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Mastering the complicated world of stakeholder management

stakeholder management held together by different people

First things first: let's define stakeholder management.

In general, it's the process of maintaining good relationships with the people who have most impact on your work.

Oftentimes when people reference "stakeholder management," they're referring to investors in a company or shareholders of the company, provided the company is public. But in recent years, there's been a push to a broader definition of stakeholder management, which includes bringing employees, vendor partners, and others into the discussion as well.

Table of contents
The most common issues with stakeholder mapping
Conducting a stakeholder analysis
Ideas to guide stakeholder analysis and stakeholder engagement, thus creating a stakeholder management plan
How can you positively impact stakeholder management, then?
What are the ultimate benefits of stakeholder management?
How much do you need to know about stakeholder management software?
What about grievance management within stakeholder management?
What's the difference between stakeholder management and project management?
What is the "key stakeholder problem?"
How can Fingerprint for Success help with stakeholder management?

The most common issues with stakeholder mapping

Typically the biggest issues with stakeholder management occur around communication and scope of projects. Stakeholders, especially those with money put into the project or operation, want to be consistently briefed on how things are going and where timelines and returns and reporting all stand. If you can master the communication side of stakeholder management, you can typically have an effective organization with good amounts of "buy-in."

You also need to remember the various complexities associated with stakeholder management, perhaps best summarized in the abstract from a popular 2003 paper on the idea of stakeholder management:

Projects do not exist in isolation. Even if there is a defined brief, budget, programme and scope of work the project is still subject to external influences. The project exists within a ‘political’ environment, populated by all those who have a particular stake or interest in the outcome of the project. This political environment and the expectations of stakeholders represent significant risk to a project. It is unlikely that the requirements of all stakeholders will coincide and they will seek to influence the project in order to meet their own requirements. Pressure from stakeholders generates change and change increases the complexity of the management task, jeopardising cost and programme certainty. However if the views of project stakeholders are not addressed and if stakeholders are not involved in the development of the project, then the project is unlikely to deliver optimum value for all involved. It is important that project managers strike the right balance between stakeholder involvement and isolation of the project from external influence in order to achieve delivery on cost and time but also to maximise benefit for the client and his stakeholders.

In that paragraph, pay particular attention to "pressure from stakeholders generates change, and change increases the complexity..." That's where the big challenges begin.

Like most management models, the ultimate key benefit of stakeholder analysis is that it helps bring understanding to a complex situation -- and, therefore, helps project managers and teams to manage and communicate with stakeholders in the most effective way. This allows everyone to concentrate resources for maximum benefit, and streamlining communications as well.

How do you effectively approach stakeholder management, then?

Conducting a stakeholder analysis

This is typically the first step in stakeholder management, and the backbone of stakeholder management strategy. What you need to do here initially is list out every stakeholder associated with a given project. As an example, let's say you're trying to launch a meditation app. Your stakeholders might include:

  • Funders and investors
  • Employees, i.e. internal stakeholders
  • Tech partners who help power the app
  • The product manager team
  • Outside partners like psychologists
  • PR agencies, marketing amplification help
  • Podcasts and other places you'll be advertising

That's stakeholder identification, in essence.

Once you have the list of all stakeholders, then you need to break them down by level of power and interest that each stakeholder has to impact the timelines and overall project. Typically, those with more front-end money -- so, in case, funders and investors -- will have the most influence over the process. This is sometimes called stakeholder engagement, referring to different contextual levels of engagement with the process of being a stakeholder.

The next step of stakeholder analysis is to look at your various stakeholders in terms of interest in the project (low to high) and power associated with the project (low to high).

For those with more interest in the project, your stakeholder analysis dictates a need to keep them informed -- so, frequent email updates, tracking documents, timelines, whatever else you choose to use in terms of communication. It might even be a dedicated Slack channel. For those with more power associated with the project, though, you need to keep them satisfied. That's a bit different than "informed." So, if their power comes from early-stage money, keep them updated on revenue cycles, profitability, cost containment efforts, new hires, and more. Constantly showcase their potential returns.

