The words ‘shareholder’ and ‘stakeholder’ may sound alike, but they have totally different meanings. Every shareholder is a stakeholder, but not every stakeholder is a shareholder. To learn tips about ways to attain stakeholder buy-in, you will first have to understand what ‘buy-in’ means, and who stakeholders are. In simple words, stakeholder buy-in may simply represent respect and teamwork, stemming from a mutually beneficial relationship.
Stakeholders
A stakeholder is a person or an entity that is directly or indirectly affected by how an organization acts or performs. The priority level and relations of each stakeholder differ, as some may be more directly impacted than others. On paper, even the people who may benefit from the environmental safeguards of an organization’s factory could be termed as stakeholders. However, entities like employees, management, clients and customers are considered as some of the most important stakeholders of any organization.
Stakeholders can be prioritized based on the interest and influence they possess over the actions of the business. Board members and executives, who hold more ‘stake’ or interest in the company, also having significant power, would be list-toppers. Similarly, financial supporters such as lenders and banks may also be right up there, as they may not have much interest but their influence level is strong. On the other hand, some stakeholders have higher interest but little to no power over the organization’s actions and decision making. This group may include the employees, their families, and the shareholders.
Examples of Stakeholders
There are countless stakeholders joined with every single project of any company. Not only do they exist within the organization itself, but also on the outside. In this section of the article, we’ve listed and described some of the common categories of stakeholders that may or may not exist in any given business activity.
Internal Shareholders – They are the individuals that exist within the business and are directly affected by the project. Employees and managers would be the most relevant example. These possess an influence over how the project pans out, so they deserve their fair share of focus according to the power-interest criteria mentioned above.
External Shareholders – The people on the outside of your organization who will feel a direct or indirect effect. Customers, lenders, competitors, suppliers, clients, and other external entities can be classified here.
Primary Stakeholders – In any big or small business, there will be primary and secondary (discussed next) stakeholders. Identifying them depends on the project itself; such as a project that’s meant to cut manufacturing costs may have a direct impact on suppliers. Raw material usage would be cut down, and labor costs would need to be reduced; this makes your suppliers and employees (labor) the primary stakeholders of the project.
Secondary Stakeholders – Unlike primary stakeholders, these people feel indirect effects. To understand this category, imagine a project to install a processing machine in your plant that’s notorious for sending harmful pollutants in the air. This brings ordinary citizens living around the production area at risk of health problems, making them the secondary stakeholders.
Key Stakeholders – The influence of the key stakeholders determines whether or not a project succeeds. This category should not be confused with the primary class. In some cases, Government bodies or officials who are empowered to authorize permissions or plans would play a key role, and hence this makes them a key stakeholder in the project.
Voluntary Stakeholders – These include the persons who are in engagement with the organization on their own will. They have a choice to be there, such as customers, clients, and investors, unlike involuntary stakeholders (such as the example of the ordinary citizens above).
Active Stakeholders – Managers, employees, and project team members are the primary examples of this category. They make an effort to improve or positively influence the results of an activity. Significant financial sponsors and investors could also play a role that sometimes demands a role in policy making. This is in contrast with the passive stakeholders who simply can’t have any involvement in the way actions are taken (e.g. shareholders).
It’s not necessary for every organizational endeavor to include all of the aforementioned classes of stakeholders. Some projects only involve internal stakeholders, such as a restructuring strategy that doesn’t impact any outsiders. In some cases, stakeholders might exist that fall into none of these categories, but that doesn’t nullify their status as a stakeholder.
Now that we have established this important basic understanding of stakeholders, we can now look into the concept of their buy-ins.
Stakeholder Buy-in and Why It Matters
As monetary as the term ‘buy-in’ may seem, most stakeholder buy-ins aren’t financial in nature. It’s generally the name of attaining the approval or agreement of a certain stakeholder about an idea, such as a design or project plan. The stakeholders who choose to buy in are actually committing to accept the proposed courses of action. Some other financial buy-in examples may include getting approval for a loan from a lender stakeholder, which also communicates that they’re ready to support you in your plan.
Without the support of powerful stakeholders that exist in almost every project, progress attempts may be futile. For any designer or project developer, the assistance of employees and the support of other influential entities is equally crucial. Encountering resistance from executives, employees, directors, management or shareholders can make proceedings impossible. Under this much pressure, your project could hardly ever succeed. Due to this, it’s imperative that you get all the influential stakeholders on the same page, and communicate with them to acquire buy-ins. This allows you to move forward with collaborative steps, instead of rebellious ones.
Tips for Gaining Stakeholder Buy-in
You now understand a clear classification of stakeholders, and why their approval and collaboration are important factors towards the success of your project. All that’s left to know is what you need to do to secure stakeholder buy-ins in the most effective way possible. The rest of the article has got you covered, as we’ve gathered and explained 12 helpful tips for doing just that. You’ll need to fight hurdles, work through disagreements, and learn to compromise. Keep reading!
1. Ensure You Include All Internal Stakeholders In The Process
The more you make people involved, the easier it will be to persuade them towards a common goal. It’s natural for project leaders to focus more on the budget holder, while other internal stakeholders may not be considered as much. Sure, finances are important, but the internal stakeholders involved in integration and task processes must also be considered. Talk things out with them and understand their standpoint, priorities, and needs.
