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What are stakeholders?

Stakeholders are individuals, groups or businesses affected by an organisation’s activities.

• Internal stakeholders are directly involved in the production of services or products, e.g. employees, directors and board members, and union representatives.
• External stakeholders have an interest in what the organisation creates or how they go about their business, e.g. customers, suppliers, shareholders, regulatory bodies and the wider community.

Why is stakeholder engagement important?

Stakeholder engagement is key for organisations across all industries and sectors because it directly impacts their ability to achieve their goals and sustain success. Engaging with stakeholders through well-planned stakeholder engagement activities ensures that an organisation understands the needs, expectations, and concerns of the people and groups it affects, as well as those who influence its activities.

Effective leadership engagement in stakeholder processes fosters collaboration, trust, and mutual understanding. By involving stakeholders early and consistently, organisations can identify potential risks, address challenges, and seize opportunities more effectively. This engagement enables organisations to:

• Drive better decision-making: Engaging stakeholders provides valuable insights and diverse perspectives that lead to more informed and balanced decisions.
• Enhance reputation and trust: Transparent and proactive engagement builds confidence and credibility with both internal and external audiences.
• Mitigate risks: Understanding stakeholder concerns and proactively addressing them reduces the likelihood of conflicts or opposition that could derail projects or initiatives.
• Increase innovation and buy-in: Collaboration with stakeholders sparks new ideas and creates a sense of shared ownership, resulting in greater support for organisational objectives.

Whether you’re launching a new product, implementing change, or navigating a challenging project, engaging stakeholders is a critical step in achieving positive outcomes for everyone involved.

Stakeholder engagement strategy 

Consider your engagement strategy. It’s crucial to engage with the right stakeholders, at the right time, with a communication channel that suits them.

All stakeholders are different, therefore it's important to get to know them to understand their exact objectives. Flex your approach based on their individual requirements.

Next, ensure you communicate effectively. This helps cement relationships, build trust, and increase confidence. Poor communication can quickly lead to problems for everyone. It’s vital to raise any issues as soon as possible so actions can be taken and results improved.

Don’t forget, communication takes many forms – use as many techniques as necessary:

• Consulting
• Listening
• Understanding
• Influencing
• Negotiating
• Gaining approval and support
• Minimising opposition or obstruction

However, before you engage a stakeholder:

1. Plan the engagement.
2. Have clear objectives and details of the stakeholders you want to engage with.
3. Develop understanding. Acknowledge their issues and analyse the impact they could have on your organisation.
4. Take time to identify common ground between your organisation and the stakeholders. Aim for a win-win outcome and commit resources to the process.
5. Recognise that your stakeholders are not homogenous, so adapt what you say and how you say it.
6. Consult everyone, not just the people who are easiest to address. Actively listen, and communicate in a form which is accessible. Be realistic about what you can achieve.
7. Respond to what you have learned and compromise if you need to.
8. Evaluate the leadership engagement process and document the learnings for the next time.

This process is cyclical and iterative and should be customised based on your relationship with the stakeholder in question and the strength of their influence over the organisation.

Let's recap

Stakeholders are the network of people who impact an organisation and are affected by an organisation’s activities. They are important to organisations because of the influence they have on their success.

Your job is to make sure you can get the most from them and learn from them, using an approach that works for both of you.

So, next time you need to engage a stakeholder, take a few minutes to review these eight top tips and you’re on your way to better stakeholder management.

Note: We have created an evidence-led resource for stakeholder engagement, to help you grow your skills.