What Is Stakeholder Management, and Why Is it Important?

If you’re managing a project, it’s important to ensure you involve all the different people and groups that can impact the project’s success. Otherwise, you risk missing key perspectives or getting pushback late in the project lifecycle, resulting in costly delays or failure.

The process of consulting different groups of people in your project is known as stakeholder management. In this guide, we’ll explain what stakeholder management entails and how you can effectively involve stakeholders in your next project.

In this guide:

• Key Takeaways
• What Is Stakeholder Management?
• Getting Started With Stakeholder Management
• Verdict
• FAQs

Key Takeaways

• Stakeholder management begins with identifying your project’s stakeholders, analyzing their requirements, and determining which stakeholders are most important to your project.
• Stakeholders can be internal or external to your business, and they may have very different demands to prioritize.
• To ensure project success, it’s essential to effectively manage the needs and expectations of individuals and groups that can impact your project.

What Is Stakeholder Management?

Stakeholder management is the process of managing the various requests, demands, and concerns of different people and groups that can influence a project’s outcome. It involves identifying your project’s key stakeholders, analyzing each stakeholder’s impact on your project, and consulting with them throughout the project’s lifecycle.

The best way to understand stakeholder management is with an example. Say you’re building new software to sell. Examples of stakeholders might include:

• Your business’ chief financial officer (CFO): They have direct financial control over your project’s budget.
• Investors: They can weigh in on your project’s costs and outcome and make changes to your business’ leadership team.
• Your business’ sales team: They understand your customers’ needs and can provide important information about what features your software should include.
• Customers who will use the software: They impact the ultimate success of your project. For instance, if your software doesn’t have the features they’re after, they won’t use it.

Managing these various stakeholders may entail weekly one-on-one calls with your business’s CFO and monthly calls with your sales team, as well as publishing information about your progress to keep investors and customers informed. You could also send out a survey to customers to better understand their needs and incorporate the features they want into your project.

This example highlights that projects can have both internal stakeholders and external stakeholders, who may have different interests that you have to balance. For instance, your company’s chief financial officer will likely be concerned about your project budget, while your customers will be keen to get the features they’re after.

Why is stakeholder management important?

Stakeholder management is important to ensure the success of a project. Here are some of the benefits of strong stakeholder management practices:

• Avoiding project pitfalls: Failing to address internal and external stakeholders’ expectations and requirements could result in project delays or even cancellation. Stakeholder management helps you anticipate potential problems and prevent them from disrupting your work.
• Increased employee morale: Managing employees as key stakeholders through surveys, meetings, and other communications can make them feel their voices are being heard. This is important for employee morale and retention.
• More diverse perspectives: Including perspectives from multiple different stakeholders can make your project more successful. For example, discovering the key features customers want in a product.

Getting Started With Stakeholder Management

Stakeholder management involves four key steps.

Step 1: Identify your stakeholders

Stakeholder management starts with figuring out who the stakeholders are for your project. It’s equally as important to consider who has decision-making power over your product development and who the end users will be, but also to remember they are fundamentally different types of stakeholders, too.

Step 2: Analyze stakeholders’ needs

Once you know who your stakeholders are, analyze each stakeholder’s concerns, needs, and expectations. The best way to complete this stakeholder analysis is by reaching out directly. Ask them about their concerns and what you can do to better align your project with their priorities.

Step 3: Map your stakeholders

Stakeholder mapping involves visualizing the influence and interest stakeholders have in your project. You can do this by ranking stakeholders on the following criteria:

• Interest in your project
• Positivity or negativity
• Decision-making power
• Influence over your end users

Step 4: Create an effective stakeholder management plan

Your stakeholder management plan should define your strategies for stakeholder communication and outline which stakeholders you will prioritize during each stage of your project’s lifecycle. It should also cover how your project team will manage stakeholder expectations and how you will approach conflicts between stakeholders.

FAQs