What Is a Stakeholder in Business?

Published: December 18, 2020
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At Good e-Learning, the frameworks and methodologies we deal with address several different aspects of a typical business. However, whether we are talking about project management, business analysis, IT service management (ITSM), or anything else, one important consideration that’s virtually guaranteed to come up is ‘stakeholder management.

‘Stakeholders’ are a common factor in every organization on the planet. Managers and executives need to keep stakeholders aware of what is going on and how it supports their individual priorities. They must also anticipate where stakeholder concerns may create conflict and, if necessary, how to achieve the best possible compromise.

But what exactly is a stakeholder? What kind of role do they play in business, and how do some of the world’s most widely-used frameworks approach them? Let’s take a look!

What is a stakeholder?

Broadly speaking, a ‘stakeholder’ is someone who has an interest in the performance and operation of an organization. Common stakeholders include:

  • Investors
  • Customers
  • Suppliers
  • Owners
  • Lenders
  • Employees
  • Users
  • Clients

As we can tell from this short list, stakeholders do not have to be directly tied to the management of an organization for their concerns to be relevant. There can be:

  • Internal stakeholders – Those who have a direct relationship and an invested interest in the company and how it gets run. These include managers, investors, employees, etc.
  • External stakeholders – While they do not have a direct connection to the company, their interests are still affected by it. This group can include compliance authorities, environmental regulators, government groups, etc.

How can stakeholders cause problems?

If stakeholders are all interested in a business performing well, how could they possibly cause any conflict? In a nutshell, the performance of a business is, in many ways, subjective. For example, while employees care about achieving targets, they also want to ensure their working conditions and pay are fair. Investors, on the other hand, may be willing to cut non-essential benefits to employees if it meant increasing their own profits. There are also stakeholders whose requirements are non-negotiable, such as governmental groups working to enforce compliance regulations.

It is also worth pointing out that stakeholder priorities can change over time. For example, over the last few years, markets have evolved dramatically. This has not only created a huge demand for digital services – certainly a non-negotiable point for customer and client stakeholders – but it has also led to the creation of several entirely new regulations and standards. Stakeholder management involves keeping track of these changes while also ensuring all relevant stakeholders are aware of them. After all, if a stakeholder forces their priorities through as a result of misinformation and the company suffers as a result, they will want someone to blame.

To put it another way, stakeholder management is a lot like managing a diverse team of employees. Each has a different background and specialty, and every single one of them thinks their sphere is most important. The manager must establish priorities and create a solution that will take everyone’s contribution into account. The difference for stakeholder management is that the diverse group of employees is now in charge, and they’ll be far less likely to follow the manager’s direction if they don’t feel their needs are being fulfilled. This can result in stakeholders withdrawing support for key projects and initiatives, reducing their viability while also threatening returns.

How do different frameworks approach stakeholder management?


PRINCE2 is the world’s most popular project management methodology. It is a holistic approach that takes multiple elements into account, including stakeholder engagement.

PRINCE2 defines three primary groups of stakeholders within a project:

  • Business sponsors – Stakeholders who want value for money
  • Users – Stakeholders who want the final project to meet their needs
  • Suppliers – Stakeholders who provide expertise and resources required to bring projects through to completion

PRINCE2 outlines a number of key groups and roles that help guarantee sufficient stakeholder representation:

  • Project board – executives, senior users, senior suppliers
  • Project assurance
  • Project manager
  • Project support
  • Change authority
  • Team managers
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The ITIL 4 ITSM framework addresses stakeholder management in one of its intermediate modules, ‘ITIL Specialist: Drive Stakeholder Value (DSV)’. Like PRINCE2, ITIL DSV lays out several elements, including stakeholder communication and continuous reassessment/ improvement. 

Interestingly, ITIL 4 also takes a unique dual approach. It is not just about giving stakeholders what they want, but also improving what they have to offer. For example, a business process owner may rely on an ITIL 4 team to deliver the services it needs. However, as part of this, the team may encourage the product owner to adopt new best practices. This will not only help with the team’s own value creation, but it will also improve the relationship with the ITIL team. This is known as ‘value co-creation’.

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How to manage stakeholders

The best way to manage stakeholders will very much depend on your position. This will decide what kind of interaction you have with different internal and external stakeholders, as well as whose priorities will have the most impact on your work. Program managers, for example, would have far more exposure to high-level stakeholders and shareholders than low-level employees. That said, these employees would still need to meet stakeholder requirements in terms of compliance, safety, productivity, and so on.

Based on this, along with the size, location, industry, and offerings of your organization, ask yourself:

  • Who are my stakeholders?
  • Do they have a direct relationship with my work?
  • What are their priorities?
  • How much influence do they have?
  • Where might they cause conflict with other stakeholders? 
  • Which stakeholder requirements are non-negotiable?

Once you have a clear idea of the identity and needs of your stakeholders, the next step will be communication. You will need to make sure that stakeholders can voice and receive updates on their priorities. For this, you will need clear communication channels, such as company instant messaging or time-management software like Monday.com. You will also need a system and process in place for communicating stakeholder decisions to those affected.

Of course, the advice above is highly generalized. The best approach to stakeholder management will, as we said, require an understanding of your organization as well as your position within it. 

To learn stakeholder management best practices, your best bet will be to study a demonstrably effective framework. Options like PRINCE2 and ITIL 4 acknowledge how complicated it can be while also providing tools and best practices for optimizing not just value for stakeholders, but also the support they offer to their organizations.

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