2. Speak The Language Of Each Stakeholder Group
Avoid making use of terms that only one specific class of stakeholders understand. The sponsors or lenders will have entirely different priorities than the customer or consumer of your product, make sure you address their concerns individuals. To get them interested in buying-in to your requirements, you’ve got to show interest in theirs.
3. Engage As Early As Possible
Engaging as early as possible is advisable. The value of time is well known to any project leader. The sooner you engage and communicate with the stakeholders, the quicker their needs can be addressed. It saves you from a ton of potential issues that may arise as a result of delaying stakeholder involvement.
4. Give a Clear Rationale For The Project
Stakeholders are generally easy to reason with, as long as their demands are being genuinely cared about as well. Chalk out the main goals and objectives of the project in particular, and explain to stakeholders why it needs to occur. Give them a crystal-clear understanding of the basic rationale behind the entire activity. To help them get a closer idea of the context, you can also communicate background information about the situation at hand.
5. Be Explicit About The Benefits
Bring the benefits of the project into stakeholders’ perspective, and contextualize their importance with the overall aim of the organization. Through effective communication of these factors, you’ll build a pretty solid ground for gaining buy-in from powerful decision-making stakeholders.
6. Identify And Manage Risks
Nothing pushes away interested parties as fast as risks. While you can’t entirely eliminate them from a business venture, they can definitely be reduced to an acceptable level. To improve the success chances of a project, it’s crucial to take necessary risk mitigation steps to limit worrying potential threats. Prepare a summary of identified key risk factors, and document your premeditated plans to respond to them, should they occur. This shows responsible management behavior and will display a positive image to the senior management members. Demonstrating your professionalism in risk management makes it much easier to attain buy-ins from influential parties, especially sponsors and lenders.
7. Listen And Communicate
Effective communication plays a massive role. In the process of obtaining buy-ins, you’ll be inquiring about stakeholders’ opinions. On the listening end, you must ensure that each stakeholder genuinely feels that his input and suggestions are appreciated. Offer your feedback and make sure everyone stays updated throughout the whole project.
8. Focus On Telling The Truth, Even When It Isn’t What Stakeholders Want To Hear
Telling the truth, no matter the cost promotes an environment of trust between you and the stakeholders. You can’t expect them to agree with your proposals if they don’t trust you to begin with. Stakeholders must never feel a prevailing loss of connection with the manager, team or the company itself. Such feelings will make buy-ins impossible to reach for, which immediately ruins projects.
To prevent such a mess, you must understand the importance of transparency from the beginning. Don’t conceal or omit things that you know would impact a stakeholder’s decision making. Steer clear of false promises, and never suggest solutions that you’re not sure you can perform. Rather ask for more time to look into stuff before you make concrete commitments. If you tell them the truth, even if it’s a response they wouldn’t like, it tells them you’re trustworthy. Honesty and objectivity in dealing with stakeholders will improve your relationship with them, increasing buy-in probabilities.
9. Make Sure Stakeholders Understand Their Contribution To a Project
By now, you’d be able to comfortably envision the demands and motivations of each stakeholder. You’re already gaining their trust by being genuine and honest with them, which always helps. The next step would be to make them understand the importance of their individual contribution to the project’s success. Point out what benefits they could bring to the project, how its success could reward them in return. Make sure you effectively communicate each one of their key roles relating to the deliverables of the project. Clarifying these blurred lines will be a major step towards urging them to buy-in and collaborate with you for a shared win.
10. Reaffirm Goals and Communicate Progress Throughout The Execution
Setting goals and establishing a well-known reliance on stakeholders’ performance is important, but not enough to carry you through the whole process. Professional execution requires regular updates and reaffirmation of targets to be made to every engaged stakeholder. It’s easy to lose track of the long-term goal being pursued by people without consistent guidance. Often after the commencement of project execution, managers simply assume that the stakeholders would simply understand and remain focused on their roles throughout the process. Such unrealistic expectations, without regular checks, can lead to derailing the project’s advancements. To prevent a decrease in already obtained buy-ins, make sure you keep reiterating the deliverables and tasks at hand.
11. Remain Consistent
A project manager needs to incorporate consistency in his managerial ways. Your instructions and speech, and how frequently you communicate, should all be consistent throughout the course. Stakeholders must perceive you to be reliable, reachable, and available for the purposes of the project. Stakeholders consciously or subconsciously require stability for them to remain invested and committed to their buy-ins.
12. Provide Positive Feedback After The Project Ends
As with any other aspect of project activity, you must never forget the finishing touch of feedback at the wrapping up stages. Describe how helpful the performances of all stakeholders have been throughout the execution of the project. If there’s any room for improvement, feedback should be provided on that as well. Sincerely thank all the involved stakeholders for buying in and contributing to the outcome.
Conclusion
As a summary, you must remember that involving influential stakeholders with you right from the start is essential. The possibilities that open up with increased collaboration should never be underestimated. Prioritize the stakeholders on the basis of their interest and power, and help them understand the value of their contribution and presence. Moving forward, you would have built rock-solid chemistry with the people around you and you would be ready to take on another demanding task together. Good luck!
