Identifying stakeholders and analyzing them is the step companies take in order to know how to manage them.
To remain relevant and accepted, companies need to initiate, maintain and manage meaningful interactions and relationships with their stakeholder groups. The process by which an organization interacts, communicates, and empowers its stakeholders to work together with them for mutual benefit is known as stakeholder management.
A simple way to identify which strategy is best suited to manage which stakeholders, is to map stakeholder groups by their level of power/influence and their interest in the company and develop tactics for engagement.
By separating their stakeholders into their respective quadrants using the stakeholder mapping as a guide, companies can effectively identify ideal methods of engagement specific to each tactic. In doing so, companies have the opportunity to simultaneously engage different stakeholder using a wider range of methods.
Tactics and Methods for Engagement
Tactics are high-level descriptions of how companies may approach stakeholders. We have simplified the spectrum into four categories:
– Engage applies to stakeholders with whom engagement is absolutely necessary. These stakeholders are usually the key players, with high levels of interest and influence upon how the business is run.
– Satisfy applies to stakeholders with a high level of influence or power but do not have sufficient interest to participate in dialogue with the company. Communicating with these stakeholders will assist with the company’s operational transparency and ensures a license to operate.
– Inform applies to stakeholders that have significant interest in the actions of the company, but do not possess considerable power or influence upon the actions of the company. Engaging with these stakeholders will assist in building goodwill, and ensures safeguards are in place for the company’s reputation.
– Monitor applies to stakeholders who seek information only instead of engaging in conversation with the company. These stakeholders are the least important and require minimal engagement.
Engagement with stakeholders is a two-way system for companies, but the amount of investment on behalf of the company, as well as the effort by stakeholders, can vary depending on their power and interest.
– Shared accountability and responsibility.
– Two way communication and engagement.
– Joint learning, decision making and action.
– Part of the team, engaged in delivering tasks or possesses responsibility for particular actions/activity.
– Two way communication and engagement, within limits of responsibility
– Examples: Grievance and feedback systems.
– Involved but not responsible.
– Limited influence outside of consultation boundaries
– Limited two-way communication and engagement: Organization asks questions – stakeholders answer
– One way communication.
– Organization may broadcast information to all stakeholders or target specific stakeholder groups using various channels (Eg. Email, webcasts, letters, pamphlets, informational videos)
– One way communication.
– Information is made available to everyone, stakeholders can choose to engage with it or ignore it.
Managing stakeholder is a complex process because the roles and allegiances of stakeholders have the potential to change rapidly and unpredictably (volatile) at different stages throughout the lifecycle of the company. They can be due to changes in circumstances, personal opinions and beliefs, vested interests, or external influence.
Different types of stakeholders must be managed using different strategies, according to the position they take for or against the company’s objectives. The figure below summarizes some of the main allegiances that stakeholders may adopt and how to manage them.