What Is a Stakeholder, and How Should You Prioritize Them?

By Indeed Editorial Team

Published October 18, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

When trying to increase knowledge of business processes and project management, individuals may wonder the answer to, "What is a stakeholder?" Stakeholders refer to those who have personal interest in company or project success. By understanding the importance of stakeholders and what they do, team members become more reliable and can increase the chances of project success. In this article, we discuss what stakeholders are, mention the types of stakeholders, provide information about the importance of stakeholders, and share a guide that mentions how to communicate with stakeholders.

What is a stakeholder?

There are many stakeholders involved in the creation of projects, businesses, services, and products. Here are some types of stakeholders:

Customers

Customers have a stake in products and the quality or value of both services and products. Businesses achieve success when their customers are satisfied with its products and services, which is why businesses typically serve their customers and their needs. These stakeholders impact businesses positively when they appreciate and buy products. They also have a negative impact when they refuse to buy services and products. For example, tourists choose which airline they use when travelling between locations.

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Employees

Employees have a stake in projects and services because their income and job security rely on the success of their employers. Employees obtain various benefits from investing time in projects. Depending on the company or employer they work for, team members also have personal interest in the outcome of projects and interests. For example, employees working in the transportation, mining, oil and gas, or construction industries have a personal interest in the outcome of projects because their job security depends on this success.

Suppliers and vendors

Suppliers and vendors have a stake in projects and services because their ability to sell goods and services depends on the success of vendors. These stakeholders depend on project success to ensure companies remain profitable and subsequently continue to buy materials and products from them. Suppliers and vendors who directly participate in the company's production processes may also rely on successful projects to ensure the health and safety of their employees. When the materials bought from suppliers result in project success, these stakeholders experience an increase in ongoing and consistent income.

Investors

Investors have a stake in projects and companies because of the money they invest and potential earnings following project success. Investors include shareholders and debt holders. These professionals invest money in businesses and projects with the expectation of receiving a return on money invested. Investors may express concern over the shareholder value, which refers to the share owned by shareholders within companies and projects. Investors provide input on projects and project management to ensure they obtain the return on money invested.

Communities

Communities are stakeholders because they have a stake in the health and safety of their environment, along with general economic development. These stakeholders have a stake in companies that operate within their locations. Communities experience significant impacts from job creation, health, safety and economic conditions. When companies enter communities or begin projects, they have a significant impact on those stakeholders. For example, big companies entering a location have a significant impact on employment, income, and spending in that area. There may also be an impact on health if local individuals work for the companies entering communities.

Governments

Governments have a stake in the taxes and gross domestic product (GDP) involved in project and company success. When projects and companies hire employees and experience growth or success, governments obtain additional revenue from taxes. They also benefit from the spending that occurs when consumers and customers buy products from companies.

Why are stakeholders important?

Here is a guide to describe why stakeholders are important for projects.

Provides expertise

Stakeholders have a significant amount of knowledge about a company's historical information and previous successes. These individuals also have expertise in particular industries and can subsequently provide employees or team members with valuable information about their industry. When gathering information for projects and when establishing processes, team members may want to include all stakeholders. This ensures team members obtain all relevant information about their projects and prevents missing deliverables. Project managers may lack knowledge in some projects, and stakeholders may provide project managers with requirements and constraints that coincide with the norms of the industry.

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Reduces risk

When companies involve stakeholders in every aspect of their projects, they experience reduced risk because stakeholders provide input about several components of these projects. Stakeholders mention potential issues or concerns during initial meetings about project requirements, project needs, and potential constraints. They discover risks and discuss potential solutions if those risks develop into more severe issues. This significantly increases the overall success of projects and requires the knowledge of all stakeholders.

Increases success

Stakeholders increase the chances of project success by reviewing project requirements and potential obstacles. They ensure companies meet their needs and set expectations early in the project. This helps companies understand the requirements of projects and ensures they're aware of both the project scope and key milestones. Stakeholders also attend project review meetings, along with project launches, to ensure companies meet deliverables and to ensure the success of projects.

Provides acceptance

Stakeholders grant project acceptance before the beginning of the project's first phase. Companies desire this acceptance because it ensures that stakeholders approve of the project's goals and potential outcomes. Stakeholders also approve suggested milestones and provide companies with overall approval following project completion.

How to communicate with stakeholders

Here's a guide to help team members communicate with stakeholders:

1. Show commitment

Companies and team members may want to consider how they can show commitment to projects and stakeholders to promote project success. To do this, team members can try to understand their stakeholders' goals and values. This requires strong listening and requires team members to regularly ask for feedback from employees, customers, and suppliers. Team members may also want to inform stakeholders of decisions that impact them before finalizing those decisions. This allows stakeholders to react to team members' decisions.

Involving stakeholders in company decisions demonstrates transparency and improves overall productivity by ensuring team members understand stakeholders' opinions during project completion. When answering stakeholders' questions, team members may also want to provide stakeholders with any relevant information and sources that help answer those questions. This ensures that all stakeholders have the information necessary to determine their own opinions and simultaneously allows them to verify any information team members provide.

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2. Demonstrate integrity

Integrity is essential when communicating with stakeholders because it improves and maintains professional relationships with them. Team members who act with integrity ensure their actions are consistent. This requires all team members to collaborate to meet goals and deliverables. This also requires all team members to understand their responsibilities and company values. When communicating with stakeholders, team members may also want to consider whether their communications are consistently and factually accurate. The team's success depends on their accuracy, and maintaining stakeholder loyalty depends on their credibility.

When issues arise, you may want to consider communicating fundamental issues with stakeholders. This demonstrates transparency and provides stakeholders with the opportunity to use their expertise to find solutions. Team members may want to consider how they can prioritize stakeholders' voices. They can discuss issues team members may have overlooked.

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3. Show engagement

When speaking to stakeholders, team members may want to consider how they can show engagement by demonstrating clear communication and making sure all terms are easy to understand by all parties. Team members may also want to provide stakeholders with all information relevant to the project. When beginning a project, teams may want to consider hosting meetings to listen to the concerns of stakeholders. This allows teams to gather information about which project components the community values.

Teams may also want to consider their overall responsiveness to stakeholder concerns. When stakeholders express concerns, team members may want to develop creative solutions for those issues and concerns. This shows stakeholders that teams are dedicated to improving projects and addressing concerns quickly. Teams who show respect for stakeholders experience increased success because they establish strong professional relationships and welcome helpful input.

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