‘Stakeholders’ is a word that gets used a lot in big organisations. But who exactly are they and what do they do in a company? Put simply, stakeholders are the main people (or groups) that influence decision-making at an organisation.
The stakeholders of a project or at an organisation are the people whose opinions determine the outcomes. They’re not always necessarily the same people, as stakeholders can change depending on the situation.
Discover more about the ‘stakeholders’ meaning, the role of stakeholders in a business or in a project, and strategies for managing stakeholder expectations.
What is a stakeholder in a business? A stakeholder is any person, group or entity that has an interest in an organisation. Some examples of stakeholders are:
Stakeholders can have either a positive or negative influence on a business. Positive stakeholder influence is when their involvement leads to beneficial outcomes for the organisation. These groups might include loyal customers, dedicated employees and investors providing funds for growth.
On the other hand, negative influence is when stakeholder demands harm the organisation’s performance or reputation. This could be through public opposition from community groups or internal conflicts with employees.
The terms ‘shareholder’ and ‘stakeholder’ seem similar, however there is a clear distinction between the two.
Who are the stakeholders in a business context? They’re anyone with a ‘stake’ in the company. Their needs, expectations and feedback influence business decisions, therefore shaping its direction and success (or failure).
Certain stakeholders, such as investors and suppliers, provide resources – financial, material, or human – that are vital for the company’s operations and growth. Here’s how they impact day-to-day operations:
There can be many types of stakeholders in a business. For example, there are internal stakeholders like employees and managers, and external ones like suppliers, customers and regulatory bodies. Here is the specific role of stakeholders in each category.
Internal stakeholders include groups or people who are directly involved with the company.
These stakeholders typically include:
External stakeholders are individuals or groups outside of the organisation who are impacted by or have an influence on its activities and decisions. External stakeholders typically include:
To understand how stakeholders play important roles in shaping the company’s projects and overall direction, it can help to look at specific scenarios.
What about employees: are they shareholders or stakeholders? The short answer is they can be both. They are considered stakeholders because their career development and job satisfaction are directly influenced by the company’s performance and decision-making processes. They contribute their skills and labour to the company’s operations, contributing to its success.
However, being a stakeholder doesn’t automatically make an employee a shareholder. ‘Shareholders’ specifically means people who own shares in the company. Most employees do not own shares in their company, though some may be offered stock options or Employee Stock Ownership Plans (ESOPs) as part of their compensation. ESOPs are programs that enable employees to own shares in the company, either as a form of compensation or through purchase plans that offer shares at reduced prices.
Stakeholder management is an important aspect of any successful business or organisation, and can be a big part of individual roles as well. It involves understanding and balancing a variety of interests, needs and expectations, to simultaneously ensure all stakeholders are satisfied and the company is on track towards its goals. Managing stakeholder expectations can be a delicate balancing act and may sometimes require a strategic approach.
Here’s how to manage stakeholder expectations:
We’ve looked at stakeholders of a company, but there can be stakeholders for any operations at an organisation. In any workplace that has projects, there will be stakeholders for each of them. Stakeholders all contribute to and influence the project’s outcome in some way. Recognising and understanding stakeholders and the different roles they play is essential for successful project management.
Understanding the difference between internal and external stakeholders is vital in project management. Internal stakeholders usually have direct control over the project, while external stakeholders usually have an indirect influence.
Internal stakeholders like team members, managers and company executives, have a direct interest in the project’s success and can have a big impact on its outcome. To manage these stakeholders, you can try the following:
External stakeholders could be clients, end-users, suppliers or any other party outside your company. Managing these groups can be trickier, as you may not be able to be as transparent with them, and therefore may not have as much trust.
Managing stakeholders is an important aspect of any workplace project, but it isn’t always easy. There are lots of obstacles, which can include the complexity of some projects, multiple stakeholders, workplace politics, time constraints, and a variety of other factors. Here are a few potential challenges you may encounter as a project manager.
One of the main challenges in stakeholder management is the failure to identify all relevant stakeholders. This might happen if you’re new to a company or if you’re taking on a larger project than usual. Overlooking stakeholders means you won’t have all the input you need to properly get your project underway. This can result in unexpected pushback and lead to delays or even derailment of the project.
Communication breakdowns can lead to missed milestones, small issues growing into big problems, and confusion among stakeholders. Maintaining clear and consistent communication is vital for keeping all stakeholders engaged and on the same page.
Stakeholders often come with different goals and priorities, which can sometimes conflict. Part of a project manager’s job is to mediate and smooth over any clashes in order to keep the project on track. Finding common ground and aligning stakeholder interests with project objectives requires skillful negotiation and compromise.
Power dynamics play a significant role in stakeholder management. Senior stakeholders can sway the direction of a project and create unexpected delays. Recognising where delays like this might occur can help when scoping out a project timeline.
Some stakeholders may be resistant to adapt to the changes brought about by a project. Sometimes this can be due to fear of the unknown or comfort with the status quo. Addressing these fears and providing support during the transition can help.
In some cases, certain stakeholders may not contribute equally to a project, though they stand to benefit from its success. This can create resentment among other stakeholders.
No matter where you work or what your role is, it’s important to keep stakeholders happy. They could be external stakeholders like customers or a governing body, or internal stakeholders like your supervisor and your teammates. Good stakeholder management often comes down to open communication and establishing clear goals from the outset, whether they’re individual or for the whole organisation.
A stakeholder business definition is any individual, group or entity that has an interest in an organisation. Examples include:
The role of a stakeholder changes depending on what they are a stakeholder in. For example, an employee is a stakeholder whose main role is to provide labour. A customer’s main role is to make purchases. A supplier’s main role is to provide resources.
Stakeholders in a project are people or groups who have a vested interest in the project’s outcome. This includes the project team, sponsors, clients, suppliers and any party affected by or influencing the project.
A stakeholder is anyone with an interest in an organisation or company, while a shareholder specifically owns shares in a publicly traded company for investment purposes. All shareholders are stakeholders, but not all stakeholders are shareholders.
In project management, stakeholders play a crucial role in defining project goals and influencing decision-making. Different stakeholders have different roles, including: the project manager, team members working on the project, any legal team overseeing the project, any client, supplier, or third-party involved in the project.
Stakeholders affect decision-making by:
Yes, employees are considered stakeholders as they are directly affected by the organisation’s success and contribute to its performance and to reaching its goals.
To engage with stakeholders effectively, maintain clear and consistent communication, understand their needs and interests, involve them in decision-making processes and manage expectations through open communication.
When stakeholders are not considered in a project, it can lead to: