.
But a new story is emerging; one that recognises engagement with stakeholders as the primary driver of valuable improvement and iterates methods of interaction based on continual validation from these parties, that recognises ethics as being at the center of business and incentivises stakeholders to contribute their own perspective accordingly, and that prioritises purpose, over profit – knowing if the purpose is right, the profit will follow.
Author: Hailey Romeo – Liberty IT Head of Marketing