What is stakeholder management - A full guide

Successful projects have consistent input and support from stakeholders. Having great relationships with your business’ stakeholders helps you better manage their concerns, build their trust in your processes, and improve your reputation. 

However, stakeholder management is not always easy. Any project has many moving parts, and it's important to involve stakeholders at strategic points of the process. 

A great stakeholder management tool can help you streamline stakeholder involvement, track their input, and maintain open communication, all of which are vital to your project’s success. 

This post will serve as a guide to stakeholder management, focusing on why it’s important and how to create a solid plan.

TL;DR

• Successful projects rely on the consistent input and support of stakeholders. Effective stakeholder management builds trust, addresses concerns, and improves reputation, ultimately helping your projects run smoothly.
• Stakeholders are individuals who are directly or indirectly impacted by a project. They can be internal (within the organization) or external (outside the organization). Effective stakeholder management involves a clear understanding of stakeholder roles and relationships. 
• A structured approach to stakeholder management involves clear steps: identifying stakeholders and understanding their interests, grouping and prioritizing them, and developing a management plan with tailored engagement methods. This approach is more effective than an intuitive one.
• Luna simplifies stakeholder management by building a common language across stakeholders. It aligns stakeholders around key milestones and delivers tailored updates on project progress, blockers, and critical changes, ensuring each audience gets the relevant level of detail. Luna integrates seamlessly with popular communication tools like Slack and email, keeping stakeholders informed and engaged without disrupting their daily routines. Try Luna for free today. 

Who is a stakeholder?

A stakeholder is an individual who is directly or indirectly involved in or affected by your project’s success or failure in a professional capacity. Stakeholders in an organization could range from your CEO to the sales team, product designers, developers, etc. Once you identify the important stakeholders who are relevant to your project, it’s easier to manage them. 

Stakeholders can either be external or internal:

• External stakeholders: Professionals outside your organization who have an impact on your project. Some examples are media companies, a project sponsor, external consultants and even customers. 
• Internal stakeholders: Members of your organization with an interest in your project. They range from project managers and sales teams to leadership teams like boards of directors, etc. 

Clarity about each stakeholder's group, roles, and relationships would help you manage them effectively. 

What is stakeholder management?

Stakeholder management is the process of identifying, engaging, and assessing stakeholders’ needs and interests in order to maintain a strong relationship with them throughout a project’s lifecycle. The main goal of stakeholder management is to address stakeholders' needs as they arise to build trust and avoid negative impacts on the project. 

Why is it important?

Effective stakeholder management is key to project success. Engaging and addressing stakeholders’ concerns secures their support and valuable input. Keeping them informed at key stages ensures smoother execution and minimizes risks. By managing expectations and addressing issues early, you build trust and prevent costly errors, contributing to project success.

Some more reasons why stakeholder management is important, are:

• It helps you secure support from your stakeholders.
• It improves communication with stakeholders.
• It helps you manage their expectations, especially on complex, long-term projects.
• It helps you keep stakeholders engaged throughout the project’s lifecycle.
• It equips you with the knowledge to resolve stakeholder conflicts.

When done right, stakeholder management can help you achieve set project goals in record time.

The stakeholder management process

Many project managers just have an intuitive approach to stakeholder management. While this is good, it is always better to have a streamlined, formal process for managing your stakeholders so nothing slips through the cracks. 

Here is a step-by-step guide to a typical stakeholder management process. 

Step 1: Identify and understand your stakeholders

Begin by identifying, understanding, and grouping all the stakeholders who can affect or be affected by your project negatively and positively. Ensure you consider all external and internal stakeholders and test and refine your understanding of them throughout the project. To successfully identify your stakeholders, ask yourself the following questions:

• Who can be affected by your project?
• Who can influence your project?
• Who wants your project to fail or succeed?
• Who is interested in your project?

Once you’ve successfully identified these professionals, you need to understand them for better categorization. This is also the first step of a stakeholder analysis process. To understand your stakeholders, you need to:

• Gather information to highlight their preferences, needs, concerns, or deal breakers.
• Find out their expectations and see how they align with the project’s or organization’s expectations. 
• Determine what kind of information stakeholders need and when they need it. Do they want weekly updates or only want to be involved when they are absolutely needed?
• Find out whether they have positive or negative interests in the project.
• Find out who stakeholders answer to and who answers to them.
• Determine what motivates their opinions on your project and what influences the decisions they make.

Step 2: Group and prioritize your stakeholders

A core part of any stakeholder management approach is grouping your stakeholders by priority. This process is also known as stakeholder mapping, where you assess certain stakeholders in relation to specific criteria and other stakeholders. Some of the criteria that will help you group your stakeholders are:

• What are their expectations?
• How much influence do they have?
• What kind of information do they want from you?
• How often do they want to be updated?

These answers will provide more clarity on which stakeholders to engage more and the best ways to do it. 

You can also use different strategies to map your stakeholders:

• Power/interest grid: also called the salience model. Use this grid to map stakeholders you can use for engagement.
• RACI matrix: This is a popular strategy that ranks stakeholders based on their involvement in the project. RACI stands for Responsible, Accountable, Consulted, and Informed. 
• Impact matrix: This model is used to determine how much impact a stakeholder has on a project.  

