A Primer on Stakeholder Relationship Management

updated on 30 March 2021

Whether you’re a team leader, a human resources manager or even the owner of busy law firm, you’ve almost certainly read your fair share of business manuals and productivity guides.

Sure, some of them are game-changers. But on the whole, the business genre is awash with corporate buzzwords and well-trodden concepts like “Transparency” and “Stakeholder Relationships”.

Your eyes are probably glazing over at the thought…

And you know what? We get it.

But here’s the thing: That last phrase; “Stakeholder Relationships”, is a vital concept to get your head around if you’re looking to improve efficiency and ultimately increase your profits.

In this article, we’re going to take a jargon-free look at the different types of stakeholder you’re likely to come across in the day-to-day running of your business or department, and offer some tips on how to manage those relationships to keep everything running smoothly.

Let’s dive right in:

So What Exactly Is a Stakeholder?

“A stakeholder is a party that has an interest in a company and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees, customers and suppliers.”

Investopia

Pretty simple right?

Even if you’re working in a business with only one other person, you have a stakeholder to consider!

The people that you and your business (or department) interacts with have their own goals, feelings, motivations and unique ways of working. If you want your organization to succeed, you need to manage your relationships with those people, or “Stakeholders”, effectively.

The Different Types of Stakeholder

Every business will vary when it comes to the number and type of stakeholders at play. As a general rule though, we can break stakeholders down into two distinct groups:

Internal stakeholders are the people you interact with inside the business on a day-to-day business. They’re the team managers, colleagues and general employees.

External stakeholders are people outside of the business that rarely interact with it on a personal level. Suppliers and investors are typical examples of external stakeholders.

Getting More Specific:

Primary Stakeholders: These people are directly involved in the running of the business and will be affected by the success or failure of your projects. That means both customers and staff all fall under the umbrella of “Primary Stakeholder”

Secondary Stakeholders: One-step removed and playing a supporting role, secondary stakeholders aren’t instrumental in product creation or project completion, but they’re still vital players. These are the suppliers, consultants and legal advisors necessary for the smooth operation of a business.

Direct Stakeholders: In a nutshell, these are the boots-on-the-ground people who make things happen. They’re your staff and managers.

Indirect Stakeholders: Think investors and shareholders. These stakeholders care about a project’s result, but they aren’t involved in bringing it to fruition.

OK, I Get It. But Why Do I Need to Know about All This Stuff?

Back in 1984, a guy called Edward Freeman wrote about a concept called “Stakeholder Theory”. He posited that a healthy business should function like an ecosystem, with all parts forming a closely interwoven system and special care being taken to keep those parts happy and healthy in order for the business as a whole to succeed.

relationship maze<br>
relationship maze

Your eyes are probably glazing over at the thought…

Sure, some of them are game-changers. But on the whole, the business genre is awash with corporate buzzwords and well-trodden concepts like “Transparency” and “Stakeholder Relationships”.

And you know what? We get it.

Whether you’re a team leader, a human resources manager or even the owner of busy law firm, you’ve almost certainly read your fair share of business manuals and productivity guides.

That Sounds Complicated!

Think of it this way: Have you ever wanted to do something for someone who is demanding and cold toward you? Someone who doesn’t seem to want the best from you, but just wants you to complete tasks like a robot?

Probably not!

We’re all human beings, and every member of a business from the CEO right down to the catering or cleaning team needs to feel respected and fulfilled.

When stakeholders feel that their needs are being taken into account and that they have a mutual and valued place in the company ecosystem, the business will become more efficient.

Better still, you’ll have an opportunity to create real, lasting and fulfilling relationships.

The Perks of Better Stakeholder Communication:

Every stakeholder requires a different level of communication. However, regardless of role, there are numerous benefits to working towards better stakeholder communications and building stronger relationships.

In this article, we’re going to take a jargon-free look at the different types of stakeholder you’re likely to come across in the day-to-day running of your business or department, and offer some tips on how to manage those relationships to keep everything running smoothly.

Here are a few of the major perks:

But here’s the thing: That last phrase; “Stakeholder Relationships”, is a vital concept to get your head around if you’re looking to improve efficiency and ultimately increase your profits.

You’ll increase loyalty: When you reach out to people to keep them updated or listen to their queries and concerns, you build loyalty and stronger team bonds.

personal relationship manager
personal relationship manager

When you take the time to foster stronger relationships with the stakeholders in your company, they’ll feel a sense of loyalty to you, pushing your company to greater success.

