Stakeholder Management Skill

What

Stakeholder management is the process of identifying, assessing and managing the interests and expectations of stakeholders, who can include customers, employees, shareholders, suppliers, regulators, and communities. This skill involves communication, negotiation, and relationship-building to align stakeholders' goals and objectives with those of the organization. Effective stakeholder management helps organizations achieve their objectives while also maintaining positive relationships with stakeholders and minimizing potential conflicts.

?

Fun facts

a few fun facts about the importance of managing stakeholders:

1. A study by the Project Management Institute found that organizations with strong stakeholder management practices are three times more likely to be successful in achieving their goals.
2. In a survey of business leaders, 85% of respondents agreed that stakeholder engagement is critical to the success of their organizations.
3. A study by the Harvard Business Review found that companies with engaged stakeholders outperformed their peers by more than 2 to 1.
4. Companies that engage with stakeholders on sustainability issues have a 20% higher return on equity than those that do not.
5. Companies that excel in stakeholder management are more likely to be viewed as trustworthy and have better reputation which can lead to more positive financial results.
6. Effective stakeholder management is an essential part of crisis management and helps organizations respond to unexpected events more effectively.

?

?Measurement

There are several ways to measure stakeholder management skill, including:

1. Surveys: Surveys can be used to gather feedback from stakeholders on the effectiveness of communication and engagement efforts, as well as the level of satisfaction with the organization's performance.
2. Interviews: Interviews can be conducted with stakeholders to gather more in-depth feedback on the organization's performance and stakeholder management efforts.
3. Project performance: The success of projects can be used as a measure of stakeholder management skill. Projects that are completed on time, within budget, and to the satisfaction of stakeholders are a good indication that stakeholder management skills are effective.
4. Relationship building: The number and quality of relationships that an individual has with stakeholders can also be used as a measure of their stakeholder management skills.
5. Conflict management: The ability to identify and resolve conflicts with stakeholders can be used as an indicator of effective stakeholder management skills.
6. Compliance, Audits and inspections: Compliance with laws and regulations, as well as successful completion of audits and inspections, can also serve as a measure of an organization's stakeholder management skills.

It's important to note that measuring stakeholder management skill requires a combination of different methods, and considering the feedback from multiple stakeholders.

?

Common approach with pros and cons

There are several common approaches to stakeholder management, each with their own pros and cons:

1. Power-Interest Grid: This approach involves categorizing stakeholders based on their level of power and level of interest in the organization. High-power, high-interest stakeholders are considered the most important and are given the most attention. Pros of this approach include that it is simple and easy to implement, and it helps focus attention on the most important stakeholders. Cons include that it can lead to neglect of lower-power, high-interest stakeholders, and it can be difficult to accurately assess stakeholders' power and interest levels.
2. Stakeholder Engagement Matrix: This approach involves categorizing stakeholders based on their level of engagement, and the type of engagement. High-engagement, high-impact stakeholders are considered the most important, and are given the most attention. Pros of this approach include that it focuses on the level of engagement, which is more important than power or interest, and it helps identify the most important stakeholders. Cons include that it can be difficult to accurately assess the level of engagement, and it can lead to neglect of low-engagement, high-impact stakeholders.
3. Stakeholder Salience Model: This approach involves categorizing stakeholders based on their level of salience, which is a combination of power, interest, and legitimacy. High-salience stakeholders are considered the most important, and are given the most attention. Pros of this approach include that it takes into account multiple factors, and it helps identify the most important stakeholders. Cons include that it can be difficult to accurately assess the level of salience, and it can lead to neglect of low-salience, high-impact stakeholders.
4. Stakeholder Circle: This approach involves creating a "circle of stakeholders" that includes all stakeholders, and managing them all to the best of the organization's ability. Pros of this approach include that it helps ensure that all stakeholders are considered and engaged, and it can lead to more positive relationships with stakeholders. Cons include that it can be difficult to manage all stakeholders effectively, and it can be resource-intensive.
5. Participation and Inclusion: This approach involves actively engaging stakeholders in the decision-making process, and including them in the design and implementation of solutions. Pros of this approach include that it can lead to more buy-in and support from stakeholders, and it can lead to more effective solutions. Cons include that it can be time-consuming and resource-intensive, and it can be difficult to manage expectations and ensure that all stakeholders are included.

It's worth noting that different approaches may be more suitable depending on the context, and it's important to select the approach that best fits the organization's needs, goals, and resources.

?

Case studies

Here are a few examples of stakeholder management case studies from different fields:

1. BP Oil Spill: In 2010, BP experienced a major oil spill in the Gulf of Mexico, which had a significant impact on the environment, local communities, and the company's reputation. BP took a number of steps to manage the crisis and engage with stakeholders, including setting up a dedicated website to provide information and updates, establishing a claims process for affected businesses and individuals, and creating a $20 billion fund to compensate those affected by the spill. This helped BP to maintain positive relationships with stakeholders, and to mitigate the negative impact of the crisis on its reputation.
2. Apple's Foxconn Audit: In 2010, workers at Foxconn, a supplier of Apple products, were found to be working in poor conditions. Apple faced significant backlash from stakeholders over the issue. To address the concerns, Apple conducted an audit of Foxconn's operations, and subsequently implemented a number of changes to improve working conditions, such as increasing wages and reducing working hours. This helped Apple to maintain positive relationships with stakeholders and to address the concerns about its supply chain practices.
3. Nestle: Nestle, the food and beverage company, faced a public relations crisis in 2010 when it was revealed that its products contained high levels of lead. Nestle was able to successfully manage the crisis by quickly recalling the products, conducting an internal investigation and communicating transparently with stakeholders about the issue. Nestle also implemented new quality control measures to prevent a similar incident from happening in the future. This helped Nestle to maintain positive relationships with stakeholders and to restore its reputation.
4. Uber: In 2016, Uber experienced a major crisis when it was revealed that the company had not done enough to address sexual harassment and discrimination within its workplace. Uber responded by conducting an internal investigation, and subsequently implementing new policies and procedures to address the issue. Additionally, Uber's CEO resigned and the company hired a new CEO who took steps to improve company culture and relationships with stakeholders. This helped Uber to maintain positive relationships with stakeholders and to restore its reputation.
5. Tylenol: In 1982, Johnson & Johnson faced a major crisis when several people died after taking Tylenol capsules that had been tampered with. The company's response, which included recalling all Tylenol products, cooperating with the authorities and providing information to consumers, was widely praised and helped to rebuild the trust of stakeholders.

These examples illustrate how effective stakeholder management can help organizations to mitigate the negative impact of a crisis and maintain positive relationships with stakeholders. It also shows that transparency, timely response and taking responsibility are key elements in managing stakeholder relationships.