Why is stakeholder management important?

Stakeholder management has long been recognised as a central part of an organisation's effectiveness. Stakeholders play important roles as advocates, sponsors, partners and agents of change. Much has been written about stakeholder relationships in the private sector and many companies now have dedicated relationship managers and strategies in place to improve and develop external relationships. However, stakeholder management in the public sector still lags some way behind, and is often haphazard.

The private sector shows that saving money by cutting back on engaging with your customers and partners is a false economy. Reputations are vital, and while hard to win, are easily lost. Understanding those you work with and for helps to build strong relationships and, ultimately, to achieve your objectives. Our research has shown that people are more willing to listen to companies with strong reputations: where there is trust, communications are more effective1. It's also easy to list a range of well-known companies that have built strong reputations based on clear, cohesive, and lived values and cultures: innocent drinks, Apple, and160Toyota to name just three.

Public sector bodies, of course, work in a very complex environment, and deal with a wide range of different audiences. Nevertheless, the basic principles of good stakeholder relationships are fairly simple to set out - if difficult to achieve. From our work across the public sector, Ipsos has identified three key elements that separate the best from the rest:

1. Leadership - the best organisations have boards with a clear set of priorities and a shared vision of how to achieve them, and articulate this directly and indirectly via their...
2. Staff - it is not all about leadership. Good stakeholder relationships are built up over many day-today interactions - staff at all levels need to be credible, consistent, and share their organisation's objectives.
3. Communication - organisations need to communicate their objectives well - internally as well as externally - and conduct real, two-way conversations with their stakeholders (feedback, don't just mutely listen).

Ultimately, a good reputation boils down to deciding what you want to be famous for and being single-minded - and united - in achieving it.