Where this gets tricky is that oftentimes, a stakeholder -- especially one with power -- can reverse the course of an entire strategy, or thinking about a specific project, simply by saying "I don't like that. Do this instead." You see this often even in organizations, where someone brings an idea that's been worked on for months to the CEO, and the CEO dismisses it, or completely changes it despite the months of work.

That's the challenging part of stakeholder management -- namely, dealing with the politics, power, and egos that can become involved.

Ideas to guide stakeholder analysis and stakeholder engagement, thus creating a stakeholder management plan

Here are some questions you can ask of each project stakeholder on the project team during the stakeholder analysis process to see where to slot them in terms of their individual stakeholder engagement:

  • Why are you interested in this project?
  • What are your expectations for this project?
  • If you have a team involved, what do you expect from them?
  • Which deliverables are you most interested in?
  • What inspired you to get involved in this project?
  • What do you hope this project changes after launch?
  • How quickly do you see this project rolling out?
  • If you feel positively about this project, why?
  • If you have worries about this project, why?
  • Do you prefer in-person meetings, phone meetings or email?

For a handy sample of the four major continuums of stakeholder management:

High power, interested people: these are the people you must fully engage and make the greatest efforts to satisfy.

High power, less interested people: put enough work in with these people to keep them satisfied, but not so much that they become bored with your message.

Low power, interested people: keep these people adequately informed, and talk to them to ensure that no major issues are arising. These people can often be very helpful with the detail of your project.

Low power, less interested people: again, monitor these people, but do not bore them with excessive communication.

Often helpful is also the below, which is a list of everything that actively falls under stakeholder management and stakeholder engagement:

  • Communicate: To ensure intended message is understood and the desired response achieved.
  • Consult, early and often: To get the useful information and ideas, ask questions.
  • Remember, they are human: Operate with an awareness of human feelings.
  • Plan it: Time investment has a significant payoff.
  • Relationship: Try to engender trust with the stakeholders.
  • Simple but not easy: Show your care. Be empathetic. Listen to the stakeholders.
  • Managing risk: Stakeholders can be treated as risk and opportunities that have probabilities and impact.
  • Compromise: Compromise across a set of stakeholders' diverging priorities.
  • Understand what is success: Explore the value of the project to the stakeholder.
  • Take responsibility: Project governance is the key of project success.

Thinking through all of the above will essentially create a stakeholder engagement assessment matrix for you and your team, which is what underpins the entire process of stakeholder management. This allows you to slot every project stakeholder in the right bucket, which informs your communication process and ultimately your success on the project. Welcome to a beautiful stakeholder management plan, friend! Welcome to project success.

People will sometimes ask "Is there a difference between stakeholder management and stakeholder engagement, then?" In all honesty, it's pretty semantic. The basic idea is that if you do stakeholder management right, that leads to stakeholder engagement. It's an "if-then" relationship, not different terms.

How can you positively impact stakeholder management, then?

There are a few core strategies, including:

  • Provide information to maintain their support
  • Consult with them prior to taking project decisions
  • Meet with them regularly
  • Consult with them, involve them and seek to build their confidence in the project and the team
  • Encourage them to act as advocates for the project
  • Nurture them as the project evolves, and frequently talk to them about steps, updates, etc.
  • Maintain a careful watching brief, make sure that changes to the project or changes within the stakeholder organization do not suddenly increase the level of negative interest.
  • Find out what is important to these groups and make sure that the project does not adversely affect this. If the project is likely to have a positive effect for them make sure they are aware.
  • Beware of other negative stakeholders passing information to this group to encourage them to oppose the project.

These are the massive complexities of any stakeholder management program -- namely, you need to be actively monitoring what's happening around discussions and ideas related to different stakeholders. If some are powerful but less interested or engaged -- maybe they have lots of other projects they're involved in, and your specific project is not top of mind right now -- then talk to them in the way they want to receive communication (which might be periodic emails, might be Slack, etc.) and ask them what would drive up their interest or move your specific project to the front of their queue in terms of focus and priority.

As with most things related to work, stakeholder management is largely about communication being done actively, consistently, and effectively.

What are the ultimate benefits of stakeholder management?

When done right?

