What is stakeholder engagement?

How well do you know what your customers, investors, and others with a vested interest in your project think? By keeping stakeholders engaged, you can continually keep your thumb on the pulse of the opinions and attitudes that inevitably control the success of your products, services, or projects.

Raising engagement among stakeholders is an important aspect of product management. Think of stakeholder engagement as a live, ongoing survey where participants are just as motivated to share their insights as you are to receive them.

In the most practical terms, stakeholder engagement is a process for communicating and collaborating with your stakeholders. It places an equal emphasis on:

• Informing stakeholders and listening to their concerns

• Identifying key opportunities to improve ROI

• Satisfying as many stakeholder needs as possible

A solid stakeholder engagement strategy is a critical part of strategic planning. It goes a long way in keeping those affected by a project invested in its success, and with minimal resources.

We'll discuss the benefits of stakeholder engagement while highlighting tools needed for an effective stakeholder engagement plan, such as stakeholder mapping and the stakeholder engagement assessment matrix.

Why is stakeholder engagement important? Proactively engaging stakeholders gives organizations and stakeholders numerous benefits, some of which couldn't be achieved any other way.

For companies, stakeholder-engagement benefits include:

• Reducing overall risk

• Better informing staff efforts

• Identifying stakeholder motivations

• Guiding organization-wide decisions

• Gaining clarity on stakeholder relationships

• Quelling stakeholder (and staff) uncertainties or fears

• Mapping stakeholder relationships more accurately

• Ensuring high-priority stakeholders come first

• Increasing buy-in to your company's vision

• Earning and fostering greater trust

• Re-engaging previous stakeholders

• Improving odds of success

Most fundamentally, stakeholder engagement ensures organizations know which efforts and benchmarks will align with stakeholders' expectations and lead to higher ROI. To these ends, the overarching aim is to identify key stakeholders with the most influence and resources and encourage them to leverage their power for mutual benefit.

The stakeholders also benefit from greater engagement. From their perspective, active engagement leads to:

• Greater knowledge of the organizational efforts that will impact them most

• More confidence in their relationship with the organization

• Increased likelihood of having their needs met

• Higher participation in future projects

• Reduced dissatisfaction

Together, organizations and their stakeholders can most effectively achieve a shared vision and fulfill their mission.

While the terms are often used interchangeably, a stakeholder engagement plan is one aspect of stakeholder management. Strictly speaking, the purpose of stakeholder engagement is to maintain ongoing two-way communications designed to increase stakeholder involvement or support.

Stakeholder management, on the other hand, is a broader campaign involving five stages:

1. Identifying stakeholders

2. Prioritizing those with the highest stakes

3. Understanding what they think

4. Defining their motives

5. Engagement

Stakeholder engagement is only the final stage of stakeholder management, which encompasses all action steps needed to fulfill the goals behind stakeholder management and engagement. Once established, the engagement process is meant to be continual, which requires ongoing improvements in the relationship between stakeholders and the company.

Naturally, there's a lot of overlap between stakeholder management and engagement. It's likely that those working in stakeholder management (such as the product management team or business analysts) will be involved in stakeholder engagement, but not always.

It's best not to try separating the two—in fact, it's practically impossible. Stakeholder engagement is necessary to fully understand your stakeholders and gain total clarity on their motives. Only then can they be effectively prioritized, resulting in a total stakeholder management process, where communications result in actual project improvements.

Pursuing a stakeholder engagement strategy may seem complex at first, but it's much easier with solid foundations. This requires clarity on three key factors:

1. Your goals

2. Who your stakeholders are

3. What their needs are

Having a consensus within your organization allows you to form a highly effective stakeholder engagement plan with greater ease. 

Let’s look at these factors in greater detail:

1. Setting stakeholder goals

Long-term stakeholder engagement requires a purpose, and without one, few stakeholders will remain engaged. Review your product strategy, and determine which project goals require better stakeholder communication and research.

Goal-setting for your stakeholder engagement plan goes beyond simply completing a project. It could involve any of the following:

• Ensuring your product finds a receptive market

• Learning which product features are most important to interested parties

• Adjusting a project for minimal disruption to a community—or all the better, making a positive impact

• Compiling market research for finely tuned PR and marketing campaigns

• Minimizing complaints and potential pushback

2. Identify your stakeholders

During the engagement phase of stakeholder management, knowing your audience is job number one. Some stakeholders are obvious, such as current customers, investors, and those living where the project takes place or where the organization controls resources. 

Sometimes it may require a fair amount of research to learn just who your entire stakeholder base is and to what extent they'll be impacted.

Measuring stakeholder interests

Begin by identifying all stakeholders, then compare them based on their level of interest, influence, and resources. Keep it simple by placing them in the following categories:

• High power/high interest

• High power/low interest

• Low power/high interest

• Low power/low interest

You can rank the power and interest of stakeholders, then plot their scores on a graph, placing power (like influence and resources) along the Y-axis and interest levels on the X-axis. Those with high power and interest will be in the upper right, and vice versa.

Each of these four categories will require very different strategies, which is why a multifaceted stakeholder engagement strategy is so important.

Which stakeholders are critical to your success?

Note that the most critical stakeholders aren't always those with high power and interest. You may need the participation of a particular stakeholder or stakeholder group who doesn't want to be involved. Worse, they may want to apply their power to a competing project.

