Importance Of Stakeholders And Engagement Management Essay

Project management is the discipline of supervising all the different resources and aspects of the project in such a way so that the resources will deliver all the output that is required to complete the project within the defined scope, time, and cost constraints (Lewis A. , 2010). It is the application of skill, knowledge, tools and techniques to project activities to achieve project requirements. It can be accomplished through the application of initiating, planning, executing, monitoring and controlling and closing (Lewis, 2007). This is mainly done in order to meet the exceeding needs and expectations of the stakeholders (Introduction to Project Management Principles, 2003). The call for project management was determined by the various businesses that realised the benefits of organising, communicating and co-ordinating work across the various departments and professions. This helps in coordinating the various resources of a project durning the project initiation stage so that by the time the project has begun its work all stakeholders and team members will have a clear cut understanding and acceptance of the process, methodology and expected outcomes of the project. (Lewis A. , 2010)

Stakeholders refers to those individuals or a group who has vested interest in the outcome or the results of the body of a work in an organisation. (Johnson, Scholes, & Whittington, 2008) defined stakeholders as the “people or small groups who depend on the organisation to fulfill their own goals and on whom, in turn, the organisation depends”. They may be actively involved in the project and may have an interest on the total performance or completion of the project. They have the power to exert positive or negative influence over the project, its deliverables and its team members.(Bourne, 2009). Hence stakeholders can be called as the key people involved in a project. They have an interest in the execution of the project, getting the approvals and resources, and they also have a stake in the project outcome. Although they may not have an official role on the project, these are the people who will ultimately estimate the success or failure of a project (Koning, 2009).

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All projects, in spite of its size, needs to have a clear cut idea and agreement about: who will decide the requirements of the project, the budget, resources, standards and in case of any change in the project, who will do the authorization of the changes and so on. Although a project manager could independently decide all these factors, unless and until the key stakeholders agree to the decision made, the project will not be able to progress and will have no scope for success (Koning, 2009).


The term “stakeholder engagement” is budding as a means of describing a broader, more inclusive, and continuous process. It takes place between the company and the potentially impacted stakeholders that encompasses a range of activities, approaches and, the entire span of a project. The change that is likely to occur reflects the broader change in the business and financial worlds. It increasingly recognizes the business and reputational risks that may occur as a result of poor stakeholder relations. It also places a growing emphasis on corporate social responsibility, transparency and reporting (Corporation, 2007) . Stakeholder engagement can therefore be defined as the process of effectively eliciting the stakeholders’ views on their relationship with the organization (Friedman & Miles, 2006).

Stakeholder engagement is increasingly becoming a part of mainstream business and is being used to improve communications, obtain wider community support or buy-in for projects, gather useful data and ideas, enhance public sector or corporate reputation and encourages more sustainable decision making (Gray, 2002). Without proper engagement of the stakeholders, it is impossible to have a common abiding agreement, ownership and support for a particular project. Any company or an organisation is likely to benefit if it takes care of the environment in which it is operating and aiming to meet the needs of its stakeholders (Gray, 2002). Stakeholder engagement gives the impression of corporate responsibility. It appears evident that if an organisation shows commitment, through policy and practice, to stakeholder involvement it is acting responsibly towards these stakeholders: the more an organisation engages with its stakeholders, the more accountable and responsible that organisation is towards these stakeholders (Greenwood, 2007). It is traditionally seen as a corporate responsibility in action. The impetus behind the use of the term ‘engagement’ in corporate social responsibility (CSR) is the need to emphasize that, for firms merely to interact with stakeholders is no longer sufficient and the interaction with stakeholders is a logically necessary activity of business (Noland & Phillips, 2010).

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Effective stakeholder engagement relies on a commitment to engage and communicate openly and honestly with stakeholders. The benefits an organization gets from stakeholder engagement activities are cooperation on operations/activities and at times on policy development as well. It enhances the community confidence and creates a more user-friendly, community/industry targeted service. Future costs can be reduced: for example, times spend in managing the crises with regard to the confidence level of the stakeholders can be avoided. It also helps in improving the access to emerging issues and communities, and helps in gaining the capacity to handle them before they develop a negative vibe in the community. This will include avoiding negative press releases.

In the case of changes and benefits that can take place inside the organisation are as follows:

It increases the organisational effectiveness which will result in more effective and efficient practice and high quality policy input within the organisation

It enhances the two-way communication skills and better understanding on both sides and thereby bridges the cultural gaps.

It develops a culture of innovation and learning, for example by building the knowledge into our decisions and practices.

Simplifies the conflict resolution through building trust, and a clearer articulation of what cannot be resolved.


Often the importance of stakeholder engagement is overlooked. It allows you to identify strengths and weaknesses and ultimately develop strategies to engage effectively. The stakeholder engagement is a critical element to the success of the project and it may be useful to develop a stakeholder engagement plan. For this, various sources, conventional and unconventional is used such as the media, online, literature or even word of mouth. As a part of the analysis, it is important to examine existing, current and past relationships, available resources and constraints and the desirable outcomes it looks forward to. For this purpose, the different desired outcomes of the stakeholders as well as the stakeholders engagement processes is analysed and studied.

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Desired outcomes are nothing but the overall aims of the engagement process. The desired outcomes for undertaking stakeholder engagement process would be

Improved personal or working relationships

Changed attitudes

Improved communication channels

Promotion of expansive circle of responsibility for actions and decisions

Identification of key issues, conflicts and benefits

Creation of new ideas

Establishment of new orderly partnerships

Improved services for society

Change in policy

Cost savings to long term

Betterment of individual and organisational learning

Local support and hostility supported for a new initiative

Increased community union and strengthened shared identity (Gray, 2002)


Stakeholder is an umbrella term which incorporates range of activities and interactions over the project life cycle. These activities can be divided into following components (Corporation, 2007):

Stakeholder Identification and Analysis

Information Disclosure

Stakeholder Consultation

Negotiation and Partnerships

Stakeholder Involvement in Project Monitoring

Reporting to Stakeholders

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