Stakeholder Engagement: Origins, Misconceptions and the Case for a Strategic Plan
Where the Term Comes From
The word stakeholder didn’t start in boardrooms or project management. Its earliest use came from gambling. A stakeholder was the neutral party who held a bet — the “stake” — on behalf of others. By the 18th century, the term grew to mean anyone with something significant to gain or lose.
Later, it appeared in legal disputes and land claim contexts. This connection has led some people today to assume the modern use of stakeholder carries colonial baggage, and a few organizations have avoided the word altogether.
In reality, the use of stakeholder in management theory emerged for the opposite purpose. In the 1960s, the Stanford Research Institute used it to describe groups “without whose support the organization would cease to exist.” By the 1980s, R. Edward Freeman formalized the idea in Strategic Management: A Stakeholder Approach. The intent was clear: businesses and public projects needed to recognize the wide range of people and groups who could affect or be affected by their decisions, not just shareholders.
What Stakeholder Engagement Means Today
At its core, stakeholder engagement is about structured involvement in decision-making. It recognizes that success depends on building relationships, not just delivering outputs.
Internal Stakeholders
Internal groups include employees, boards and leadership teams. Their role in engagement is often underestimated. Without internal alignment, external communications can become inconsistent, unclear, or even contradictory.
For example, in a large infrastructure project, engineers, communications teams and operations staff need to be engaged internally so that what gets shared with the public is accurate and consistent. Internal misalignment often creates external mistrust.
External Stakeholders
External groups range widely, from regulators and government funders to local residents, advocacy groups, and suppliers. Their interests differ, but all can influence outcomes.
A new healthcare facility, for example, may face regulatory approvals, community concerns about traffic or land use, and expectations from patients and staff. Each group has a different stake, but none can be ignored if the project is to move ahead smoothly.
Levels of Engagement
Not every stakeholder needs the same level of involvement. The International Association for Public Participation (IAP2) spectrum is a widely used guide:
Inform: one-way communication (updates, notices)
Consult: two-way dialogue (surveys, feedback)
Involve: working directly with stakeholders to address concerns
Collaborate: joint decision-making and problem-solving
Empower: transferring decision authority to stakeholders
The right level depends on the significance of the project and the influence of the stakeholder. A major transit line or health policy reform usually requires collaboration or empowerment, while routine operational changes may only require informing or consulting.
Why a Formal Plan Matters
Too often, engagement is treated as an afterthought — an activity added once a project is already underway. This approach is risky. It leads to reactive communications, shallow consultation, and higher chances of backlash or delays.
A formal stakeholder engagement plan addresses this risk by laying out:
Objectives linked to project outcomes
Stakeholder mapping by influence and impact
Tailored tactics for each audience
Roles and responsibilities within the project team
Evaluation methods to measure success
When integrated from the start, engagement becomes part of the project’s structure rather than a side activity. It helps manage risk, builds legitimacy, and ensures the voices of those most affected are heard.
Bringing It Together
Stakeholder engagement didn’t emerge from colonial land practices, but from management theory’s recognition that organizations and projects depend on more than just shareholders. Its original intent was to broaden inclusion, and that remains its value today.
Whether dealing with internal staff or external communities, whether informing or empowering, engagement must be intentional. Projects that rely on ad hoc or reactive efforts face greater resistance and risk. Projects that invest in formal engagement planning, on the other hand, are better positioned to deliver durable, widely supported outcomes.
