For Leaders, There’s a Lot at Stake When It Comes to Stakeholder Management

Woman sitting at the head of a boardroom table.

A CEO recently shared with me that she felt frustrated about the lack of movement on initiatives she resolutely believed would position the organization for a bright future. She said she wasn’t sure if her team really bought into her vision, and felt she was losing traction with her board and shareholders. 

As we talked, it dawned on her that, while she’d spent significant time formulating the strategy and building executional plans, she had perhaps missed some opportunities to bring others along with her. She acknowledged that because she felt like the course she had charted for the organization was so self-evident, she may have made some assumptions about stakeholder understanding of and engagement with the direction.

According to a recent McKinsey article, a researcher once discovered 435 definitions for the term “stakeholder.” This statistic is at once mind-boggling – and completely understandable. We use the term stakeholder constantly, but it is often hard to define who we’re talking about when we use it. It’s no wonder, then, that stakeholder management, while being critical to a leader’s success, also leads to some of their biggest struggles. It’s the key to getting big ideas off the ground. It’s the key to keeping teams motivated and board members engaged. Yet, managing stakeholders falls through the cracks – especially when leaders are overwhelmed with working “in” the business instead of “on” it.  

Why does this happen?

In my experience coaching leaders, I’ve found that two factors play the biggest roles in these missed opportunities:

1. Leaders haven’t intentionally identified their stakeholders.

2. Even if leaders know who their stakeholders are, they don’t have a mission-based communication strategy to keep them aligned.

Let’s explore each of these obstacles – and advice for remedying them – below:

Who are your stakeholders, and why are they important?

McKinsey offers three general categories of stakeholder definitions:

  1. Internal Stakeholders: “employees, executives, the board, and shareholders.”

  2. External Stakeholders: “those who are outside the company but interact directly with it, such as customers, suppliers, and non-shareholder investors, such as banks.”

  3. Community Stakeholders: “entities that are outside the company but are critical to its operations, such as governments, communities, and the environment.”

Depending on the size and complexity of your organization, your list of stakeholders may be simple and straightforward or murky and complicated. Either way, it’s helpful to create a stakeholder map as a starting place to understand who has a vested interest in the success of your organization and what their level of involvement and influence is on that success. You’ll want to create a way of easily categorizing and visualizing your stakeholders according to power and interest metrics. Doing this exercise will help you determine a clear sense of who wields power in and around your business, who is likely to help you move things forward, and who is expected to present obstacles. 

How do you communicate with your stakeholders, and why is it important?

Once you’ve determined who your stakeholders are and their level of interest and influence, you can start to strategize how you’ll build relationships with them via clear communication. While each category of stakeholder will require a customized communication approach, the key messages you’ll want to convey will remain the same across the board:

  1. Your company’s mission, vision, values, and employee value proposition. 

  2. How your ideas, initiatives, and performance reflect and inform the above. 

These foundational messages are the glue that holds your organization together – and the same is true for your stakeholders. From your employees to your board to those in the community who have a vested interest, everyone should know your company’s key drivers and understand how their involvement serves them. The most influential leaders know how to galvanize their closest stakeholders around initiatives that support these drivers. Here are some strategies on how to engage with the stakeholders you work closest with:

To Engage Your Team: Communicate Opportunity 

Start with a solid employee value proposition: sharing organizational foundational messaging and being transparent about business performance is vital to growing employee trust, loyalty, and engagement. Team members want to know how their work plays a part in the larger story of the business and what career opportunities lie ahead if they stay committed. The more a leader can communicate this unfolding narrative and connect an employee’s work to organizational strides, the more employees will feel “in the know” and motivated. 

To Engage Your Board: Communicate Value

It’s a leader’s job to bring big ideas and change suggestions to the table – but they won’t get far if they don’t have the support of those who hold sway over resources and evaluate their success. In this case, they have to get the board, well, “on board.” Take the time to draw connections among your ideas, organizational beliefs, and the desired business outcome and help your board members understand how these components work together.  

To Engage Your Community: Communicate Global Benefits

Whether forwarding a social cause or aiming to be a greener company, it’s more important than ever to communicate how your work and mission affect the greater good. Making this connection helps all involved parties understand your brand as one who sees its efforts adding value to the broader world.

Leadership is not possible in a vacuum. When you communicate a cohesive purpose-driven message to your stakeholders, you’re upholding the true meaning of being a leader: ensuring that you’re all moving forward together.

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