Tip: Luna is a product launch management platform that helps you customize project roadmap views so you share only necessary information with different stakeholder groups. This way, each stakeholder only gets access to the information they want. Luna also lets you update stakeholders on the communication tools they are familiar with such as Slack, emails and docs. Try Luna for free today. 

Step 3: Develop your stakeholder management plan

A stakeholder management plan is a document outlining your plans to engage your stakeholders throughout the project. This plan is 100% based on your identification, understanding, and analysis of the different existing stakeholder groups and their impact on the project’s success. 

Once you have identified, understood, and prioritized your stakeholders, you can create a solid stakeholder management plan by doing the following: 

Consistent communication

One of the most important aspects of stakeholder management is communicating with your stakeholders as often as necessary to update them on progress, setbacks, and any other information they need. You can do this face-to-face, via emails, or phone calls. Stakeholder mapping should give you an idea of how each stakeholder wants to be informed, and it's important to stick to those methods. 

Remember, each stakeholder needs different levels of information. The table below showcases each stakeholder group and how you should typically shape your engagement/communication plan around them. 

Tip: Luna makes it easy to update stakeholders on familiar platforms like Slack, Teams, etc. The platform also helps you streamline communication by freeing up time from the many alignment meetings and follow-ups so that only the most important topics are discussed with stakeholders. 

Monitor and update

Consistently monitoring and updating your stakeholder management plan is important, as some stakeholders may leave the project during its course for various reasons. You may also need to regroup some stakeholders depending on how much their interest or involvement in your project changes over time. You should be ready to make changes to your plan as stakeholders evolve. The stakeholder management plan is dynamic, and your stakeholders will appreciate your attention to detail when updating them with information they find relevant at the time. This is also a great way to keep them invested in your project. 

Determine how to manage stakeholder grievances.

A grievance management process is a core part of the stakeholder management plan. During projects, stakeholders often have issues that, if not managed properly and resolved, may lead to serious problems that directly affect the project. A good grievance management process involves the following:

• Clear process that showcases all the roles of those involved in the issue
• All documents showcasing the issues raised, responses, and the main source of the grievance
• Clear reporting on how the grievance is being managed.

A good grievance management process increases stakeholder trust in your management skills and makes them more comfortable bringing issues to you in the future before they escalate. 

Step 4: Use a stakeholder management software

A stakeholder management software helps keep stakeholders actively engaged throughout the project. This tool streamlines all communications, updates, milestones, etc., and provides a 360-degree view of the project roadmap in a centralized hub. Using a stakeholder relationship management tool ensures nothing slips through the cracks and all stakeholders are adequately managed exactly how they need to be without any confusion. 

How Luna can help: Luna ensures your stakeholders get what they need when they need it so you can focus your energy on completing the project. 

Luna offers a wide range of features that facilitates stakeholder management. Here is how Luna benefits different stakeholders across the company:

• For product managers: Involve the right stakeholders at the right time, streamline communication and buy-in, and free up time for only high-level conversations with stakeholders. 
• For product marketers: Sync GTM activities with product roadmaps, ensure launch activities match deadlines, and centralize workflows for easy stakeholder involvement. 
• For product leaders: Gain real-time visibility of the project’s progress, ensure OKRs are on track to completion, address the project’s risks early, and provide solutions. 
• For Sales and Customer Support teams: Gain a clear view of the project roadmap for proactive client engagement and support
• For Legal and Finance: Stay updated with project progress and manage your milestones (such as requested reviews and approvals) in a centralized hub. 

Finally, by integration with most popular task management and communication tools (e.g., Slack, email, docs), Luna ensures effective and proactive stakeholder management across all stages of the project with no disruption to their daily  workflows. 

Practical tips for effective stakeholder management

• Identify stakeholders early: Begin by listing all individuals and groups with an interest or influence in the project.
• Understand stakeholder needs and expectations: Determine what each stakeholder expects from the project and their needs.
• Classify stakeholders by power and interest: Use a power-interest matrix to group stakeholders. This will help you manage your engagement efforts, so you don’t burn out.
• Tailor communication to meet stakeholder needs: Keep different stakeholder groups informed with the information they expect in a clear, consistent manner throughout the project lifecycle.
• Set expectations: Be transparent about project goals, timelines, and limitations to avoid misunderstandings.
• Use stakeholder management software: Use tools to track stakeholders, manage communications, and store relevant information in a centralized hub.
• Build trust and maintain relationships: Develop a rapport with stakeholders through honest, respectful, and empathetic communication.
• Manage conflicts proactively: Address any conflicts or grievances early to prevent them from escalating and impacting the project’s success. 
• Adapt as the project evolves: Consistently assess and adjust your stakeholder engagement approach based on the dynamic nature of project needs and stakeholder involvement.
• Document all interactions: Maintain records of communications and decisions for accountability and future reference.
• Seek feedback: Regularly gather feedback from stakeholders to improve processes and demonstrate their importance to the project.

Wrapping up

Stakeholders have the power to affect your project positively and negatively. Managing their expectations and keeping them involved and updated throughout the project’s lifecycle helps you avoid issues and obtain the resources you need for a successful project. Identify and group your stakeholders, create a management plan, use a stakeholder relationship management tool and monitor your process for the best results.