Definition:

Stakeholder Management is the process of identifying individuals who will be affected by a potential action, categorizing the individuals by impact, and engaging them accordingly. The goal is to determine the appropriate actions to meet the expectations of individuals affected by the aforementioned action. There are three main components to stakeholder management: Stakeholder identification, stakeholder classification, and stakeholder engagement.


Stakeholder Identification:

A stakeholder is anyone who is involved in, or is affected by an action or change. There are two broad classes – internal stakeholders and external stakeholders. Internal stakeholders are those who are responsible for the change, whereas external stakeholders are those affected by the change.


Stakeholder Classification:

There are several different ways to classify stakeholders, most have some visual matrix dividing stakeholders into groups depending on their degree of impact. Examples include Responsibility-Assignment (RACI) matrices as well as the influence-interest grid made popular in the 1997 book "Toward a Theory of Stakeholder Identification and Salience” by Mitchell Agle and D.J. Wood. Both are useful tools in classifying stakeholders.


Stakeholder Engagement:

Central to stakeholder engagement is the fact that stakeholders should have some ability to influence the decision making process leading to the action or change. The extent of the influence should depend on the stakeholder’s relationship to the change defined by their classification (see above).


Example:

Let’s say you are appointed the Project Director for a sales management re-organization in the US. There are a number of stakeholders influenced by this change – Front line Sales Reps, Sales Managers, Regional Directors, Pricing Groups, etc. However, there are only so many that will need to be involved in the decision making process initiating the reorganization, and the implementation process to ensure the change is a success.

By employing a structured stakeholder management program, you can determine how to manage the roles and responsibilities within the project. Also, a structured stakeholder management program will help to define the appropriate communication channels for various kinds of external stakeholders who will be directly affected by the change. Put simply, stakeholder management will allow you to gather the support and resources you will need to be successful, while minimally disrupting the operations of the organization while you employ the change, thus improving the likelihood of a positive outcome.


Advantages:

• Stakeholder management helps to clearly define the roles and expectations of those involved in the success of the change – both internally and externally.

• Stakeholder management increases the chance that those who will influence the success of the change will indeed support it.

• By gaining the support of stakeholders, change agents will be backed by additional resources and credibility.


Disadvantages:

• It can be a time consuming activity at a crucial time in the planning process where resources are often at a premium.


References:

• Jacka, Mike; Keller, Paulette (2009). Business Process Mapping: Improving Customer Satisfaction. John Wiley and Sons. p. 257. ISBN 0-470-44458-4.

• Mitchell, R. K., B. R. Agle, and D.J. Wood. (1997). "Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What really Counts." in: Academy of Management Review 22(4): 853 - 888.