Stakeholder Communication Manual

Wesley Doyle

Organizational Communication, Strategic Leadership, and Culture

November 28, 2023

What are Stakeholders, and Why Should Companies Focus on Them?

Stakeholders are engaged groups of individuals who are actively affected by the decisions and strategy of an organization. They are different from ‘publics’ or ‘audiences’ in that they have a stake in the success or failure of an organization (Institute Project Management, 2023).

These stakeholders are imperative to the success of the organization; however, they are different from shareholders. Shareholders have a financial stake in the company—while they might often be considered a type of stakeholder, the shareholders are typically solely focused on the financial performance of the company. Stakeholders     are often more engaged in the strategic performance of the company as well—shareholders tend to be more passive.

The Importance of Stakeholder Communication

Actively communicating with stakeholders is one of the most strategic plays an organization can make today. It’s imperative that stakeholders understand their role in the company’s success, both in times of need and appreciation from the organization to the stakeholders. The following principles should serve as a guide for communications practitioners; these principles also include:

1. Identify stakeholder importance early in the strategic planning process.

2. Nonverbal communication can speak just as loudly to active stakeholders.

3. Stakeholders are people, not just groups or categories—define them relationally.

4. Encourage feedback from stakeholders—and be open to receiving and implementing changes.

5. Focus on issues imperative to the organization and stakeholders—do not focus solely on financial aspects.

Principle 1: Identify stakeholder importance early in the strategic planning process.

When developing a stakeholder communication strategy, it’s important to identify the most important stakeholders and prioritize them accordingly. Those stakeholders with the most power, legitimacy, and urgency to the organization should be prioritized and communicated with consistently. These stakeholders may not necessarily have the strongest economic impact on the organization, but a lack of communication and engagement with these types of stakeholders would be detrimental to the company.

Identifying each group of stakeholders’ importance early in the strategic planning process could drastically improve your relations with those stakeholders and help your internal management understand these stakeholders’ roles in the overall success of the organization.

 

Principle 2: Nonverbal communication can speak just as loudly to active stakeholders.

Nonverbal (or even lack of) communication can speak just as loudly to your stakeholders as a miscommunication. Stakeholders typically respect and forgive a miscommunication, but they will easily grow frustrated and tired of a lack of direct, verbal communication from the organization.

Furthermore, a lack of communication leads a lot of room for interpretation from the company stakeholders, often leading to greater miscommunication and growing frustration from your company’s biggest stakeholders. No matter how much or little information your company has available to share, proactive communication allows you to retain influence over and maintain relationships with stakeholders (Grullón, 26).

Example: Brandon is upset at the office one day, and his facial expression shows this. Anita, a key stakeholder in Brandon’s company, notices Brandon’s visible displeasure before an important meeting that same day. Now Anita is worried, but after some discussion with Brandon, she realizes that Brandon is upset about a personal matter. However, Brandon’s visible body language allowed for an instinctive miscommunication before a big company meeting. Brandon’s nonverbal communication sent messages before words were ever spoken at the meeting.

Principle 3: Stakeholders are people, not just groups or categories—define them relationally.

While stakeholders have historically been classified in categories or groups (similar to ‘publics’ or ‘audiences’ in public relations and marketing), the communicative aspect of stakeholder relations focuses on the organization’s relationships with the stakeholders (Koschmann & Kopczynski, 2017). Often, important stakeholders can play simultaneous roles in the success of an organization; instead of placing these stakeholders in multiple categories, an organization should focus on the relationship with those stakeholders, and the ways of which they communicate.

Example: Paul is on the Board of Directors for ABC, Inc., but he also serves as a shareholder of the company with several dozen stocks invested. He would be included in imperative information shared with the board of directors, but he would also be included in general shareholder information. In addition to these roles, he also serves on community service committees of key partner organizations to ABC, Inc. Defining and understanding ABC, Inc.’s relationship with Paul is necessary to keep him accurately informed on the company’s processes, as well as receiving valuable feedback from key stakeholders of ABC, Inc.

Principle 4: Encourage feedback from stakeholders—and be open to receiving and implementing changes.

Koschmann and Kopczynski (2017) write that communication “involves a fundamental reconceptualization of communication in stakeholder management and stakeholder relationships. Rather than understanding communication as the linear transmission of information, some scholars argue for more dialogic and constitutive approaches to language and human interaction. (Koschmann & Kopczynski, 2017, p. 8).”

This type of shift in understanding stakeholder communication allows for truly transformative strategic planning. It puts the stakeholder needs front and center of the company, and it directly addresses the concerns of the most influential players in the company game.

Koschmann and Kopczynski (2017) further write that this type of symmetric communication is a “constitutive approach,” which treats communication as a necessity rather than a “commodity to control and exchange (Koschmann & Kopczynski, 2017)” information.

Example: Rather than simply sending out regular news updates, create opportunities for stakeholders to actively engage with the company. Special events, surveys, more meaningful stakeholder meeting invitations—no matter the opportunity, the organization should work to ensure the stakeholders are heard and messages received. Furthermore, work to implement ways that the organization can let stakeholders know the messages have been received and ideas implemented.

Principle 5: Focus on issues imperative to the organization and stakeholders—do not focus solely on financial aspects.

Historically, stakeholder communication was focused on the financial aspects of the firm’s success; however, recent development and the complication of political relationships, business, technology, and social responsibility of corporations and organizations has prompted businesses to look beyond the financial aspects of their decisions.

Local community members have a stake in the company, but they may not directly benefit from the company’s financial success. Shareholders have a stake in the company, but many of them likely won’t benefit from the company’s local investments in the community. When evaluating stakeholder relationships and how the company communicates with them, it is more important now than ever to focus on more than the financial successes and impacts of the company—after all, there is truly much more at stake than the financial effects of the company.

Evaluating more aspects than just the financial allows the company to see the “big picture” when strategizing, both internally and externally.

Example: Oil companies that drill in rural areas must work with the local community when it comes to employment as well as how the company is working to protect the environment. National campaign advertisements won’t have much effect, but local television placements and community engagement specialists to understand the needs of the nearby environment and community will better serve a key stakeholder—the local community, from citizens to local government officials that have the power to ban this type of activity.

Conclusion

In practice, these five principles should help you better communicate with your organization’s stakeholders in today’s world. Stakeholder theory will continue to evolve, of course, as communications principles and society change. The communication with these stakeholders remains of utmost importance, but styles of which an organization communicates with them will change. Utilizing these five principles, though, should guide you to be a better communications practitioner with your company’s stakeholders.

Bibliography

Grullón, N. (26, November 2023). 5 Axioms of Communciation as outlined by Paul Watzlawick.

Institute Project Management. (2023, June 30). What are Stakeholders and Why are They Important? Retrieved from Institute Project Management: https://www.projectmanagement.ie/blog/stakeholders/

Koschmann, M. A., & Kopczynski, J. (2017). Stakeholder Communication. The International Encyclopedia of Organizational Communication, 1-12.