In today’s rapidly changing business landscape, understanding the needs and expectations of stakeholders has become increasingly important for organisations of all sizes and sectors. Stakeholders can significantly impact an organisation’s operations and success, and failing to consider their needs and interests can lead to negative consequences, such as loss of reputation or decreased customer loyalty.
If you’re new in the world of stakeholder matrix and want to learn more, read this article. We will delve deeper into what stakeholder analysis is, its advantages, and examples.
What is Stakeholder Analysis?
Stakeholder analysis involves identifying and analysing the interests, needs, expectations, and concerns of all individuals regarding a project, decision, or initiative of an organisation. The goal is to gain a comprehensive understanding of the stakeholders’ perspectives and to use this information for
- Informed decision-making
- Develop effective communication strategies
- Manage relationships with stakeholders.
Stakeholders can include various individuals and groups, such as customers, employees, suppliers, shareholders, regulatory bodies, community groups, and other organisations interested in the organisational activities. The analysis typically involves –
- Identifying and categorising stakeholders based on their level of interest in the organisation’s activities
- Their influence on the organisation
- Their potential impact on the organisation’s success.
What is stakeholder management?
Stakeholder management is the process of identifying, assessing and managing the relationships with stakeholders to ensure that their needs and expectations are met. Stakeholder management aims to establish a positive relationship with stakeholders and ensure that they are satisfied with the organisation’s actions and decisions. Ultimately, their say can influence your company’s future. The process includes –
- Locating stakeholders
- Evaluating their requirements and expectations
- Organising and carrying out various actions to interact with them.
Stakeholder Management Strategy
Here is what a stakeholder management strategy should look like –
- How complicated your project is: You may evaluate this by comparing it to previous projects, looking at the project’s milestones, or looking at the resources needed or the time allotted.
- The level of help required to get the desired results: This might involve financial support, professional counsel, tangible assets, content quality checks, and other things.
- The amount of time you have to communicate: If your project involves a lot of stakeholder input, you should think about how to manage the time you are going to be spending on communication.
Types of Stakeholders
There are mainly two types of stakeholders –
- Internal/direct/primary stakeholders
- External/indirect/secondary stakeholders
Internal
Internal stakeholders include individuals or organisations interested in or concerned about an organisation’s choices or actions. They are also referred to as Direct or Primary stakeholders.
Examples of internal stakeholders –
- Employees
- Managers
- Board of directors
- Shareholders
- Contractors
External Stakeholders
Those having an interest in a company’s success but are not directly connected to its projects are external stakeholders. They are also referred to as Indirect or Secondary stakeholders.
Examples of external stakeholders –
- Customers
- Suppliers
- Community groups
- Government
- Competitors
- Media
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Advantages of Stakeholder Analysis
Stakeholder analysis offers several advantages to organisations, including –
Understanding stakeholder perspectives
Companies can better understand their needs and expectations by analysing stakeholders’ perspectives and concerns. This allows them to tailor activities and decisions to meet stakeholders’ needs and build stronger relationships.
Mitigating Risks
Stakeholder analysis can help organisations identify potential risks and negative impacts of their activities on stakeholders. By understanding the concerns of stakeholders, organisations can take steps to mitigate these risks and minimise negative impacts. Since stakeholders often bring along a significant length of experience, it is wise to obtain their valuable insight and implement it into your project.
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Enhancing decision-making
Stakeholder analysis provides organisations with valuable information that can be used to make more informed and effective decisions. By considering the perspectives of all stakeholders, organisations can make decisions that are more aligned with their goals and values.
Improving communication
Stakeholder analysis can enable organisations to identify the most effective ways to communicate with stakeholders. Businesses can tailor their communication strategies to build stronger relationships and promote transparency by understanding stakeholders’ communication preferences and needs.
Becoming Successful
Project success and its related effects are significantly influenced by stakeholders’ attitudes. You may also land new jobs by anticipating stakeholder expectations and delivering results. This is key in helping organisations stay ahead of the competition.
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Steps for Stakeholder Analysis with Examples
Stakeholder Analysis is a very critical step for the success of a company. Here are the steps on how it can be achieved –
Identify the stakeholders
The first step in stakeholder analysis is to identify all the individuals or groups that are affected by an organisation’s activities. This can include internal stakeholders like employees and shareholders and external stakeholders like customers, suppliers, community groups, and government entities.
For example, a software company might identify stakeholders such as employees, investors, customers, software developers, and government regulators.
Prioritise the stakeholders
Once all stakeholders are identified, they need to be prioritised based on their level of influence and interest in the organisation’s activities. This can be done by stakeholder mapping on a power/interest grid, where stakeholders with high power and high interest are considered key players, and those with low power and low interest are considered low priority.
For example, the software company might prioritise stakeholders like customers, investors, and software developers as key players and government regulators and community groups as a lower priority.
Understand stakeholder needs and expectations
Once stakeholders are prioritised, it is important to understand their needs and expectations. This can be done through interviews and surveys.
For example, the software company might conduct interviews with key customers to understand their expectations for software features and functionality.
Evaluate stakeholder impact
After understanding stakeholder needs and expectations, assessing the potential impact of the organisation’s activities on each stakeholder group is important. This can be done through a risk assessment or impact analysis.
For example, the software company might evaluate the potential impact of new software features on software developers and customer adoption.
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Develop a stakeholder engagement plan
Based on the stakeholder analysis, you can develop a stakeholder engagement plan that outlines how the organisation will engage with each stakeholder group. This plan should be tailored to meet the needs and expectations of each stakeholder group.
For example, the software company might develop a plan to engage with key customers through regular product updates and customer feedback surveys.
Things to Avoid
While lots of companies work to maintain relationships with their stakeholders, here are some things that must be avoided in the process –
Ignoring key stakeholders
It is important to identify and prioritise all key stakeholders, including those who may not have direct influence or power but are still affected by the organisation’s activities.
Stereotyping or making assumptions about stakeholders
Avoid stereotyping or making assumptions about stakeholders based on their group affiliation or background. Each stakeholder should be considered as an individual with unique needs and perspectives.
Failing to engage with stakeholders
Stakeholder analysis should involve engagement and consultation with stakeholders to consider their perspectives. Avoid conducting the analysis in isolation without engaging with stakeholders.
Neglecting to update the analysis
Stakeholder analysis should be an ongoing process and updated regularly to reflect organisational or stakeholder environment changes.
Overcomplicating the process
Stakeholder analysis should be conducted clearly, concisely, and structured manner. Avoid overcomplicating the process with too many categories or complex frameworks that can lead to confusion or inaccuracies.
Assuming stakeholder perspectives
Avoid assuming stakeholders’ perspectives without engaging with them directly. The analysis should be based on stakeholder input and feedback rather than assumptions.
Conclusion
Organisations can gain insights into the potential impact of their activities on stakeholders by conducting a stakeholder analysis. They can develop tailored engagement strategies to address their needs and concerns. Through this process, organisations can build stronger relationships with stakeholders, mitigate risks, and make more informed decisions leading to profit generation.
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