September 10

What Is Stakeholder Management & How To Manage Stakeholders

Product managers want to lead collaborative and successful projects throughout the entire product life cycle. But the more people that get involved the harder it is to manage their expectations, interests, and opinions.

Stakeholder management can help you develop your relationships with stakeholders and ensure that you have a satisfying communication and engagement plan with them.

What is stakeholder management?

A critical component of running a successful project is to involve key stakeholders in the process. Product managers should ensure that important stakeholders are engaged and participating in the project. This process is called stakeholder management, and it centers around the idea of developing and maintaining relationships with stakeholders to establish a smooth project process.

Stakeholder management usually involves identifying key stakeholders, understanding their needs and preferences, and then effectively communicating with them about what they need to know about the project.

Stakeholder management definition

Stakeholder management is the process of understanding, communicating, and developing relationships with key stakeholders.

Why is stakeholders management important?

Key stakeholders can have a significant potential impact on the success of your project. They have influence and power to support your project or block it from happening at all. That’s why it’s important for product managers to ensure that they are effectively communicating with key stakeholders and convince them to support the project.

An in-depth understanding of stakeholders combined with a clear communication and engagement plan can help you develop and maintain relationships with key stakeholders that can help provide support to your project.

Poor stakeholder management could lead to the failure of your project and miscommunication about what is happening during the project.

3 benefits of project stakeholder management

Stakeholder management can be a heavily involved process, but it’s well worth the effort. Having a smooth project process is far easier to manage than a project that consistently runs into roadblocks from stakeholders. Some of the benefits of project stakeholder management include:

Prevent micromanaging

Micromanagement from internal stakeholders is often caused because they don’t understand what is happening or they don’t have enough visibility on projects. Stakeholder management will give product managers the tools they need to frequently communicate with stakeholders and ensure they are satisfied with the project.

Stay on deadline and within budget

You might find yourself in a situation where a stakeholder doesn’t approve something until late in the process, which could delay the project and cause an increase in the budget. This could have been avoided with stakeholder management.

Proper stakeholder management will mean that all involved stakeholders will always be communicated with about the project. This will lead to fewer major problems occurring and mitigating issues early on in the project.

Properly utilize stakeholder expertise

Product managers can’t keep track of every conversation that happens over multiple teams. Having an effective communication plan with various stakeholders could help you get crucial information that could’ve been lost otherwise. It will also give stakeholders a channel to provide feedback and share their expertise. This will lead to better collaboration between stakeholders and creating better outcomes.

10 key principles of effective stakeholder management

The Associate of Project Management identified 10 key principles to keep stakeholders engaged. Engagement from stakeholders is critical to meeting a product manager’s objectives, but they can only engage if they are encouraged by proper management.

Communication

Communication is more than sharing information with a stakeholder. It’s also about gathering information from stakeholders and learning how to effectively communicate with them. Different people have different preferences for communicating, so product managers will need to adapt as needed.

Consult early and often

It’s necessary to ensure stakeholders are properly informed about a product’s purpose, scope, risks, and approach. You’ll want to communicate this early on in the product life cycle to ensure requirements are met and compromises are made to keep the product moving forward.

Remember stakeholders are human

Humans make mistakes, and the same goes for stakeholders. Sometimes there are personal agendas, poor attitudes, and inconsistencies that need to be managed. By understanding the root cause of a stakeholder’s behavior, you can determine the best course of action to keep the relationship productive.

Plan for stakeholder management

It’s worth the time investment to create a stakeholder management plan. Engaged stakeholders can lead to better outcomes. Taking a proactive approach to communication and engagement will prevent major potentials from occurring. We’ll discuss how to manage stakeholders later in this post.

Develop and maintain relationships

Relationships are important to create a level of trust. When people trust each other, collaboration may happen more easily and yield better results. You should take the time to develop relationships with stakeholders and participate in team-building activities. Good relationships will lead to better problem-solving and decision-making capabilities.

Keep it simple

There’s no need to overcomplicate your role as a product manager to have effective communication with stakeholders. By creating a plan for simple and timely communication and anticipating possible objections, product managers can improve product delivery and get approval from stakeholders.

Prepare for potential problems

While stakeholders can have great sources of opportunities, they can also cause risks themselves. You should have the foresight to determine possible risks and hazards that could arise during the product life cycle. Managing risks is important to keep the process on schedule and within budget.

Compromise when necessary

Stakeholders can have different opinions and ideas, which can make it difficult for a product manager to make everyone satisfied. It may be necessary to compromise by establishing an acceptable baseline for all involved stakeholders.

Define project success

Stakeholders will have different metrics for determining project success. A product manager should know what those metrics are so that they can effectively manage expectations.

Take responsibility

All stakeholders should take responsibility for their role in the product life cycle. While product managers may take extra effort to engage stakeholders, everyone has to communicate effectively and understand their roles and responsibilities. Be sure that the necessary stakeholders understand what is expected of them.

6 tips to create an excellent stakeholder management process

There are a few tips to establish excellent stakeholder management processes. Product managers work with stakeholders daily, so consider these tips to ensure success.

Ensure everyone is on the same page

This tip goes back to defining project success. A product manager can make it clear what the project objectives are and how success is being measured. Communicating this early and often with stakeholders will establish an understanding of your goal and where they fit in within your project.

Setting expectations will make it easier to communicate with stakeholders and ensure the project moves forward smoothly.

Listen to stakeholders

Stakeholder management is not about bending stakeholders to your will and agenda. It’s about listening and collaborating with stakeholders to meet project objectives.

Product managers need to provide a channel for stakeholders to communicate their needs and concerns about the project. By truly listening to stakeholders, you can establish trust in your relationship and make collaboration easier.

