How to perform stakeholder analysis
With stakeholder interests, expectations and dissatisfactions growing ever more prominent, stakeholder analysis should be a fundamental part of any business’ strategic toolkit and executive reporting framework. But for the results to be useful, it needs to move from a once-a-year internal review to an always-on, agile process.
What is meant by stakeholder analysis?
A business is the sum of its stakeholders. The owners, investors, employees, customers, suppliers. And more broadly, the community in which is operates, the other organisations its operations impact, regulators and governance bodies, even the media that reports on it.
All have a vested interest in how it functions. All types of stakeholders have differing priorities, perspectives and requirements, and varying levels of interest in and influence on the business.
Stakeholder analysis is the process by which an organisation can identify all of its different stakeholders. It enables it to understand which are the important stakeholders, and group them by the level of participation they have in different elements of the business.
It uncovers how particular stakeholders can influence both a company and other stakeholder groups. How stakeholders and linked and interact. And how to create an engagement plan to proactively involve those stakeholders.
Performing stakeholder analysis is the first essential step in creating a stakeholder engagement plan. The more complex a business, the more involved the process of stakeholder analysis will be.
Why use stakeholder analysis?
Stakeholder analysis is far more than stakeholder identification. It surfaces the expectations of stakeholders, the relationships between them, and how these elements marry or conflict with the goals of the organisation. Everyone from project managers to board members can benefit from this information.
Alignment of purpose between stakeholders and the corporation ensures sustainable success, as part of the social contract between business and the wider world. Stakeholder analysis enables this by:
- Ensuring support from key stakeholders: Determining who key stakeholders are, and what they expect from the business, makes it easier to enlist their backing for business decisions and corporate actions.
- Avoiding conflict: Stakeholder analysis identifies potential opposition to decisions and activities, along with the motivations behind that opposition. Early identification allows negative sentiment to be neutralised or mitigated.
- Aligning expectations with reality: By engaging relevant stakeholder groups, businesses can clearly communicate the company’s purpose. Project stakeholders are better positioned to contribute to its success if they accept what that success looks like.
- Engaging external stakeholders: External stakeholders can be harder to influence and understand, and potentially ‘high power, low interest’: having a greater impact than their level of involvement suggests. Stakeholder mapping identifies these stakeholders and assesses their influence. Communications plans can then be drawn up to attempt to manage closely their interests and expectations.
Why stakeholder analysis is increasingly important
The requirement for all organisations to understand their stakeholders has evolved alongside the shifting business terrain. The rise of global interconnectivity, hyper transparency, and the speed of issue proliferation have led to rapidly shifting goalposts.
With the expansion of digital communications, there is ever-greater interaction between stakeholder groups, and a blurring of the boundaries between their interests, expectations and needs.
Stakeholder management requires similarly fleet stakeholder analysis, moving away from the sole dependence on monolithic annual stakeholder surveys, the findings of which might be out of date before they are released. While direct stakeholder communication is important, this primary research can be unwieldy. It requires supplementation with analysis of alternative data, which can surface shifts in stakeholder priorities.
Stakeholders operate in a multi-channel environment – one measure is no longer sufficient to capture rapidly changing perspectives, sentiment and expectations. Traditional research methods remain valid, but suffer due to slow speeds, small sample sizes and bias. They lack robustness. An integrated metrics approach is needed, incorporating content analytics to enrich the understanding of all stakeholders.
Undertaking stakeholder analysis
Combining all available information on all stakeholders is the foundation of advanced stakeholder analysis. Stakeholder-specific primary research – employee reviews, customer surveys, reports from departments that deal directly with stakeholders – can generate an initial hypothesis, which is then linked to the analysis of publicly available content, such as print, online and broadcast media, and social platforms.
Content analytics, the processing of millions of pieces of content to ascertain topic, sentiment and level of influence, closes the information gap left by primary research.
Utilising artificial intelligence and machine learning, stakeholder intelligence solutions such as alva’s are able to perform this analysis of alternative data quickly, cost effectively and accurately.
Employing these tools, the stakeholder analysis process encompasses the following stages:
- Identify all stakeholders: Any group or individual with an influence on the business needs to be classified. For example, for a specific project, programme managers will identify all project stakeholders with an interest in the project, both within the business and externally. Stakeholders may fall into more than one classification so the process of identifying them needs to factor this in.
- Assemble a power-interest grid: The next step is to weight stakeholders’ impact. A power-interest grid maps the level of interest a stakeholder has in the business against the power they have to influence it. This results in the prioritisation of stakeholders. High power, high interest stakeholders need close management. High power, less interested should be kept satisfied. Low power, high interest need to be kept informed with regular communication. Low power, low interest need remote monitoring just to ensure no issues arise.
- Assess stakeholder participation: The final stage is to understand the stakeholders. Their level of participation should dictate how the business directly engages with them. This includes their motivation, current sentiment, the factors likely to affect that sentiment, who influences them, how they might be won over. Likewise it should include any existing or future planned efforts to satisfy their interest sand demands. This intelligence will inform how active a given stakeholder is likely to be in a media campaign, product launch, or AGM, and whether their impact will be positive or negative.
Once this initial analysis has been completed, it will need to be maintained and enhanced through ongoing listening and engagement with stakeholders to assess developments in these priorities and expectations. Newly emergent topics of interest, risks and opportunities can be fed back into the initial framework, to ensure that the business has a clear understanding of the strength of its relationships with all key stakeholders.
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