Stakeholders

Definition

There are a number of definitions of a stakeholder. Freeman (1984), for example, defined a stakeholder in terms of any organisation or person that can affect or be affected by the policies or activities of an entity. Hence stakeholding can result from one of two directions: being able to affect and possibly influence an organisation or, conversely, being influenced by it.

Any engagement with an organisation in whom a stake is held may be voluntary or involuntary in nature.
*********


Importance of identifying all stakeholders

Knowledge of the stakeholders is important for a number of reasons.

1. This will involve surveying stakeholders that can either affect or be affected by company’s project. Stakeholders in the company’s project include the local government authority, the local residents, the environmental group, the local school and the customers.

2. Stakeholder identification is necessary to gain an understanding of the sources of risks and disruption. Some external stakeholders, such as the local government authority, offer a risk to the project and knowledge of the nature of the claim made upon the company by the stakeholder will be important in risk assessment.

3. Stakeholder identification is important in terms of assessing the sources of influence over the objectives and outcomes for the project (such as identified in the Mendelow model). In strategic analysis, stakeholder influence is assessed in terms of each stakeholder’s power and interest, with higher power and higher interest combining to generate the highest influence.

4. It is necessary in order to identify areas of conflict and tension between stakeholders, especially relevant when it is likely that stakeholders of influence will be in disagreement over the outcomes for the project.

5. There is a moral case for knowledge of how decisions affect people both inside the organisation or externally.




********