Investopedia defines stakeholder as "one who has a share or an interest in an enterprise." Typically, a company's stakeholders include varied groups such as owners, managers, business partners, government and regulatory authorities, employees, customers, and the community where it is located. All stakeholders can influence and be affected by a company's actions, but not all groups of stakeholders are equally emphasised upon, nor are they interested in the same considerations.
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Modern businesses view stakeholders as being an integral part of the company. The different groups represent the end-users of a project's output, the influencers of design, and the people who fund the project and ultimately reap its benefits. Stakeholders should be involved in all stages of a project's development because their feedback augments correction and improvement, and also increases the likelihood of acceptance of the project or venture. Stakeholders can be categorised into three broad groups--executive, end-user and expert.
Executive stakeholders comprise managers and directors of a company. This group is the foremost source of funds, and is directly involved in achieving the commercial interests of the project. Executive stakeholders are discouraged from influencing technical aspects of a project, as their experiences are not representative of end-users.
End-Users & Experts
The end-users are the customers---people who will buy into and use the product. In the design and development stage, continuous input from end-users may help in streamlining the final output. End-users are typically not concerned about technical aspects, and have their own considerations and expectations from a product. The final group of stakeholders are experts and include professionals from other fields, such as sales and support representatives, lawyers and accountants. Input from experts also helps in efficient project management.
Stakeholder management is an important business discipline aimed at winning support of stakeholders, and may be the difference between a project's success and failure. One of the key elements of stakeholder management is stakeholder analysis, a technique that identifies the specific groups or individuals who have to endorse a venture in order for it to succeed. The three steps in stakeholder analysis include identifying groups as stakeholders, evaluating the groups' influence and interest, and developing an understanding of the most important groups.
Three Steps Explained
Stakeholders are identified by considering the groups that are, or will be, affected by the project's actions; the groups that have power and authority to influence the eventual outcome of the project; and the groups that have an interest in the final outcome. The next step in stakeholder management is prioritising groups. Once all stakeholders are identified, the groups should be categorised according to power and interests. The final step is understanding key stakeholders and how they might react to the venture. Understanding stakeholders entails devising the best channels for communication, and engaging the groups early in the project's life.
The benefits of stakeholder management are many. A stakeholder-based approach enables a business to shape projects, based on the input and opinions of powerful stakeholders. Stakeholder involvement improves project quality, and the likelihood that it will win support. Further, early communication with specific groups also makes more resources available, and better equips management to anticipate reactions and plan for contingencies, enhancing the efficiency of the project.
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