You can increase the stakes: No one thrives when they are so uninspired or unhappy in a role that their only motivation to stay and do well is to ensure they keep paying the bills.

Sure, things aren’t usually that dire, but you can positively increase the stakes by creating a greater sense of belonging within a team or department.

Even if an employee isn’t directly involved with a new product or project, it’s vitally important to keep things transparent and keep everyone in the loop. You’ll be pleasantly surprised at the results!

Stakeholders will be more honest: Bottlenecks, miscommunication and general delays often arise because managers and staff are afraid of the consequences of reporting important issues. If all of your company’s departments and managers are working hard to build honest and open relationships, efficiency will eventually skyrocket.

Will Any of This Help My Specific Business?

It’s often tempting to think that concepts like “Stakeholder Management” only apply to huge corporations and multinationals, but that couldn’t be further from the truth! Here are some genre-specific examples of how better stakeholder relationships can improve day-to-day work:

HR Managers: Stakeholder relationships should be an obvious and key concern for HR managers. Mediating disputes between employees can often get messy, so it’s vital for everyone in the HR department to be able to smooth over problems whilst also keeping an eye on the strengths and weaknesses of employees, with a view to keeping everything running efficiently and harmoniously.

Attorneys & Law Practices: Law practices typically have smaller amounts of internal stakeholders, but juggle a huge network of external parties, all with their own unique interests and goals. To further complicate matters, law firms usually deal with multiple drawn out cases, so it’s vital for partners and team leaders to understand the basics of Stakeholder Management theory.

Journalists & Media Companies: Media companies are another type of business relying on large amounts of external stakeholder input. From freelance journalists to technical departments (think video editing and filming), it can be a huge challenge to meet deadlines and manage client expectations.

Education: Educational faculties by their very nature have a huge amount of stakeholders: Parents, teachers and even the pupils themselves all have multiple needs and goals. Managing everyone’s personal quirks and behaviors whilst simultaneously running a campus smoothly is a huge logistical operation. An understanding of stakeholder management theory can help massively in the process.

OK, I’m Convinced. But How Do I Create a Stakeholder Management Plan?

We’ve taken a look at some of the reasons you might want to focus on better stakeholder relationships, but what does that look like during a typical day at the office?

Here are a few pointers for creating a successful stakeholder management plan:

Phase 1: Create a List of Your Key Relationships

Create a list of all the stakeholders you usually communicate with.

  • Who needs to hear from you regularly?
  • What are their roles within the organization?

Don’t go too overboard here, especially if you’re part of a large organization. Look for lynchpin managers, and avoid focusing on every individual employee.

Top Tip: Check out Mendelow’s Matrix to get a better understanding of the process of “Stakeholder Mapping”, especially if you’re part of a larger company.

Phase 2: Develop a Communication Plan

Once you’ve got everyone listed, you need to plan how you’re going to communicate with them and how often.

Not everyone needs to know everything, and you certainly don’t have the time to have casual discussions through email or Slack on a daily basis. Decide when and where you will communicate regularly, and don’t deviate from these channels, so you can keep track of all communication.

Top Tip: Consider issuing a newsletter on a weekly or monthly basis to keep your immediate stakeholders up-to-date.

Phase 3: Look for Problems Now

Even with the best communication in the world, there may be certain members of staff who aren’t as on-board with your thinking as you’d like them to be. Go through your list and determine who is engaged and who is distant. Look to these people and find out what is causing their disinterest or irritation. Is there a problem you can fix?

a man creating his to-do list
a man creating his to-do list

Top Tip: Stakeholder relationships need to be organic and personal. If someone isn’t quite as responsive as you’d like, dial back the self-help buzzwords and HR-speak and go back to basic, honest communication!

Phase 4: Build a Feedback Loop

Every quarter, or at a time of your choosing, depending on the length of projects in your business, check in with your stakeholders. How do they feel your communication has been throughout the quarter or project? Ask for their feedback and try to implement it as you move forward.

Top Tip: Consider an anonymous feedback system, where staff can speak honestly, without fear of reprisal.

Summing up:

So there you have it. Our complete guide to managing stakeholder relationships and ensuring your business runs as smoothly and efficiently as possible.

Putting a stakeholder management plan into practice isn’t easy, which is why we’ve created a tool to automate as much of the process as possible.

Metacosm lets you unburden your thoughts and experiences with others by allowing you to sort through your open loops so that you can build more meaningful relationships despite your overwhelming, fast-changing environment. This helps you to keep track of complex stakeholder relationships in a hyper-efficient manner.

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