What is Stakeholder Engagement

Engaging stakeholders is essential for any organization or business to succeed. While fundamentally different from stakeholders management, stakeholder engagement is also created for handling stakeholders. An effective stakeholders engagement strategy involves understanding and engaging with people who have a stake or interest in the organization. In this article, we will discuss what is stakeholder engagement and the importance of coming up with an effective strategy. 

What is Stakeholder Engagement?

Stakeholder engagement is a process used by an organization to improve communication with their stakeholders. This process involves identifying, mapping, and prioritizing the stakeholders to identify the most effective way to communicate. An effective communication between an organization and their stakeholder is important in building trust, mitigating risk, and improving the decision making process.

Difference Between Stakeholder Engagement and Stakeholder Management

Compared to stakeholder engagement where the main focus is on interaction and involvement, stakeholder management focuses on the overall strategy for dealing with stakeholders. It involves understanding and managing the stakeholders behaviour and actions. An effective management between an organization and their stakeholder is important in determining the direction of an organization or a project they’re involved in.

In short,

• Stakeholder Engagement: Focus on engaging with stakeholders by communicating and interacting with them.

• Stakeholder Management: Focus on managing stakeholder behaviour and actions.

Who are The Stakeholders?

Stakeholder is the term used to refer to individuals or groups who have an interest in, or have an influence in, an organization’s activities. Stakeholders exist both as internal or an external part of an organization.

1. Internal stakeholder

Internal stakeholders refers to people with interest in an organization through a direct relationship, such as employment, ownership, or investment. An example of internal stakeholders is shareholders who will be directly affected by the organization’s action and performance..

2. External stakeholder

External stakeholders do not work for or have any direct relationship with an organization, but they are affected by the actions of the business. Some examples of external stakeholders are the suppliers, creditors, and general public who are indirectly affected by the business decisions. 

Who are The Most Important Stakeholders?

The most important stakeholders vary depending on the organization, project, and its current stage. However, some stakeholder groups are often considered as highly important for most organizations:

• Customers: They are the lifeblood of any business. Their satisfaction directly affects an organization’s future.
• Employees: They are the frontline who directly interact with customers and significantly impact customer experience.
• Shareholders: The owners of the company who have a significant influence on its overall strategic direction and long term goals.
• Vendors, Suppliers, and Business Partners: External collaborators whose dependability and performance are crucial for an organization’s success.
• The Community: Both the immediate local and the broader community play an important role as they influence and are being influenced by the organization’s operations and reputation.
• Government: The government establishes laws, regulations, and policies that the company needs to adhere to. This can determine an organization’s operations, costs, and overall performance trajectory.

How to Engage with the Stakeholders?

In order to engage with the stakeholders, there are 4 key components that you will need to implement in the process. Those components are:

1. Identify

Identify all of the existing stakeholders which includes both internal and external stakeholders. Some stakeholders, like the project manager, may be more visible due to their involvement while some others, for example an investor, might be less apparent.

2. Analyze

The best way to analyze your stakeholders is by creating a map to define each stakeholder based on their importance and influence to the organization. This will help your organization identify and efficiently use the available resources on stakeholders with higher interest and need for information. You can start by creating questions based on these points:

 – Contribution : Does the stakeholders have the necessary information or expertise that would be helpful to your organization?

– Relevancy : Would the process be affected if the particular stakeholder is not being involved in the process?

– Influence : How large of an influence does the stakeholder have, and toward whom? 

– Engagement : Is the stakeholder open to being engaged?

3. Communicate

Creating a communication plan is important as it will affect how well your stakeholders are informed regarding your organization. A communication plan is an outline of how to provide your organization’s information to your stakeholders. There are two key points you need to identify in order to create an effective communication plan: 

i. Available communication channels : Start by identifying which communication channels your team regularly uses and what is each communication channel used for. 

ii. Type of communication each stakeholder will need : This includes figuring out how and which info you will need to communicate to the specific stakeholders. 

4. Feedback

The stakeholder’s behaviour might change throughout the engagement process, so remember that the key points and strategy you have come up with will need to be flexible and open to changes. You can continuously collect feedback from the stakeholders and use it to continuously improve your engagement strategies.

Benefits of an Effective Stakeholder Engagement Plan

1. Better understanding: An effective stakeholder engagement plan can lead to a deeper understanding of stakeholder needs and concerns, and their understanding of your organization.


2. Effective decision-making: Engaging with stakeholders can help organizations make more informed decisions with a higher success rate.


3. Risk management: By identifying and addressing stakeholder concerns, organizations can mitigate risks better and improve accountability.


4. Prevention of project roadblocks: An effective communication and collaboration with stakeholders can help prevent issues in a project which might cause it to be delayed and cause unnecessary waste of resources.


5. Build trust: Engaging with stakeholders in a transparent and respectful manner can foster trust and strengthen two-way relationships.


6. Improved sustainability: Stakeholder engagement can help organizations identify and address sustainability challenges. This will ensure your organization will be viable for a long-term.

Common Mistake in implementing stakeholder engagement

1. Misidentifying or overlooking some key stakeholders: Failing to identify all of the important stakeholders can result in missed opportunities and potential disagreements further down the road.


2. Misunderstanding of expectations: Misunderstanding of the stakeholder needs, concerns, and expectations can make it difficult to communicate effectively and work together.


3. Failure to manage stakeholders appropriately: Failing to properly manage stakeholders based on their influence and interest levels can lead to misalignment and dissatisfaction.


4. Failure to communicate: Neglecting to provide stakeholders with regular updates and information can damage trust and lead to misunderstandings.


5. Ignoring  risks: Failing to identify and address potential risks associated with stakeholder engagement can lead to negative outcomes.

Tips for Engaging Your Stakeholders

Engaging effectively with your stakeholders is important for project success. It’s not just about communicating, it’s about building meaningful relationships. Here’s some tips on how you can improve your engagement approach:

1. Adopt Meaningful Engagement Approach

Tailor your communication style and message to each stakeholder group to ensure inclusivity so everyone will feel heard and eager to participate. Actively listen to their feedback, acknowledge their contributions, and most importantly, genuinely allow their input to influence your decisions and project direction.

2. Be Accessible

Make it easy for stakeholders to reach you and provide feedback by offering a clear and accessible way to contact you. Let the stakeholders know what kind of response time they can expect and remember that giving even a quick acknowledgement of receipt can be valuable. 

3. Build Trust Through Honesty and Transparency

Share information openly and honestly, even when it’s challenging. Explain your reason clearly and be upfront about any limitations or restrictions. This would develop an environment of transparency where stakeholders feel informed, understand the logic behind a decision, and are aware of any challenges, essentially helping you build confidence and strengthen your relationships.

4. Systematically Track Your Engagement

From the beginning, track your engagement effectively by maintaining a stakeholder register, which can be either a simple spreadsheet or dedicated tools. Record all of your interactions and the feedback you’ve received. This organised tracking is important to promote collaboration, gain valuable insights, generate comprehensive reports, and facilitate audits.

5. Ensure Continuous Improvement

Continuously strive to improve your stakeholder engagement process and outcomes. Regularly assess your engagement data, actively request feedback from stakeholders, and then incorporate those learnings. This approach will help you maintain the relevancy of your engagement and keep your stakeholders actively involved in the long term.

Conclusion

An effective stakeholder engagement is essential for the success of any project or organization. By identifying, analyzing, and engaging with key stakeholders, organizations can implement an effective stakeholder engagement strategy to build trust, improve communication, and improve decision-making processes. Contact us to know how you can implement an effective stakeholder engagement strategy in your organization.