Lori has taught college Finance, Operations and Business courses for over five years. She has a master's degree in both Accounting and Project Management.
Imagine you are a young bride or groom and are meeting with your wedding planner to determine who you will invite to your wedding. While you have lots of friends and family, the location you have chosen for the wedding will only hold just over 40 people. How do you decide who gets invited? The first step is to make a list of all the people that are potential guests. This process is similar to a business concept called stakeholder mapping. Organizations must define who their stakeholders are that will be considered when making important business decisions.
Who Are Your Stakeholders?
There are many different definitions of a stakeholder. Stakeholders can be internal or external, but they are those individuals or groups who can affect the success of the organization in some way. Stakeholder mapping is a dynamic process, and the definition of an organization's stakeholders will change as the business environment, stakeholder requirements, and opinions change.
Depending on the organization, the following could be possible stakeholders: owners, customers, employees, suppliers, competitors, industry leaders, community, environment, government, and other organizations. If we consider our wedding scenario, stakeholders could be the bride's parents and siblings, the groom's parents and siblings, grandparents, aunts and uncles, nieces and nephews, best friends, family friends, co-workers, and any other family or friend whom the bride or groom would consider including in their special day.
Stakeholder Mapping Is a Four-Step Process
Stakeholder mapping is a four-step process of:
- Identifying groups, organizations, and people who are stakeholders
- Analyzing stakeholders' perspectives and interest
- Mapping the relationship between stakeholders and company objectives
- Prioritizing and ranking stakeholders
Step 1: Identifying Your Stakeholders
The first step in stakeholder mapping is to identify your stakeholders. The process requires knowledgeable people who understand the importance of developing this list. Consider past stakeholders as well as future stakeholders. Is the company entering new markets? Is there new technology involved? Are there new customers? How are they relevant to the business? Be as diverse as possible to ensure a broad range of experience, locations, influence, and expectations. Focus on reaching the smaller, in some cases hidden, stakeholders that can bring a unique perspective. Create a final list of stakeholders before you proceed to Step 2.
Step 2: Analyzing and Understanding Your Stakeholders' Perspective
Business Social Responsibility has identified five criteria to help improve your analysis.
- What contribution does each stakeholder offer?
- How can they help the company?
- Does the stakeholder have a true stake in the future success of the organization?
- How willing are they to participate?
- To what extent does their influence affect the analysis?
It is recommended to create a decision matrix that will allow you to map and compare each stakeholder against the others. This analysis should give you an idea who to include as you move to Step 3.
Step 3: Mapping Your Stakeholders' Relationship to Objectives
Visually mapping each stakeholder's relationship compared to one another also provides further analysis. There are many different forms of mapping and ways to compare your list of stakeholders. Understanding different criteria in relation to other stakeholders, their willingness to participate, their expertise, and their potential to impact the organization will help the team determine which stakeholders are important to engage. Stakeholder engagement is critical to the overall success of the business.
Step 4: Prioritize Your Stakeholders' Relevance
Some stakeholders will be more relevant for different business needs than others. Establish a way to prioritize stakeholders so the team knows the level of engagement needed and the importance to place on the feedback. While you need to cover a good majority of your stakeholders at some detailed level, the team needs to be smart about the time and money being put into engaging stakeholders. Knowledgeable business leaders will have the best input as to recommendations for prioritizing this list.
If we met back up with our bride and groom at this point, we would expect to see a list of guests starting most likely with mom and dad and following down accordingly. The bride may choose a different date if her sister or best friend were unable to attend, but she may not have such strong feelings if her dog sitter couldn't make it.
The same is true with stakeholders. Our key customers, ones who may represent 25% of our sales, will get priority status, and a substantial amount of engagement activities will be planned around their availability. Another group of 10 customers who collectively make up 15% of sales may be engaged via a market survey and some follow-up phone calls. While the business goal is to treat all customers the same, the reality is that we have to prioritize in order to get to the voice of our majority customers, and we must make decisions to benefit not only the company but also our stakeholders as well.
Stakeholder mapping is the process followed to help identify, analyze, map, and prioritize an organization's stakeholders. Many different business tools and techniques can be used to gain stakeholder feedback and encourage involvement beyond that. Tools such as a decision matrix and stakeholder relationship mapping can help an organization translate their feedback into actions that will support their overall business objectives.
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