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What is successful stakeholder management?

A stakeholder is defined as any individual or group which has an interest in the actions of the party concerned.

The interest may be direct, as in employees or only as part of a regulatory requirement but in the commercial world competitors are also stakeholders since they are definitely interested in what you are doing.

This raises an obvious issue: when it comes to involvement, decision making processes and especially in communication processes not all stakeholders should be treated the same.

Stakeholder analysis

One way to analyse your stakeholders, particularly in considering change management, is to draw the stakeholders on a circular onion type of chart with the key people in the centre and less involved (but still important ones) further away from the centre.

You could also use this to help you plan the frequency of communications from at least daily (in the centre) to perhaps only annually e.g. to tax authorities perhaps (further out from the centre).

Another way is to prioritise your stakeholders through using a Power/Interest grid. This article on the Mindtools website gives you a simple introduction to stakeholder analysis and has a simple tool to help you prioritise stakeholders using this grid.

Types of stakeholders

Thus there are four broad groups of stakeholders:

  1. The critical ones, who must be involved and managed closely;

  2. Those who need to be kept satisfied;

  3. Those who only need to be kept informed; and

  4. Those we simply monitor.

This process can be usefully employed in many aspects of management.

Relationships with stakeholders

You will not necessarily have contracts with all stakeholders.

With some, you will be subject to their rules and regulations and you have to report on your compliance to them.

In the case of competitors you ideally would not tell them anything but they will carefully watch your other communications to try and establish your strengths and weaknesses.

So in communicating to outside parties you always have to consider who else might be listening.

Success in managing stakeholders

Success in managing this process will be a successful implementation of your action plans. This will avoid unforeseen and unpleasant surprises.

At the same time, all of the stakeholders will feel that their respective concerns have been considered fairly and even if they were not accepted the actual choice will have been properly explained.

Difficulties come if some stakeholder’s agenda has not been recognised or considered and yet it turns out they are really key to a successful implementation.

If they were not included then there will be problems in making the actions work at all or in the ways hoped for.

It is always worth spending time, in consultation with others, at the start of this process to try and mitigate the risks of these unforeseen and critical effects.

Good and comprehensive plans can often be implemented much quicker than those where there are lots of reactive changes to cope with ‘new’ and unplanned issues.

In step 1.5, Tim identified ‘Failure to engage stakeholders’ as No 3 in the ‘Top Ten Pitfalls in Contract Management’. A major issue in managing stakeholders can be in finding stakeholders you did not initially think about at a stage which is far too late on in the project.

To practice thinking about stakeholders, in the following steps we would like you to undertake a simple stakeholder analysis for a housebuilding project. It is not something we expect you to be an expert on, but you do not need to be an experienced contract manager to be able to think through the issues. This is a peer review activity which means that it is a valuable opportunity for you to be able to get feedback on your own ideas and to give feedback to others about their ideas.

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This article is from the free online course:

Contract Management: Building Relationships in Business

University of Southampton