Do you remember working on group projects in school? Typically, you and your teammates would decide on a topic after brainstorming project ideas. You would run the topic by your teacher and ask for inputs. One of you would decide to lead the project and the responsibilities would be distributed by the team leader. Finally, you would present the project to the teacher and the rest of the class. You would also take questions from the audience and respond to their queries. In short, you needed teammates, the teacher’s inputs and engagement with your audience for your project’s success.

Some of the processes are the same when it comes to business projects. A team works on a project, every individual in the team has a role to play, but a team leader is required for effective coordination to drive the project to success. This outcome is achieved because of effective stakeholder management. What is stakeholder management? Let’s find out.

What Is Stakeholder Management?

Before we understand the meaning of stakeholder management, let’s understand what ‘stakeholder’ is. A stakeholder is an individual or group of people interested and involved in any decision or activity of an organization. Stakeholders can be both internal (for example, the employees of an organization) and external (for example, vendors and clients). The most common types of stakeholders are:

  • Customers: They are the most crucial stakeholders of any business as they’re impacted by a product or service.

  • Employees: They have a direct stake in the organization as it provides them with monetary (for example, salary and perks) and non-monetary (for example, safety and infrastructure) benefits

  • Suppliers and vendors: They sell goods and services and the organization relies on them for revenue generation.

  • Investors: They bring in capital and expect a return on their investments, and have a high stake in an organization

  • Government: The government collects taxes from the organization (corporate income taxes) as well as from the employees (payroll taxes).

Stakeholders have a lot of power as they can decide whether a project should exist or not. It’s because of the power stakeholders wield that businesses need to prioritize their requirements. Stakeholder management is the process of managing the requirements and expectations of the stakeholders.

What Is Project Stakeholder Management?

In organizations, projects don’t exist in isolation. They always exist in an environment that’s influenced by multiple stakeholders who are interested in the outcome. Project stakeholders commonly include:

  • Project sponsors: They are the ones who pay the bills and have the ultimate authority.

  • Primary customers: They are the primary users of a project’s products or outcomes.

  • Secondary customers: They are the stakeholders who benefit or interact with a project. They can be either from inside or outside the organization.

  • Project team: The members of this team are expected to execute the project. These include project managers, employees, support personnel and consultants.

Project stakeholder management involves stakeholder identification, analysis of their expectations and development of appropriate strategies to meet their requirements. Frequent communication, managing conflicts and involving project stakeholders in decision-making drives the stakeholder management process.

Need For A Stakeholder Management System

Stakeholders have the potential to exert positive or negative influence over your project deliverables, which is why it’s important to have an in-depth understanding of their requirements. A vital part of running a business is building lasting relationships with those who’ll exert influence over your business.

A stakeholder management system is an engagement tool that focuses on creating long-term partnerships to minimize risks and protect your projects. Here is a list of the benefits of implementing an effective stakeholder management system:

  1. Builds Better Relationships

Effective communication and engagement with stakeholders lead to trust, mutual understanding and cooperation. Having better relationships with the stakeholders will help you understand the project requirements and is critical to building lasting credibility and trust in your organization. Engaging with stakeholders will also provide better learning opportunities because different thoughts and opinions will influence the decisions.

  1. Saves Time & Money

Effective stakeholder engagement can save time and money in the long run. It can equip you to map the resources because you would be fully aware of your stakeholders’ needs and priorities. You can allocate resources where they are needed.

  1. Better Decision-Making

When priorities and responsibilities are clearly laid down, it yields a better understanding of an organization’s positioning. You will understand the views and interests of your stakeholders and address their issues or concerns in the planning process. You will get an opportunity to reflect on what will work and what won’t, which will help you make strategic decisions accordingly.

  1. Service Significant Stakeholders

A stakeholder management system helps you identify who has the maximum influence over your business. By prioritizing who needs more attention, you allow time and resources to be dedicated accordingly. For example, investors will have a higher stake in a project because they’re providing capital and your team will have a lesser stake than them because they are simply required to achieve the project’s objectives. In this case, the investors will be the primary decision-makers.

