How to identify stakeholders in a business negotiation
To identify stakeholders, you first have to know who stakeholders are. Stakeholder analysis which is the process of collecting and assessing information about persons that are likely to affect or be affect by the workings of your organization or project is important.
Think about this from a negotiation point.
If you have no idea who the people or groups pulling strings in a negotiation are, and simply operate under the assumption that the person sitting on the negotiation table with you is all you have to care about, then you are already losing in that negotiation.
Defining stakeholders
An informal way to look at “what is a stakeholder?” is, those who can affect or are affected by an organization.
Formal and academic definitions have also been given by a number of authors.
Johnson and Whittington (2017) defined stakeholders as people and groups that depend on the organization and upon which the organization itself depends.
When you identify stakeholders, this way you realize that it will include individuals, groups or even societies, as long as they are in a position to exert influence on an organization or on whom the organization in turn will be in a position to influence.
In negotiation set up you have to know the power, interest and influence level of stakeholders since the result you desire out of the negotiation will be affected by such, which is why you need to know how to conduct an analysis of stakeholders!
Identify stakeholders in a practical sense
Imagine you are going for a negotiation or are actually in a negotiation. Who do you think are the persons likely to affect the outcome of that negotiation or be affected by the outcome of that negotiation? Because the answer to that will give you a list of stakeholders you will be dealing with.
Soccer if you are in North America or football if you are from any other part of the world is a good way to understand why you have to identify stakeholders
You and the other team
In this case you have yourself just like in the match there is your team which goes up against the other team. It is every easy, as we have numerously pointed out, to assume that the only people likely to affect the outcome are the people you are at the negotiation table with. But just like in the game, you are not just playing the opponent in the field!
Just like in football, the other team represent the negotiators from the other side which are the first stakeholders you can identify.
The official on the side line
Just like in a match you have officials on the sidelines from both teams, the same thing will happen when you are negotiating.
There are going to be indirect actors on the sidelines from both your side and the side of the person you are in negotiation with and these too are stakeholders.
In this case you will be dealing with people who actively influence the parties on the negotiation table. Examples here will include;
- The cross functional project or procurement team
- Senior users
- Budget holders
- Senior management
Remember these stakeholders’ influence is direct even though they are not on the table. A budget holder for example will control how high of a price a negotiator is willing to pay in a sales deal
The Interested observers
At this point you have managed to identify stakeholders who have a direct influence on what is going on in the negotiation, basically the party you are negotiating with and the parties controlling their actions.
You still have to deal with “observers”.
Just like in a football match the fans are not directly involved in the outcome of what is happening in the field but their support will affect the players, the same can be said about “observers” in a negotiation.
This is where you find remote stakeholders who have a ‘stake’ in the process or outcome of the negotiation, but are unlikely to exercise direct influence on the negotiation.
Examples might include, shareholders, competitors, regulatory bodies, trade unions or the media.
Some of these observers, lets take trade unions or regulatory bodies as an example, may be in a position to exert influence, in various ways, if their interests are threatened or engaged.
For example, the trade union, might initiate a campaign of protest or industrial action if the negotiated agreement threatens jobs.
Understanding categories of stakeholders
To help you identify stakeholders in a company there are two general ways you can categorize stakeholders.
- Stakeholders as internal, connected and external
Internal stakeholders are the kind you find in the organization. They are members of the organization, for instance, employees of the organization, managers and supervisors
Connected stakeholders are persons or groups that have an economic or contractual relationship with the organization. In this category you find, customers, distributors, shareholders etc.
External stakeholders are the kind that have no direct connection with the organization but have levels of interest in the activities undertaken by the organization or could in same way be affect by the organization.
In this category you have, government, pressure groups, financial communities, media etc.
- Stakeholders as primary and secondary
The second way you can categories stakeholders is to look at them as primary and secondary.
Primary stakeholders are stakeholders that have a direct interest in an organization. Example in this case are people like employees or even shareholder. Both of these depend on the organization for their income and the organization also in turn depends on such for its labour and finances
Secondary stakeholders have an indirect interest in the organization. Think of people who live next to a factory that pollutes environment, these people are not that much interested in the success of the organization but are interested in consequences of the organization’s activities, which in this case is waste and its effect on them.
You have to remember that just because stakeholders are secondary doesn’t mean they cannot have a significant impact on the organization. They can stage a protest which can have a negative effect on your organization performance.
Conclusion
A stakeholder is a person or a group of persons that are affected by an organization or who can affect an organization.
This can be anyone, for example, the government, another company, a customer or even society at large as long as they have the capability to exert influence on a given company or to whom the company is in a position to influence through its day-to-day activities.
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