In the past, companies have predominantly been managed with an eye to the financial returns for shareholders. This approach is still common, but an exclusive focus on maximising shareholder returns has come under increasing criticism for business as well as social reasons.
Stakeholder theory argues that the interests of all stakeholders – not just those with a financial stake in the business - should be taken into consideration. Proponents of this approach argue that this approach will contribute to the success of the business and ultimately the interests of shareholders. Fundamental to stakeholder thinking is that the interests of all stakeholders are taken into account in order to maximise the value of the organisation. The needs of each stakeholder should be understood, respected and incorporated into company thinking and plans. To achieve this, managers need to identify their key stakeholders, and understand their interest in, contribution to or effect on the organisation and its ability to meet its objectives.
The aim of stakeholder analysis is to provide decision makers with information about the individuals and groups that may affect the achievement or otherwise of their goals. This makes it easier to anticipate problems, gain the support of the most influential stakeholders, and improve what the organisation offers to different groups and individuals and how it communicates with them.
What is a Stakeholder?
A stakeholder is any group or individual with an interest or a stake in the operations of a company or organisation - anyone who can affect or be affected by its activities. This includes: internal stakeholders such as employees, departments, divisions or subsidiary companies; external stakeholders such as business partners, customers and suppliers; and wider groups within society such as government departments, the media and pressure groups.
What is Stakeholder Analysis?
Stakeholder analysis is the process of identifying an organisation’s stakeholders and their interests, assessing their influence, or how they are impacted by the organisation, so as to formulate strategies for managing relationships with them.
At strategic level an organisation may conduct a broader review of stakeholder relationships to inform the strategy making and objective setting process. At an operational level, an individual manager may undertake a stakeholder analysis within their own division or department in order to better manage the motivation, cohesion and commitment of key stakeholder groups. Equally stakeholder management is relevant to projects and programmes.
Stakeholder Analysis and Management Techniques and Best Practices
- Gather information
- Identify stakeholder groups
- Map your stakeholders
- Be specific
- Prioritise your stakeholders
- Understand your stakeholders
- Develop strategies for action
- Communicate and develop relationships with stakeholders
- Monitor and review
For detailed explanation of each step and to find out more about managing conflict, view the guide below.
Download the guide