  1. Creates Accountability

Stakeholder management helps create transparency because you want to be clear about the outcomes you’re trying to achieve. Since everybody is invested in the project, a small error can affect everybody involved. Many stakeholders will help you identify potential threats and nip the problem in the bud. This will lead to improved brand image and reputation.

Tips For Effective Stakeholder Management

Fully recognizing and understanding the role of stakeholders in your project is important in ensuring the success of your project. Here are a few effective tips that’ll help you tackle all the curve balls during the stakeholder engagement process:

  1. Stakeholder Mapping

Map out everyone who is affected by your project—individuals, special interest groups, communities, municipalities and organizations. Gain an understanding of internal stakeholders—immediate staff, contractors, suppliers and shareholders. This will help you gauge whether you have the right resources to execute a project efficiently.

  1. Stakeholder Prioritization

Understanding the level of influence each stakeholder has will allow you to predict how someone may impact a project’s success. Identify priority stakeholders—those who have greater authority to block or advance a project’s progress. You can measure their influence through this simple ranking scale:

  • High:

Has significant power to influence decisions, timeframes and outcomes.

  • Medium:

Has a significant interest in a project but not high levels of power to influence major changes.

  • Low: 

Has very little influence and ability to change project outcomes.

  1. Stakeholder Communication

Communicate as early and as transparently as possible. Understand what resources and details will be needed for stakeholders to understand your project. Loop them in when needed and update everyone regularly. Stakeholders will feel engaged and valued if they’re aware of the processes and steps involved in executing a project. As a result, they’ll stay invested in your project and provide valuable inputs, if needed.

  1. Stakeholder Relationship Analysis

Have an effective system in place that’ll help you review and improve stakeholder engagement strategies. By doing this, you’ll increase project support and create long-lasting relationships. Keep your activities and communication aligned with the interests of your stakeholders, and you’ll be able to produce more effective outcomes.

Engaging With Specific Stakeholders

A common strategy plan will help identify the opportunities and problems for effective stakeholder engagement. But dealing with specific stakeholders is a different ball game altogether. Here are some strategies for navigating different types of stakeholder relationships, whether you’re a junior employee, manager or leader.

  1. Customers

The key here is information. Gather all the available data on customer culture, needs, expectations and pain points before you start a project. Documenting everything will direct investors and other important stakeholders towards the most optimal solution. Customer data can also help navigate conflicts as it makes for well-researched arguments.

  1. Project Team Members 

A team has certain expectations before a project is assigned to them. It’s a good rule of thumb to understand their expectations, ideas and opinions and how they’d manage a project. Constant communication, one-on-one meetings with each member and feedback loops are some of the effective ways to gauge their expectations. Show your team that you’re approachable and keep your doors open.

  1. Executives

They’re the primary decision-makers. They won’t be as involved as team members but their role will be to guide and motivate the team towards the goals. The key here is presenting them with a comprehensive project plan, milestones and deadlines. Milestones will help them monitor individual progress and potential risks that are identified later in the process.

  1. Resource Managers

They’re usually responsible for resource planning and allocation. They ensure that the organization’s resources have enough capacity to meet project needs and deliverables. You need to be able to establish a good relationship with your resource manager so that your requests are easily met.


Strong stakeholder engagement and effective stakeholder management are the cornerstones of effective project management. To successfully engage your external stakeholders, you need to evaluate internal stakeholders. Harappa Education’s Navigating Workplaces course will teach you how to understand your workplace culture and relationships better. The Power Structures framework will help you understand the different types of power your co-workers hold. The Stakeholder Map will help you identify decision-makers and powerful influencers. Drive successful stakeholder engagement with Harappa Education’s courses today!

Explore our Harappa Diaries section to know more about topics related to the Collaborate habit such as Teamwork, Delegation of Authority, Difference Between Leadership and Management, Strategic Management, Functions of Management & Risk Management in order to develop your collaboration skills.

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