Managing Stakeholder Relationships: Effective Leadership in a Networked World
Posted on Dec 12, 2023 at 03:12 AM
What is the best approach to managing stakeholder relationships to ensure success in your leadership role? If you are a manager or business owner dealing with a group of different cultures and dependencies of people, you may be asked the above question a lot.
The answer to the previous question is complicated because it depends on understanding, communicating, and cooperating with all groups and stakeholders to achieve satisfactory results.
Our article for today will discuss the importance of managing relationships with stakeholders and the best strategies for creating a compatible work environment.
What is managing stakeholder relationships?
Before going into what the term "managing stakeholder relationships" is, we have to define who the stakeholders themselves are!
A stakeholder is any individual, person, group, or party who can directly affect the objectives and work policy of any company, organisation, or institution.
The groups of primary stakeholders are many and varied according to business models and types. These groups are also categorised into internal and external stakeholders. They include all related parties, for example:
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Suppliers.
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Investors.
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Employees.
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Customers.
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Contributors.
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Marketing and PR agencies.
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Purchasing committees.
Managing stakeholder relationships means working on written communications and meetings with project stakeholders. The reason is to involve everyone involved in the project, get to know them and their expectations, build trust and effective communication with them, and address any concerns they have regarding project work and implementation.
Stakeholders are central in determining how firms can address the Sustainable Development Goals (SDGs). Firms must consider their different stakeholder groups to contribute to the SDGs and stay competitive. The aim is to interact and address the stakeholders’ needs in other engagement processes, measure a firm’s impacts on them, and communicate to the market how interactions with stakeholders generate value for the firm.
Why is managing stakeholder relationships important?
Managing Stakeholder relationships is important because it is the reason for project success. Hence, it is essential to manage stakeholder relationships. In other words, when you can understand your stakeholders and their requirements and assess their expectations, you can meet their needs more efficiently. You can also understand what the project aims to achieve and why it's necessary. This helps you create a successful outcome.
Building and managing stakeholder relationships effectively cultivates trust and encourages stakeholders to support and champion the project. This can have many positive effects on workflow. Some of the benefits of good relationship management include:
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Reduces the project's risks
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Develops long-term relationships and partnerships
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Improves your organisation's reputation
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Creates a competitive advantage
What are the best managerial strategies for managing stakeholder relationships?
Correct application of managing stakeholder relationships means making them supportive and championing the project. Thus, they will be more receptive to decisions and contribute to creating positive outcomes.
However, failure to engage stakeholders means excessive project costs and significant delays. So, an effective strategy for managing stakeholder relationships is essential.
Here are some successful practices and strategies:
1. Identify and prioritise key stakeholder relationships
The various stakeholders, who have certain direct and indirect relationships with the project, must be analysed and accurately divided into two main groups:
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Who Has a vested interest in the project
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Only those who Are affected by the project outcomes
These two groups can be further split into those who are:
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Directly involved in the project
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Who influence decisions
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Who needs to stay informed about the process and decisions?
That process requires precision in setting the priority of each of them. Therefore, it must be ensured that the nature and interest of each stakeholder are understood separately, and accordingly, the degree of priority is determined. While some of them just want to see the results. Others want to know every detail.
Following one of the Leadership Training Courses in Dubai contributes to developing leadership expertise to manage priorities. Because underestimating some stakeholders' impact is also high risk, be sure to do the analysis and take the time to identify the influential stakeholders who can either endorse or resist the project.
2. Communicate information to stakeholders
Honesty, transparency, and integrity are vital to building stakeholder trust and creating more productive relationships.
Stakeholders must be informed of the process used to communicate information to them and the channels of communication from the outset. It is also essential to clearly explain how their input into the project will affect the outcomes and how much they will be engaged in decisions.
3. Gain stakeholder trust right from the start
More trust can be built by communicating with people early and frequently so they clearly and fully understand the benefits and goals of the project. This means that they are more likely to provide support when necessary.
It also means that even if stakeholders disagree with the final decision, they have the advantage of understanding the process and the trade-offs made. Therefore, they will be less likely to object strongly in the final stage.
4. Consistency in communication and messages
Stakeholders can quickly obtain the correct information from several sources and discover any contradictions between it and the information provided. Therefore, consistent messages must be ensured to prevent mistrust, outrage, and negative reputation.
Stakeholders value accurate information from a trusted source throughout the project life cycle. They are always there to help overcome any hurdles that may arise along the way.
5. Meet with stakeholders who are resistant to change
Consensus and agreement on everything are not beautiful things. Without conflict and resistance, creativity and innovation will be lacking. In any project, some love or hate or want to change the idea of the project or the work policy.
In this case, the administration's task is to create a way in which opinions are balanced and agree on a compromise that satisfies everyone. The level of mastering public relations skills of business managers and leaders is highlighted here.
Avoiding what goes against business policy may lead to resistance and backlash regarding the project at the final hour. To prevent this from happening, it is essential to meet regularly with key stakeholders who are resistant to change, involve them in decisions, listen to their concerns, and have mutual discussions.
In Conclusion,
Building a positive relationship with stakeholders increases the effectiveness of coordination and work with management in making more comprehensive decisions. Therefore, managing stakeholder relationships as a proactive approach to business is crucial for companies that are keen to protect their reputation, continue to grow, and create new opportunities.
