What are Stakeholders, why are they important and what challenges do companies face in dealing with them?
Many things that companies do or don’t do have an impact on people and organisations. Stakeholders are all internal and external persons and groups of persons who are directly or indirectly affected by activities of a company or who have a concrete interest in these activities. They can be natural persons or legal entities.
The term stakeholder is derived from the two words stake and holder. The word stake means claim or share, holder means owner or proprietor. A stakeholder therefore has an interest in the activities of a company because its stake is at stake.
Identification of Stakeholders
Stakeholders are essential for the development of systems and in the design of projects and undertakings. Surveys show that projects often fail because there is no clarity about stakeholders and thus an important source of requirements is missing. Identifying all important stakeholders is the task of stakeholder identification.
Typical stakeholders are:
- employees and customers,
- suppliers and partners,
- trade unions, associations and consumer organisations,
- as well as capital providers such as owners, silent partners, shareholders or banks.
In addition, also
- authorities or
are stakeholders, because they can significantly influence the achievement of corporate goals.
Stakeholders and their Interests
What interests could stakeholders pursue? Here is a small example:
- Employee X is interested in a meaningful workplace, he wants to participate in decision-making processes and contribute his skills.
- Owner Y is primarily interested in sales and profits, and wants to retain his power and decision-making autonomy.
- Owner Z is interested in a “secure” return on investment in order to gradually increase his assets.
If Owner Y is now considering moving jobs from Berlin to New Delhi, what will Employee X and Investor Z think? X is likely to lose his job, Z could hope for a higher, but possibly riskier return on investment. And what does Employee A, who would like to work abroad, think? And supplier B or customer C?
Tips for dealing with stakeholders
Within the scope of a stakeholder analysis, companies must identify their relevant stakeholders, their expectations and influence possibilities, as well as the associated opportunities and risks. This is important because stakeholders behave differently. At a cinema a customer would probably wait several minutes in line at the box office, but would not accept this in an online shop.
Who ignores stakeholders
- often does not know what is to be developed,
- does not recognise problems in time,
- neglects those who have a relevant interest in the success of a project,
- missed opportunities to improve products and systems,
- detects too late when a project gets into trouble.
Professional interaction with stakeholders is very important for companies. As the project manager, you should therefore record the following information for all relevant stakeholders:
- What is the stakeholder’s influence?
- What is the stakeholder’s attitude and motivation towards the project or plan?
- What are his goals?
- How influenceable is he?
- How is he perceived and how does he represent his opinion?
- What conflicts are there between him and other stakeholders?
In addition, you should also document contact data with the appropriate communication possibilities and times, as well as conflicts with other stakeholders. Simple tables or a stakeholder matrix can be used for documentation purposes. Since stakeholders can also change their opinions, it makes sense to review their knowledge at regular intervals. Only if you notice changes can you respond to them.
Stakeholders and Conflicts
Stakeholders pursue individual goals. There can easily be conflicts between the goals of the individual stakeholders, e.g. if quality leadership on the one hand and price leadership on the other hand are aimed for. Such professional conflicts can also easily become personal conflicts between the stakeholders. Often conflicts also occur when management believes they know what customers want and defines their own opinion as the benchmark for future actions.
It is important for the success of a company to recognise conflicts at an early stage, define measures for stakeholders with a high degree of effectiveness and communicate regularly.
Stakeholders and Shareholders
The term shareholder is often used alongside stakeholder. The shareholder concept is aimed at the economic interests and expectations of the company’s stockholders. The primary objectives are therefore maximisation of turnover and profit. This is the so-called shareholder value.
In theory, the interests of stakeholders are only taken into account if a positive effect on the success of the company can be expected. However, since companies are hardly in a position to focus exclusively on the interests of shareholders or the needs of stakeholders, in practice both approaches are usually pursued simultaneously. Potential conflicts can be visualised with goal diagrams.
Challenges for companies
Stakeholder Identification and Stakeholder Analysis
How do you identify who your stakeholders are and which motives, attitudes or goals they pursue? In the course of stakeholder management, it is important that companies identify and analyse stakeholders. This must be done as early as possible, but is not a one-off task, because stakeholders change their opinions and priorities during the course of a project. You should therefore define a procedure for stakeholder identification and analysis. Ideally, you should document and version your findings because this will enable you to trace project changes back to changes in stakeholders at a later point in time.
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