Many people assume that ‘stakeholder management’ and ‘stakeholder engagement’ are simply different names for the same concept, but in reality, they are separate but related. Stakeholder management offers a framework that ensures the people who are important to a company understand what is happening, while stakeholder engagement aims to optimise how those individuals respond to the company.
As a founder or leader in a company, it’s important that all internal and external stakeholders are identified and communicated to effectively. Having their support and advocacy is key to ensuring that your business succeeds, which is why developing a way to manage and engage stakeholders early on in your company's journey is vital.
In this article, we'll explore the differences between stakeholder management and stakeholder engagement and give you actionable tips for implementing them.
What is stakeholder management?
Stakeholder management is the overall process of organising, monitoring, and improving interactions with stakeholders. In most circumstances, stakeholder management serves both a legal and strategic purpose.
Stakeholder management entails systematically identifying stakeholders, understanding their needs and expectations, and organising and carrying out specific actions to engage them. A solid stakeholder management approach will allow you to coordinate your interactions and evaluate the status and quality of your relationships with a diverse group of stakeholders, including shareholders, investors and employees.
What is stakeholder engagement?
Stakeholder engagement is a component of the overall stakeholder management process. It consists of the actions and activities that must be completed to effectively interact with your stakeholders and build a relationship with them and your company’s brand. A stakeholder engagement strategy outlines who, what, how, why, and when to engage stakeholders.
It involves taking the stakeholders on the journey with you to ensure they are on board, and that their perspectives are considered. A stakeholder engagement strategy goes beyond just managing your audience; it emphasises listening to their voices and actively involving them in the decision-making process, where necessary.
The activities involved in stakeholder engagement may vary greatly depending on the stakeholder, their level of resistance or influence.
Want to learn more? Discover the true value of engaged stakeholders.
Step-by-step stakeholder management process
There are five steps to effective stakeholder management:
1. Identify potential stakeholder groups.
The initial stage in the stakeholder management process is identifying all possible stakeholders including shareholders, investors, senior managers, employees, and other external stakeholders relevant to your company. Unless your company is very small, you likely won’t list each stakeholder, but instead, choose a representative set of stakeholders.
2. Assess each stakeholder and their support or resistance to change.
After compiling a list of stakeholders and stakeholder groups, the next phase in your stakeholder engagement plan will be to examine each stakeholder's desired levels of involvement, the impact of the programme, and other considerations. In your stakeholder matrix, or a sheet you've prepared, be sure to record this information.
3. Create a stakeholder engagement strategy with shared activities and individualised engagement.
Having documented all relevant information in the previous step, you’ll next formulate your stakeholder engagement strategy. In doing so, you’ll need to determine whether to undertake individualised or shared engagement. Individualised engagement targets a stakeholder's opinion and attitude toward the project. Shared engagement activities are all-encompassing efforts that will occur regardless of a stakeholder’s position on the project, initiative or company direction, such as group communications.
4. Engage stakeholders and prepare them for change.
Stakeholder engagement is the next step in the stakeholder management process. This is where you will implement the personalised and collaborative stakeholder engagement methods you devised in Step 3. During the stakeholder engagement stage, you should meet with stakeholders one-on-one or in groups to give information and updates and to answer any questions or concerns.
5. Continually share updates with stakeholders.
The last phase in the stakeholder engagement process occurs regularly throughout the life cycle of the company. You will connect with stakeholders regularly to offer progress updates and ensure they continue supporting your mission. It's important to see your strategic plan for stakeholder management as something that evolves. As the company grows, so will the number of stakeholders. For your engagement framework to be adaptable, it must be a living document that is routinely updated. Before planning your strategy, read these stakeholder engagement mistakes to avoid.
Differences between stakeholder management and stakeholder engagement
The key difference between stakeholder management and stakeholder engagement is that the former emphasises proactively engaging with them to ensure their needs, expectations, and concerns are taken into account, and the latter focuses on ‘communicating with’ stakeholders.
Co-developing ideas or communicating ideas
Stakeholder engagement involves engaging with stakeholders on an ongoing basis in order to understand their needs, expectations and concerns and then work together to develop ideas and solutions that take their interests into account. This differs from stakeholder management which can involve merely communicating information to them without any true interaction or collaboration.
Individual or collective working
Stakeholder engagement differs from stakeholder management in that it is a collective rather than an individual working process. This involves engaging stakeholders on an ongoing basis to understand their perspectives and needs and working together to develop ideas that take stakeholder interests into account.
Approach: Personalised or not
Stakeholder engagement provides a more tailored approach, allowing organisations to assess stakeholder needs, expectations, and concerns. This helps to ensure that stakeholder interests are addressed and met in the best possible way, rather than relying on a one-size-fits-all approach.
Stakeholder engagement involves working collaboratively to develop solutions that meet stakeholder interests; this can help to foster deeper trust and create a more positive relationship between the organisation and its stakeholders.
Good stakeholder engagement can help organisations better understand their stakeholders, build trust, and create more meaningful relationships. This, in turn, can lead to more support for the change initiative and a more positive overall outcome.
When looking at the difference between stakeholder management and stakeholder engagement, organisations will find that by focusing on engagement rather than just management, they can ensure that their stakeholders are central in the process. This will help improve communication, collaboration, and, ultimately, the success of their change initiatives.
Read more tips to improve stakeholder communication.
Overall, stakeholder engagement is a critical part of planning for and executing successful organisational changes. By taking time to consider the needs and concerns of stakeholders, organisations can ensure that they have the support they need to deliver on their goals successfully.
If you’ve found this article helpful, you may also be interested in our Shareholder Investor Report Template.
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