Managing Stakeholders

By Janet Grauberg

This article was first published in Public Management and Policy and is reproduced by permission of the Association. http://www.cipfa.org.uk/pmpa/index.cfm

‘Managing stakeholders—a recipe for confusion’, was the title of a seminar led by WCL consultants in association with the PMPA. In the convivial surroundings of the Local Government Association, 30 or so senior civil servants and other public managers gathered to consider what can be learnt from private sector models of stakeholder management, and to hear how others had put these lessons into practice.

Stakeholder definition

Opening the seminar, Merlin Stone (visiting professor at Brunel University) outlined the importance of starting by defining stakeholders in detail: for example by identifying types of stakeholder, including making a distinction between current stakeholders and future stakeholders. This distinction, he said, is more important in the public sector than the private sector, as customers’ current needs are probably pretty closely correlated with customers’ future needs, but in the public sector if policy changed, some stakeholders could suddenly become much more significant. For example, the increasing policy focus on educational outcomes for children looked after by local authorities has made schools a prime stakeholder, alongside foster and other carers, for children’s social workers.

Stakeholder management

Another key aspect of stakeholder management in the public sector is the danger of assuming that ‘organizations’ have relationships, when actually it is always individuals that hold relationships. A change in minister, or change in senior official, will require additional stakeholder management effort to establish a new relationship.

Under the slogan ‘a stakeholder is for life, not just for Christmas’, Merlin went on to discuss the need for tailored stakeholder management. He said that many private sector companies make the mistake of assuming that their customers want a relationship, whereas in reality they are simply focused on one transaction. Using the NHS as an example, he described the different nature of stakeholder management activity depending on whether you are running a one-off vaccination campaign, or whether you are a GP providing health care to a family. Merlin concluded by considering some of the threats to effective stakeholder management, such as unclear objectives or competition for resources.

Models and approaches

Ashley Semmens, a consultant at WCL, next described some of the models of stakeholder management that had been helpful to organizations with whom he had worked. First, he described a ‘stakeholder management cycle’ in which stakeholders are identified, assessed, managed, and then reviewed. From the database of private sector organizations built up by WCL, he noted that many organizations didn’t get much past the ‘identification’ and ‘assessment’ part of the cycle, and that very few had good quality measures of the quality and effectiveness of their stakeholder management as part of their regular management information systems.

Second, he described a classification of approaches to stakeholder management that might help to identify which approach would work in which circumstances. Many public sector organizations, for example, make stakeholder management a separate project within an overall programme. In some cases a more ‘relational’ approach such as a ‘key account manager’, or even a more ‘delivery chain’ approach, would be more effective. There was no ‘right’ answer, he said, just different approaches for different circumstances and different stakeholders.

In the discussion that followed, several themes emerged. The first was that stakeholder management needs to be integrated into the business. In response to a suggestion that it is too difficult to manage stakeholders when there is an overwhelming amonut of work to do, Ashley said that in many cases in the public sector, where formal command-and-control levers are few and far between, stakeholder management is the real work.

The second theme was that stakeholders must have some influence in the decision-making process, otherwise the relationship will inevitably not be seen as worthwhile and the stakeholders will eventually drift away.

The third theme that emerged was that the task of mapping the stakeholders is often so large in the public sector that moving on to managing the key stakeholders never happens. In these circumstances stakeholder management could become a way of managing risks, rather than a way of moving an agenda on and delivering better outcomes as a result. Janet Grauberg is development director at the PMPA. then reviewed. From the database of private sector organizations built up by WCL, he noted that many organizations didn’t get much past the ‘identification’ and ‘assessment’ part of the cycle, and that very few had good quality measures of the quality and effectiveness of their stakeholder management as part of their regular management information systems.

Second, he described a classification of approaches to stakeholder management that might help to identify which approach would work in which circumstances. Many public sector organizations, for example, make stakeholder management a separate project within an overall programme. In some cases a more ‘relational’ approach such as a ‘key account manager’, or even a more ‘delivery chain’ approach, would be more effective. There was no ‘right’ answer, he said, just different approaches for different circumstances and different stakeholders.

In the discussion that followed, several themes emerged. The first was that stakeholder management needs to be integrated into the business. In response to a suggestion that it is too difficult to manage stakeholders when there is an overwhelming amonut of work to do, Ashley said that in many cases in the public sector, where formal command-and-control levers are few and far between, stakeholder management is the real work.

The second theme was that stakeholders must have some influence in the decision-making process, otherwise the relationship will inevitably not be seen as worthwhile and the stakeholders will eventually drift away.

The third theme that emerged was that the task of mapping the stakeholders is often so large in the public sector that moving on to managing the key stakeholders never happens. In these circumstances stakeholder management could become a way of managing risks, rather than a way of moving an agenda on and delivering better outcomes as a result.

Future debate

Although the discussion closed at this point, the debate continues. Professor Stone is delivering a paper at the Public Administration Committee’s Annual Conference in September 2006 on ‘From political processes to policy outcomes—comparing marketing strategy in the private sector with stakeholder management in the public sector’. A report of the Public Administration Committee’s conference will appear in the December 2006 issue of the PMPA Review.