Otherwise, stakeholders may start causing barriers because their concerns aren’t being properly heard. Take the time to hear what they have to say and try to find a solution.

Define roles and responsibilities

A lot of confusion can happen if stakeholders aren’t fully aware of their roles and responsibilities in a project. They may not know who’s in charge of what tasks they are responsible for completing.

Product managers can establish expectations by defining roles and responsibilities for stakeholders and making them visible to everyone.

Clearly defined roles can also help stakeholders know who to turn to if they have a question or a problem that needs to be addressed.

Keep stakeholders informed

Stakeholders will have different hierarchical levels of communication, depending on how much power and influence they have over a project. We’ll discuss how to prioritize stakeholders later, but stakeholders need to be informed. High-level stakeholders may need information given to them via frequent in-person meetings while low-level stakeholders may only need the occasional email update.

Keeping stakeholders informed will aid the development process since they may be able to point out problems early on in the timeline when it’s easier to fix.

Be flexible

A product manager needs to be open to change with their stakeholder management strategy. Staying open to new ideas can help you manage stakeholders better. For example, some stakeholders would prefer that you sent them a Slack message instead of an email while others never use Slack. It’s essential to ensure that you can always reach your stakeholders, and you may need to adapt to some situations.

Use proactive communication

Regularly sending progress reports is one way to ensure frequent communication. But a product manager can also get more personal and follow-up personally to see if the stakeholder has any feedback. Following-up helps you manage stakeholders’ input and keep track of any concerns they may have.

How to manage stakeholders in 4 steps

Product managers will need to create a stakeholder management plan to ensure that stakeholders are kept informed about the process. Start by analyzing your stakeholders and what they need for success as well as their level of influence on the product. Let’s take a detailed look at creating a stakeholder management plan.

Identify stakeholders

The first step to creating a stakeholder management plan is to identify your stakeholders. Create a list of stakeholders that will be directly or indirectly affected by your product. It can include both internal and external stakeholders. Some common examples of stakeholders include:

  • Customers
  • Project team members
  • Upper management
  • Competitors
  • Government regulators
  • Shareholders
  • Analysts
  • Project sponsor

Prioritize stakeholders

The next step is to prioritize your stakeholders. Some of your stakeholders will be heavily involved in building your product while others may not care about it at all.

Prioritizing your stakeholders will help you determine key stakeholders. Key stakeholders are the people that have a heavy influence on your product or can veto it entirely.

For example, your customer may be affected by your product, but they don’t have the ultimate authority on what features get built. That’s a job for upper management that may or may not be swayed by a customer’s opinion. It may end up being a product manager’s responsibility to represent the customers’ needs to upper management. Prioritizing stakeholders will help you manage your time and energy in what you need to communicate to certain stakeholders.

Conduct stakeholder analysis

Even after you have prioritized your stakeholders, you may end up with numerous opinions and get overwhelmed with feedback. It’s common for stakeholders in the same group to have different opinions.

At this point, you’ll need to learn about your stakeholders individually and determine their characteristics and interests in your product. This is a good stage to define their responsibilities and participation roles because it makes it easier to set up and manage expectations later on.

You should consider setting up meetings with your stakeholders, so you can ask them questions and begin a successful relationship with them. You can discuss topics like:

  • What are their priorities for the deliverables?
  • How do they define success? What are their KPIs?
  • What is their preferred method of communication?
  • Who influences their opinion?
  • Do they have a positive or negative opinion of the product? Why?

Learning about any potential conflicts of interest early on will help you manage any opposition in the future and potentially address them now. Analyzing stakeholder interests can also help you identify who needs more information to get their full support.

Create a stakeholder communication plan

Once you have identified stakeholders and determined their interests, you can create a personalized stakeholder communication plan.

A stakeholder communication plan will cover:

  • What are their job responsibilities
  • What are their expectations
  • What information needs to be conveyed to the stakeholder
  • How often the stakeholder needs to be updated
  • What method of communication is best
  • What stages of the product life cycle will they be involved in

Creating a communication plan for each stakeholder will make it easier to keep them engaged with the product. It will help product managers keep track of when they need to communicate with stakeholders. This will help monitor for any potential issues that may arise from stakeholders and manage them as necessary.

What is an example of stakeholder management?

Earlier we discussed that part of creating a stakeholder management plan was to prioritize stakeholders.

The easiest way to prioritize your stakeholders is to use a power/interest grid template. It’s a stakeholder map that helps product managers determine how much support they will need to give each stakeholder. You will rank each stakeholder based on their level of power and level of interest.

The power/interest grid divides stakeholders into 4 groups:

  • Manage closely: This group has high power and is highly interested in your product. Full stakeholder engagement and frequent communication are needed to keep this group satisfied.
  • Keep satisfied: Stakeholders in this group have high power but have low interest. Project managers will want to give strategic communication to this group.
  • Keep informed: This group has stakeholders that have a high interest in your product but don’t have much power. You’ll want to keep them informed about what is happening so they can identify any major issues.
  • Monitor: Project managers will only need to give minimal effort to stakeholders that have low interest and low power with your product. This necessitates the least amount of communication.

The power/interest grid makes it easier for you to determine who needs the most communication and how high-touch the information should be delivered.

Key takeaways about managing stakeholders

Stakeholder management is critical to the success of your project. Implementing a management plan from the beginning will help detect issues early on, collaborate easily, and keep the project on track.

Managing stakeholders ultimately means forming productive and positive relationships with them. This will turn stakeholders into effective project partners and supporters.

saranguyen

About the author

Sara J. Nguyen is a freelance content writer for B2B SaaS, telehealth, and marketing industries.


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