Even lower interested and less powerful stakeholders aren't just ignored, as the shared stake of uninterested parties (even if they're unaware of it) could still hold significant sway over long-term success.

A comprehensive stakeholder engagement strategy is necessary to ensure all impacted by your product, service, or project won't be negatively impacted. The ultimate goal is to maximize stakeholder willingness to help or promote your cause, whether they're already involved or being invited.

Whether a single large investor or numerous highly active community members, those who hold the greatest sway over a project's success are the highest priorities.

3. Assess your stakeholders' needs

Product developers and project managers can only guess what needs to be done until they discover what their stakeholders truly need. They can uncover this information with a stakeholder needs assessment.

It's essentially a questionnaire, and the exact contents depend on the type of product or project being developed. Generally, the stakeholder needs assessment will involve asking stakeholders some combination of the following:

• "Which communication channels do you prefer?"

• "How aware of the project are you?"

• "What project goals will impact you most?"

• "How do you hope to benefit from this project?"

• "Is there any project information you want or need?"

• "What challenges or obstacles are you currently facing?"

• "Do you support, oppose, or feel neutral towards the project?"

• "How much influence and power do you have among other stakeholders?"

Stakeholder engagement plans must be highly customized and open to a continual feedback loop between new stakeholder insights and modifications to the stakeholder engagement plan, as new insights reveal new questions. Still, it requires a solid framework to begin.

A complete SEP should cover at least 11 specific factors:

1. Areas of influence. Where will the project have the highest impact, and how much will that impact be? Start with four basic levels: (1) major, (2) moderate, (3) minor, and (4) negligible.

2. Regulations and requirements. What internal and external regulations are your company subject to throughout its project or product development?

3. Project stakeholders. Which stakeholders have a particular interest in a given project? How do stakeholder relationships change depending on the course the project takes?

4. Methodology. How will your stakeholder engagement plan be carried out, and which factors must it address (e.g., local economies, ecological health, local resources, etc.)?

5. Stakeholder engagement plan matrix. What steps will you take to improve and maintain stakeholder engagement levels?

6. Stakeholder engagement activities. How will you gain and keep their interest?

7. Monitoring and reporting. How will stakeholder engagement actions and results be monitored and reported back? Which staff will need a given type of data?

8. Timetable. What are your action items, and when do they need to happen?

9. Resources and responsibilities. What company resources can be applied, and who's responsible for applying them?

10. Budget. How much liquidity is available to implement your stakeholder engagement plan?

11. Grievance management. Which support services are most suitable for resolving conflicts and grievances? Are they already in place, or do they need to be created?

You should prepare each of these items in advance. Some may be small projects in and of themselves—but putting in the hard work at the beginning goes a long way to (A) providing stakeholders with a satisfying experience and (B) gaining high-quality feedback.

Being the most active part of the stakeholder management process, it's important for your stakeholder engagement plan to be as thorough as it is streamlined and easy to implement. Determine from the beginning what resources are available for your overall engagement strategy, then assign responsibilities.

As mentioned, internal clarity on organizational goals is primary. What do you wish you knew about your stakeholders, and how do you wish they would help you? Align your questions with the factors that will impact your project most.

Discuss how you can most efficiently use resources to identify stakeholders and design engagement activities to generate and keep stakeholder interest. Stakeholder mapping is an important tool for discovering the relationships of each stakeholder or stakeholder group, and it can significantly cut down the perceived complexity of the engagement plan once it's active.

Consider your duties and obligations to stakeholders, then plan to fulfill them first whenever possible. This will generate good rapport early on. Stakeholders will then be more eager to engage, sensing that your organization wants to make a positive impact on their lives.

The stakeholder engagement assessment matrix

Both during and after outreach efforts, consider how your stakeholder engagement team will report their findings. One of the most common methods for this purpose is the stakeholder engagement assessment matrix, a tool for monitoring engagement levels and documenting their effects.

One commonly used format involves categorizing stakeholders' engagement levels into the following categories:

• Unaware

• Resistant

• Neutral

• Supportive

• Leading

You can then zero in on the desired position for a given stakeholder (or stakeholder group), allowing the stakeholder engagement team to direct their messaging efforts accordingly.

Moving high-priority stakeholders from their current positions to the ones desired becomes a test of how authentically empathetic your PR efforts are. Remember that stakeholder engagement is a two-way process—and for public projects especially, it's just as important to adjust elements of the project as it is to motivate stakeholders in a certain way.

Any stakeholder who already shares a stake in the outcome and actively participates in its progress is considered an engaged stakeholder. Their involvement is already established, and it's clear that they're impacted by the outcome of an organization's project, product, or overall success.

Stakeholder engagement manifests as active participation in any of the following:

• Sharing feedback

• Investing resources

• Cooperating with project needs

• Inquiring about a project's progress

• Discussing the project with others

• Actively communicating with project leaders or the media

The stakeholder engagement team includes any staff member who plays an active role in carrying out the stakeholder engagement plan. They're responsible for carrying out the engagement process in the stakeholder management strategy, which largely involves communicating with stakeholders and reporting what they learn.

Doing so requires learning how to use the main stakeholder engagement tools:

• Stakeholder mapping

• Stakeholder needs assessment

• The stakeholder engagement assessment matrix