Stakeholders and Their Importance for an Organisation
Stakeholders are the people who an interest in something special such as activities of the business. Stakeholders are in the form of any, member, group or system that affects the actions of an organization. In any Project, the type of stakeholders are- Top management, peers, manager, resource manager, customers, Government etc. For the projects, stakeholders are the internal and external part of the organization.
Importance of Stakeholders
To ensure the success of any business, stakeholders play an important role. Following are the reasons why the stakeholders are important for an organization-
- Reducing risks- The stakeholders who are involved in the projects may reduce the risks. Stakeholders bring the problems and issues while discussing the needs of the projects, initial requirements, and constraints.
- Increasing project success- The success of the project will increase by collecting and reviewing the project requirements with the stakeholders. Due to conflicting priorities and needs, If the business cannot meet the needs of their stakeholders then it should set the expectations of the stakeholders in the project life cycle.
- Granting Project acceptance – The more the engagement of stakeholders the more will beproject acceptance of the project. With the end of every project, the team members should be aware about the delivery expectations and the ways to mitigate the risks. The project acceptance should help to avoid any problems at the end of the activities involved in the project. During the project closure phase, the final acceptance of the project is final approval of the activities in the organization.
- Providing expertise – For the current processes, industry insight and historical information, the stakeholders are the wealth of knowledge of the organization. To avoid missing deliverables of the project, the key stakeholders should develop and gather accurate information. Project managers and the persons who handle the deliverables, may not handle the activities of every project adequately.
- Stakeholder Engagement- Stakeholder engagement is very important for the success of the organization. They gather useful information and enhance the reputation and image of the enterprises. Stakeholder engagement enhances the sustainable decision making in the organization. Without the proper engagement of the stakeholders, a difficulty arises in the ownership, support and common abiding agreement of the particular project. The stakeholder engagement ensures the proper Corporate Social Responsibility. If the organization is engaged with the stakeholders, it is considered responsible and accountable (Greenwood, 2001). For the effective working of the organization, the stakeholder engagement process has been followed by every business. This process has been shown as-
- Identification and analysis of stakeholders- Before identifying the stakeholders, the organization may first determine the organization process, unit, job role and geographic area etc. It is important for the organization to identify their external stakeholders such as suppliers, customers, partners etc. Once the identification is completed, the interest and opinions of the stakeholders group are
- Communication with stakeholder engagement – The communication with stakeholders can be done in the loop such as through phone calls, face to face communication and email trials. The communication with stakeholder engagement implies being open and honest about the relationship within the organization.
- Negotiation and Partnership – Negotiation takes place when the two or more persons are prepared to bargain for achieving the acceptable solution. A project can be disallowed with the help of stakeholders. These stakeholders avert the project with negotiation and partnership with other members involved in the organization.
- Involvement of stakeholder in project monitoring – The Project monitoring consists the steps for reporting and collecting the information about the budget requirement, project plans and stakeholder involvement. The involvement of stakeholder in the project monitoring improves the progression of the project and develops the trust between the primary stakeholders and project.
- Reporting to stakeholders- The last and final step of the stakeholder engagement planning is the reporting to stakeholders. The reporting should be done in such a manner that it provides the opportunity to support the business practices with community expectations and needs.
Types of Stakeholders
The different types of stakeholders are -
- Project Management stakeholders – A Project Management stakeholder are the people who is responsible for the success or failure of the project. The project stakeholder is the person who define the scope, milestones and goals of the project. There are different types of project management stakeholders-
- Project Manager
- Functional Management
- Project team
- Primary and secondary stakeholders – The outcome of the project affects the Primary stakeholders. The example of primary stakeholder are- Customers, end users, team members etc. However, Secondary stakeholders helps to complete the project and assist the administrative, legal and financial process.
- Internal and external stakeholders – The Internal stakeholders such as Project managers are directly involved in the development of the project. However, the external stakeholders such as suppliers and vendors supply the important elements to the business which ensures the success of the business.
- Direct and Indirect stakeholders – The day to day activities are handled by direct stakeholders. The example of direct stakeholders are- Team members. Whereas the Finished project is affected by Indirect stakeholders. These finished projects are in the form of price, packaging and availability of the goods (Janmaat, McCowan and Rao, 2016).
- Greenwood, M. (2001). The Importance of Stakeholders According to Business Leaders. Business and Society Review, [online] 106(1), pp.29-49. Available at: https://onlinelibrary.wiley.com/doi/abs/10.1111/0045-3609.00100 [Accessed 15 Jan. 2019].
- Janmaat, G., McCowan, T. and Rao, N. (2016). Different stakeholders in education. Compare: A Journal of Comparative and International Education, [online] 46(2), pp.169-171. Available at: https://www.tandfonline.com/doi/full/10.1080/03057925.2016.1134956 [Accessed 15 Jan. 2019].