Develop Effective Stakeholder Management Within the Public Sector

(Updated July 2024)

Effective management and engagement of your stakeholders is key to building strong relationships with them and in turn building trust and improving efficiency within your organisation.

Today, we’ll be going over identifying the most common types of stakeholders in the public sector and how to improve your relationship with them.

Identifying Your Key Stakeholders

There are many different types of stakeholders that have different levels of expectations of your organisation. The expectations they have and the type of stakeholder they are may drastically change the best way to manage them. For example, it may be difficult to manage large members of the public on a personal level, whose expectations of your organisation may be having a positive effect on their everyday life.

In comparison to the owner of the company, who may expect to be more involved in the processes of the organisation and has a vested interest in the financial success of the organisation, which the public may have less of a focus on.

A good way to separate and identify the different types of stakeholders is to differentiate between internal stakeholders and external stakeholders.

Internal Stakeholders – Examples and How Best to Manage Them

Internal stakeholders are stakeholders who have direct ties to the company or organisation, often they work within the organisation and may include:

Employees

Anyone who works for the organisation at any level holds a stake in the company, though the influence they have may depend on their own level. It’s important that employees share the same aim as the business so they can effectively carry out any actions on the company’s behalf. In some cases, it may be necessary to get senior employees on board for any changes in strategy or structure.

An employee's needs as a stakeholder may relate to financial and job security, it's important the employee feels comfortable in their role and is engaging with it so the organisation can be its most efficient. In this case, using employee retention strategies can be a good way to keep employees happy as stakeholders.

Owners

The owners of the organisation share a large stake and have a vested interest in the organisation's success. They will be interested that the organisation is running successfully both financially and in terms of its long-term goals, including growth.

As a stakeholder, they want to feel secure and confident that the company is running well, meeting its goals and is financially successful. In this case, communicating personally with owners can be an effective way to manage their needs, which would be more difficult with a large number of employees.

Volunteers

More relevant for public sector organisations like charities that use volunteers. Despite not having a financial stake in the organisation, volunteers still act as internal stakeholders. Being responsible for the organisation's image as well as carrying out the aims and goals of the organisation.

For volunteers, it's important that their values and ideas continuously match that of the organisation they are volunteering for. Therefore, communicating with volunteers that you are continuing to meet those values as your organisation progress is a valuable tool for keeping volunteers happy as stakeholders.

External Stakeholders – Examples and How Best to Manage Them

External stakeholders are outside parties, they may not have direct ties to the company or organisation, but the actions that the company or organisation takes are likely to affect them. They may include:

The public

The public are considered stakeholders as they are very likely to be impacted by the actions your organisation takes. For example, local and central government can affect the public financially through taxes and through other means such as roadworks, housing, social care etc. Building trust from the public in your organisation is a key role of any public sector body.

Giving the public opportunity to voice any concerns and further addressing those concerns as an organisation allows the public to feel valued as stakeholders and further builds trust for your organisation.

The Government

Within the public sector, the government is likely to hold big responsibilities within your organisation, including funding for public sector bodies such as local governance and health care, as well as the overall strategy. Managing the government as a stakeholder may mean matching the wider vision and frameworks that they may have put into your organisation.

Regulators

Regulators such as HM Revenue and Customs (HMRC) and the Competition and Markets Authority (CMA) are external stakeholders who ensure your organisation is operating lawfully and fairly. Ensuring compliance with them is pivotal to avoid financial or lawful sanctions, their expectations as stakeholders will be that your organisation follows their procedures correctly, including paperwork, regulations, files etc.

Suppliers

Important external stakeholders for the general running of your organisation. Having a good relationship with your suppliers ensures that your organisation can continue running in the event of situations with supply lines. Keeping a consistent, reliable relationship with them is a good way to keep suppliers happy as stakeholders.

5 Ways to Improve Stakeholder Management

With your stakeholders identified and with a relationship established, it's important to continue to improve on those relationships and effectively manage your stakeholders to ensure your organisation runs effectively and everyone is aligned with the wider goals. Here are 5 ways to continuously improve your stakeholder management.

1.      Identify Your Key Stakeholders

As highlighted before, there are likely to be many internal and external stakeholders within your organisation. Identifying your key stakeholders is a good way to ensure you aren’t spreading your management and resources too thin.

That isn’t to say that any of your stakeholders should be ignored, but your key stakeholders are likely to have a large impact on your organisation and likewise may be impacted by your organisation in a larger way compared to other stakeholders.

2.      Have a Clear Vision for Your Organisation

This is important to build trust with your stakeholders. Outlining your vision, goals and values to your stakeholders helps to align their own goals with your organisation and allows you to be transparent with your stakeholders (and hopefully vice versa). This makes it easier to gain stakeholder approval when you may have to change something that could affect them, as they will feel valued being part of the process.

3.      Communicate With Your Stakeholders

Along with the initial aspect of sharing your vision, goals and values with your stakeholders, being in frequent communication with your stakeholders is a good way to keep them updated on the organisation’s progress. While emails and newsletters can be useful for large numbers of stakeholders, it can be effective to communicate with your key stakeholders on a more personal level, such as a meeting or phone call, to ensure any queries are answered and they feel confident in the organisation's plans.

It can also help to evaluate the types of internal communication you use in your workplace.

4.      Build a Relationship with Your Stakeholders

Building a good relationship with your stakeholders, rather than seeing them as an external part of the organisation, is an effective way to deal with any issues they may have. If they feel there is a good relationship between themselves and the organisation, they may be more direct in their communication of potential problems, rather than discussing them behind closed doors with other stakeholders.

If your organisation is friendly and approachable to your stakeholders, they will more likely feel they can put trust in how the organisation deals with issues and problems.

5.      Re-evaluate Your Stakeholder Management Frequently

Frequently checking in with your stakeholders on how they feel about the relationship between themselves and the organisation allows you to identify any problem areas within aspects of your stakeholder management. Likewise, evaluating and re-evaluating your stakeholder management strategy frequently allows you to adjust how you deal with stakeholders.

Has stakeholder approval improved or declined? Do stakeholders feel communication with the organisation is adequate? These are some of the questions you should be asking within your organisation for effective stakeholder management.

It’s also important that you manage stakeholders’ expectations when you are updating, don’t overpromise to stakeholders on something that you can’t deliver or they may feel less confident that your organisation can deliver on its goals and needs.

Join our Effective Stakeholder Management Course for More Insights

With Our ‘Effective Stakeholder Management’ course, you can create a dynamic plan to preserve relationships with your stakeholders, learn how to resolve conflict and overcome unforeseen obstacles that may arise. View the full agenda here to learn more.