Our Guide to Building a Stakeholder Management Plan
Managing, engaging, and leveraging your company’s stakeholders is an essential part of building your business. Your team, investors, and partners offer input, resources, experience, and networks that will help you grow.
What is Stakeholder Management?
Does your startup have a comprehensive stakeholder management plan? Investors, team members, and core decision-makers: these are the critical stakeholders within your business, and these are the people who will influence your company’s success.
Stakeholder management is the process by which you communicate with and engage your company’s stakeholders, prioritizing them by importance and ensuring that all stakeholders feel valued. Through stakeholder management, you can acquire better business outcomes, while also developing long-lasting relationships.
When you manage stakeholder engagement, you increase the likelihood of raising follow-on funding from your investors, as well as accessing their knowledge, network, experiences, and resources. Stakeholder relationship management leads naturally to stronger relationships between investors, team members, and key decision-makers.
Stakeholder management includes:
- Identifying and prioritizing key stakeholders.
- Getting to know stakeholders and their preferred communication methods.
- Interacting with and relating to stakeholders based on their own goals.
- Determining how much influence a stakeholder has on core business operations.
- Beginning to influence and engage with the stakeholder, with the goal of improving the relationship.
Every stakeholder is different and may have different interests when interacting with and engaging with your business. To properly manage stakeholders, you need to be able to address their concerns — showing them that you understand their personal metrics of success, and taking responsibility for any issues as they arise. Building trust is important.
Stakeholders are still human, and it’s important to develop a variety of soft skills when managing them. In addition to providing them with the information that they need to make critical decisions, you also must be willing to work with them and help manage their emotions. A stakeholder analysis cannot forget the fact that stakeholders are independent actors, and they may not always be perfect actors: they may not make decisions purely based on statistics or logic.
Rather, stakeholders may be worried about the company’s performance and metrics or may be anxious about new moves that the company is about to make. Managing these fears is a key part of stakeholder management.
And, of course, each individual stakeholder will have a different level of influence on the company’s actions. Sometimes, the most difficult to reach stakeholders may have the least amount of influence, and consequently, the management process may be more about reducing disruption.
Stakeholder relationship management is a complex skill, which needs to be developed over time. It’s a part of being a successful entrepreneur and running a successful startup and will build relationships that can carry over from business to business as an entrepreneur moves on.
Stakeholder Management Strategy
Let’s break down a classic stakeholder management strategy. Creating a relationship between investors and team members takes some time — and communication. A classic stakeholder management approach is broken into stages of assessment, communication management, and persistent engagement.
These stages can be augmented through the use of stakeholder management tools. Once stakeholders have been prioritized and analyzed, they need to be communicated with and engaged.
There are a number of strategies for improving upon stakeholder engagement:
- Regular stakeholder meetings. These meetings provide an open dialogue, to address any of their concerns or their ideas for the future. Stakeholder meetings are often effective ways to discuss issues quickly, rather than going back-and-forth in written media.
- Consistent financial reporting. Financial reports give stakeholders a feeling of being connected to the business, and assure them that they understand how the business is doing and the direction that the business is moving in. Many investors or team members may have key insights regarding the financial reports they’ve seen, and may be able to help the business with these insights.
- Scheduled Updates Newsletters can be prepared for all stakeholders at once, updating them in a single sweep regarding the current initiatives of the business. This is a fast, effective, and easy way to keep all stakeholders on the same page.
- Timely communications. When investors and team members have questions, they need to be answered quickly. The more involved the investors are in day-to-day operations, the more likely they are to provide accurate direction.
Stakeholders want to be involved in the business. They want to feel as though their time is valued, as though they are being notified of major events, and that they are being consulted when applicable.
Investors and team members can be kept on the same page through regular communications, such as meetings and newsletters. This allows the business to present the information that it needs to present in an organized fashion.
During these communications, investors should be treated as partners rather than a source of capital. They should be engaged as colleagues and peers, and their contributions should be acknowledged. Stakeholders have responsibilities to the company, just as the company has responsibilities to them.
Too often, companies only loop their stakeholders in when the company is experiencing a disruption. This stage is too late for true involvement and engagement. Instead, stakeholders should be involved from beginning to end, as their resources may be critical to developing and stabilizing the business.
When managing stakeholders, it’s important not to get too wrapped up in the idea of “management.” Managing your stakeholders is about managing your relationship to your stakeholders, not managing the stakeholders themselves. If you are too rigid in developing your relationships, you may find that your stakeholders begin to resent their role in the process.
Before you begin truly engaging your stakeholders, you need to go through the process of stakeholder analysis. A stakeholder analysis investigates the role that investors and team members will play within the business, including how involved they wish to be in the business, and whether they have a significant amount of influence on the organization’s initiatives.
When performing a stakeholder analysis, use the following stakeholder analysis template:
- How interested are they in the company’s success? How much do they personally have riding upon it?
- What are they motivated by, when they are engaged with the business?
- What information are they most interested in?
- How do they feel about the business? What is their disposition to you, the business owner?
- If they are not positively inclined, why? What would make them support the business more?
- What resources do they have at their disposal, that they could use to help the business?
- What opposition could they possibly present, when considering business strategies?
When these questions are answered, you’ll have a better idea of how to prioritize and classify your investors and team members.
Of course, every stakeholder is unique, and consequently the methods used to interact with them will need to be tailored to them. It is often a business owner’s role to develop personal relationships with these stakeholders, learning more about what drives them, and learning more about what they desire.
Apart from the above stakeholder analysis example, stakeholder analysis tools can be used to identify the amount of each stakeholder’s engagement, while also facilitating communication between the business and key interested parties.
To make it easier to manage your stakeholders, you can develop a stakeholder matrix. You can do this manually or using stakeholder management software; either way, you’ll have a better depiction of how your investors and team members fit into your stakeholder management model.
There are multiple types of stakeholder matrix, one of the most popular being the power interest matrix.
In the power interest matrix, stakeholders will be classified as follows:
- Powerful, interested stakeholders. These are stakeholders that have a direct interest in the success of a business, as well as a significant amount of influence on how the business is able to develop. These stakeholders must be managed closely and continually communicated with.
- Powerful, uninterested stakeholders. These are stakeholders who are disinterested in the business, such as an investor who has invested in many other projects. However, they still have a lot of influence and control over the business. These individuals need to be kept satisfied, identifying their core success metrics and pursuing them.
- Non-powerful, interested stakeholders. These are stakeholders who have a direct interest in the success of a business, but have very little control over how the business develops. These individuals need to be kept informed.
- Non-powerful, uninterested stakeholders. These are stakeholders who have neither any real interest in the business or engagement with the business, such as lower-level team members. These individuals must be monitored.
But this isn’t the only stakeholder management matrix. There’s also a stakeholder analysis matrix, stakeholder engagement assessment matrix, and other unique matrixes that may be developed for a specific company.
Hiring a Manager
What if you have enough investors and team members that you can’t handle the management process on your own? It’s always possible to outsource your stakeholder management to a project manager.
Consider the following project manager interview questions, when looking for a project manager to take on these responsibilities:
- Which project management skills do you believe will most apply to your role within our business?
- What is your communication and leadership style? How do you approach fostering new relationships?
- How do you interact with difficult personalities? Do you have an example of a time when you needed to manage a difficult team member or investor?
- What position on your project manager CV do you think is most relevant to the role being offered here? Why?
A project manager isn’t going to develop the type of in-depth, long-lasting relationship with your team members and investors as you will. However, they will be able to take on the day-to-day communications, financial reporting, and general engagement. This frees you up to focus on developing and building out your business.