Today we will discuss stakeholder analysis.
A stakeholder is defined as an individual or group that can impact or be impacted by the project.
A project causes a change in an environment of individuals, regulators, customers, sponsors, and more.
All these stakeholders are affected by the outcome, and they have the potential to impact a project.
Stakeholders have a vested interest in the project. You cannot undermine their impact. If you are concerned about the success of your project, you must analyze your stakeholders to manage them efficiently.
This is a process of gathering information about stakeholders and group them according to their attributes.
Businesses these days are becoming more customer-centric; projects are more human-dependent over machines or tools. Technical knowledge alone is not enough success.
In governance, stakeholders are an integral element of policy formulation. You cannot create a policy in isolation. The stakeholders (legislators, labor unions, civil society, non-governmental organizations, commercial/private sectors, ministries, departments and agencies, and even international bodies) are considered to have an all-inclusive outcome.
Stake of Stakeholders
A stakeholder can have the following stakes in the project:
- Stake Based on Interest: Certain individuals may have a vested stake in a project based on interest. For instance, communities within the recommended buffer of a pipeline project will certainly be interested. The project team must acknowledge this and plan to manage their concerns. So, the community dwellers here are stakeholders. This is why a major highway project in Pittsburg, USA, was rerouted to avoid the demolition of a historical church.
- Stake Based on Rights: These rights could be legal or moral. Safe working conditions can not be compromised; otherwise, there will be a negative impact on the project. Failure can result in loss of person-hours or additional fines. Some organizations use slogans like “no harm to people and no harm to the environment” to promote moral rights to stakeholders. Your project activity must not affect people’s rights to safe and healthy living.
- Stake Based on Ownership: This includes shareholders who have a legal title to the asset. For example, high-level executives, boards of directors, co-owners in a joint venture partnership, and more. Their expectations must be provided for; according to a survey, “33% of projects fail because of a lack of involvement from senior management.”
- Stake Based on Knowledge: The project manager leverages subject matter experts, consultants, or other professionals to achieve the project objective. These individuals have a knowledge stake in the project. Their role cannot be ignored; otherwise, you have a poor-quality deliverable.
- Stake Based on Contribution: You need to facilitate the seamless flow of materials and resources. The human resources or supply chain department can help. They have a contribution stake in the project as more of support service. The IT department and the Project Management Office (PMO) are contributory stakeholders.
The list below shows various stakeholders in a typical project.
Customers: The end-user of your project’s output.
Sponsor/Owners: They provide support to complete the project.
Project Team Members: They are directly involved in the project. This includes designers, developers, testers, business owners, project managers, project management teams, and subject matter experts.
Company Board Members: These are high-level decision-makers.
Regulators: These are government agencies that guide or oversee the industry.
Suppliers or Vendors: They provide raw materials.
Employees: Staff of the performing organization but not including the project team members.
Partners: Third-party support providers.
The list above could be endless and will keep evolving throughout the life of the project.
The Importance of Stakeholders Analysis
It helps with the following:
- Identify key stakeholders.
- Separating unimportant stakeholders.
- Help avoid conflicts.
Identify Key Stakeholders
You should identify your project stakeholders as soon as the project charter is signed. After doing so, you need to classify them according to their power, influence, and interest.
This is how you see who the key influential stakeholders are and how you manage them proactively.
That’s how you get their buy-in.
Separating Unimportant Stakeholders
A large project can have hundreds or thousands of stakeholders; managing them is no easy task.
A stakeholder analysis lets you know who key stakeholders are; investing resources on low power and low-interest stakeholder is a waste.
Help Avoid Conflict
You know your stakeholders and have managed them proactively. This lets you complete the project with fewer conflicts.
How to Conduct Stakeholders Analysis
A stakeholders analysis requires the following steps:
- Identify stakeholders.
- Categorize stakeholders.
- Priorities the categorized stakeholders.
Your first task as a project manager is to identify your stakeholders; this precedes stakeholder analysis. The following techniques and documents will help you find them:
- Business Case: This document contains the justification for the project.
- Benefits Management Plan: Every project has benefits to deliver. This document looks at how this value can satisfy the beneficiary even after the project closes.
- Agreement: This is a contract or legal document between the performing organization and third parties such as suppliers or partners.
- Expert Judgment: Every project relies on professional inputs throughout its lifecycle. This advice is rendered by subject matter experts.
- Brainstorming: This activity helps generate ideas. All team members are invited to do this and identify stakeholders.
- Brainwriting: This is also brainstorming but here team members are told ahead of time to come up with their inputs which are reviewed during the meeting.
- Survey: Here, you get data or information from non-project team members, especially the larger population. This is common in ‘community projects.
The output of the identify stakeholder process is the stakeholder register.
Every project has visible and sleeping stakeholders.
Visible stakeholders are those stakeholders whose influence is easily noticed, for example, customers and suppliers.
Sleeping stakeholders are quiet and pose the greatest risk because they are often not proactively managed. Examples are the procurement departments and regulators.
Some stakeholders can be risky as they can influence the project outcome. This should not be seen as a threat but as an opportunity for project success.
Though you can use any technique to categorize stakeholders; the following two methods are most popular than the rest:
- Power/Interest grid
- Salience model
In the power/interest grid, you can draw a chart as shown above.
The horizontal line denotes interest, and the vertical line is for power. Here, you can divide stakeholders into four categories:
- High-power – high-interest
- High-power – low-interest
- Low-power – high-interest
- Low-power – low-interest
A salience model is a Venn diagram consisting of circles that represent three attributes: power, legitimacy, and urgency. The intersection shows stakeholders with multiple attributes.
The stakeholders are classified into seven groups according to these attributes:
You can divide these groups into three categories:
- Latent stakeholders
- Expectant stakeholders
- Definitive stakeholders
These stakeholders have only one attribute. Since they only have power, these stakeholders get little attention.
Dormant, demanding, and discretionary are examples of latent stakeholders.
Dormant stakeholders have high power, low urgency, and low legitimacy. Because of their high power, they can influence your project. Therefore, you will manage these stakeholders closely.
For example, top management does not take part in meetings and has no interest. However, you will still watch them as they can influence your project.
This group has high legitimacy, low urgency, and low power. Despite having lower power and urgency, you will manage them closely because of the legitimacy.
Examples of these stakeholders are NGOs and charitable organizations
These individuals have high urgency, low power, and low legitimacy. They are usually vocal, so you will need to manage them carefully.
For example, if your project is in a public place, the local community has an interest.
This group has two attributes: they have high expectations and are actively involved with the project.
Dominant, dangerous, and dependent are examples of expectant stakeholders.
These have high legitimacy and high power but low urgency. You will manage them closely.
For example, local government agencies.
This group has high power, and high urgency, and low legitimacy. Sometimes, they can be violent; you will manage them cautiously.
For example, a group of local terrorists in a third-world country.
These people have high urgency, high legitimacy, and low power. Because of their lack of power, you will not manage them closely.
For example, in construction work, local residents can be an example of dependent stakeholders.
This last set has three attributes and requires the most attention from the project manager.
Sometimes these stakeholders are known as “definitive.”
They have high power, high urgency, and high legitimacy. You will manage them closely.
For example, the top management of your organization.
You will not manage these people.
The stakeholder analysis begins with the identification. Stakeholders analysis helps you identify key individuals and groups so you can manage them and get their buy-in.
Your project cannot succeed until your stakeholders are happy, and stakeholders analysis can help you achieve that objective.
How do you carry out stakeholder analysis on your projects? Please share in the comments section.