  • Strong in-market reputation
  • Competitive advantage
  • Ability to attract future investors
  • Risk management
  • Strong overall corporate governance
  • Business intelligence

That last bullet point is crucial (as are the rest). What business intelligence means here is that, as you master stakeholder management and communicating with different stakeholders in their preferred cadence, you begin to learn more and more about product development, product offerings, marketing, sales, cold sales approaches, what aspects of your work resonate with who, customer considerations, project management overall, and improved communication models. All of this is business intelligence. It makes you better and smarter as you keep moving ahead with stakeholder management.

How much do you need to know about stakeholder management software?

Not a tremendous amount, thankfully.

In the software world, you have CRMs, which are Customer Relationship Management platforms. You also have Stakeholder Relationship Management platforms, called SRMs.

CRMs are generally designed around a sales process, which is fundamentally quite different to an engagement process.

While both a CRM and SRM can track stakeholders and their contact details well, an SRM is also designed to track and analyze the purpose and content of the engagement with the stakeholders. A CRM is designed around tracking where a contact is in a sales pipeline, i.e. funnel. A SRM is designed around understanding the engagement with the stakeholder – what they are saying to you, their needs, priorities and concerns.

A SRM allows you to basically record key questions around stakeholder relationships, including who’s been contacted about a particular issue, where and when did consultation events take place, and what the results were.

What about grievance management within stakeholder management?

Grievance management is the process of handling negative feedback or concerns from different stakeholders. Again, this depends somewhat on the power, influence, and interest of the different stakeholders. If a very powerful stakeholder comes in with grievances, there are chances for an "all hands on deck" type situation where everyone needs to be ready to make pivots and adjustments related to those grievances. For some other stakeholders, sometimes referred to as "latent stakeholders" (those who are interested but impact the project less), you can simply take their suggestions, incorporate them into planning stages, and you don't necessarily need to showcase what you've done with the grievances immediately. For more powerful stakeholders, though, you do need to showcase immediate reaction.

What's the difference between stakeholder management and project management?

This question does come up for people. Stakeholder management is more about relationships, people dynamics, and those politics of power, influence, and interest. Project management, in contrast, is more about timelines, deliverables, process, progress, and check-ins. You can think of stakeholder management as the "WHO" of getting things done, and project management as the "HOW" of getting things done.

What is the "key stakeholder problem?"

From the mid-1980s to the mid-200s, the number of key stakeholders in an organization, as measured by the C-Suite members, doubled in large companies. It was traditionally five (CEO, CFO, COO, CMO, CSO or CTO) and now it's traditionally 10. That means more -- quite a few more -- key stakeholders internally, before you even get to external stakeholders like vendor partners or funders. At the same time, while we like to think that we live in a very innovative and entrepreneurial time, the fact is that bureaucracy is exploding and over 30 million people globally are employed by the biggest companies on the planet. That's a lot of people pleasing a lot of stakeholders. It can get very complicated.

The problem here becomes that, we know from legitimate research that most senior leaders don’t think the same way about work, so ... you’ve got some key stakeholders in Operations. You’re saying one thing to them. Then you got to meet with key stakeholders in Sales. You say something different to them. Internally, you have to keep adjusting your message based on what the head of that functional area (silo) thinks and feels about the business. It can become exhausting, and delay the project. People can end up running in circles attempting to justify the importance of their individual worth, or their silo's worth.

How can Fingerprint for Success help with stakeholder management?

We have several programs that can help you become more efficient in stakeholder management efforts. For example, our online coaching program pushes participants to ask deeper questions about their network of relationships around work, which helps to manage stakeholders effectively.

Our ranking talent program is often used for internal promotion and advancement ideas (i.e. talent management), but can be used to quantify different stakeholder relationships internally as well.

We also offer a program around resolving conflict, which can be helpful when dealing with stakeholder grievances and concerns. And finally, but perhaps most importantly, we have a robust program around communication, and the centerpiece of effective stakeholder management is communication.

Here's a full list of F4S coaching programs. It will require you to create an account, but it's completely free to do so.

Stakeholder management and stakeholder engagement are confusing and complicated topics involving an intricate matrix of human relationships and business needs, and many companies struggle with them -- or they spin their employees out (burn them out, in essence) by constantly pivoting based on the needs of stakeholders.

The process can be managed effectively, but it takes time, planning, processes, and managerial self-awareness as well. We'd be delighted to help you along the journey.

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