Stakeholder Analysis and Management
Parties involved in a project often have various expectations. It might be difficult to understand and document particular requirements of the stakeholders especially in complex projects. Therefore, project teams spend most of their time with stakeholder analysis and classification as well as developing management strategies to deal with them.
In a general sense, stakeholders are people or groups that can affect or be affected by the outcomes of a project. Employees, directors, government, investors, communities are examples of stakeholders. They may have positive or negative impacts on the project’s goals and objectives. Stakeholder’s requirements and expectations can be different based on their level of interest in the project’s objectives.
Below steps are recommended for a successful stakeholder management process.
- Stakeholder Analysis and Classification
- Establishing a Stakeholder Management Strategy
Let’s start with the definition of the stakeholders.
All the projects have internal and external parties that interest in the outcome or the product of the project. These parties often change or their interests may change as the project progresses. This causes various technical or other requirements which the project team may have assumed to be stable.
In project management, the term stakeholder is used to describe individuals, groups, or organizations which have interests in the outcome of the project. They may have the power or influence to supply resources to affect the outcome of the project. Stakeholders can be individuals who are involved in the project actively.
It is essential to take into account the requirements of all stakeholders in order to maximise the value of the project. To that end, expectations of your project’s stakeholders must be understood before to take important decisions.
Decision makers need complete analysis to evaluate the powers and interests of people and organizations that may influence the success of their business. This helps them to realize the issues, obtain support from key stakeholders and improve the quality of the project or product.
Stakeholder Analysis and Classification in Project Management
Stakeholder analysis and classification process come after completing the stakeholder identification. Project teams employ various tools and techniques to perform stakeholder analysis in order to understand the needs and expectations of parties inside and outside the project. Understanding their attributes and interrelationships may be helpful to plan and manage the project strategically.
Stakeholder classification aims to group stakeholders according to their power, level of effect, and influence on the project.
Models for Stakeholder Classification
The PMBOK Guide, recommends below four models for classifying stakeholders
1. Power/interest grid
2. Power/influence grid
3. Influence/impact grid
4. Salience model
Basically, stakeholders can be classified into four groups below;
Power and Interest
Stakeholders are classified according to their power and level of interest in the project’s outcome.Power/interest grid can be used for classification.
Power and Influence
Stakeholders are classified according to their power and level of influence on the project’s outcome. Power/influence grid can be used for classification.
Influence and Impact
Stakeholders are classified according to their influence and impact on the project’s outcome. Influence/impact grid can be used for classification.
Power, Urgency, and Legitimacy
Stakeholders are classified according to their power, urgency, and legitimacy. The salience model can be used for classification.
Stakeholder Management Strategy
Stakeholder analysis and management strategies include gathering information, identify stakeholder groups, stakeholder mapping, and monitoring. Stakeholder classification is very important for establishing the right stakeholder management strategy.
The power and Interest model is the most common model used for stakeholder classification. In this model, there is a chart with the x and y-axis, where the x-axis represents the degree of interest and the y-axis represents the degree of power.
Stakeholders with a high level of power and interest are on the right top of the matrix. They may be strongly supportive or otherwise. Since their interest is high, they have opinions.
Stakeholders with a low level of power and interest are on the left bottom of the matrix. They may have no strongly formed views.
This matrix provides you a basic analysis that helps you to create your basic management and communication strategy.
In this model, stakeholders can be grouped into four classes.
- Stakeholders with high power and high interest should be managed closely. If they are positive and supportive, you can provide information and maintain their support. If they are negative, be careful and put effort into dealing with them.
- Stakeholders with high power and low interest should be kept satisfied. Because they have power. If their interests change over time, they may have positive or negative effects on the project’s goals.
- Stakeholders with low power and high interest should be kept informed. If they are positive, use them to lobby other stakeholder groups and maintain their interests. If they are negative, don’t spend too much time with them.
- Stakeholders with low power and low interest should be monitored. If they are positive, provide them information because their position may change over time. If they are negative, don’t spend too much time with them.
Like other models, the power and interest model is helpful for managing stakeholders and their requirements. Establishing an efficient stakeholder analysis and management strategy is important for saving time while managing stakeholders. Because a project manager can not make the same effort while managing stakeholders with different priorities. Inherently, managing stakeholders with high power and interest is more time-consuming than managing stakeholders with low power and interest.
Project communications plan helps the project team to understand which stakeholders they need to communicate. Especially in complex projects, communications plan helps to define communication routes.
In the past, organizations were predominantly focusing on the financial outcomes of projects. Today, this attitude is still recognized however, focusing on just profitability can bring stress and troubles. Because all of the stakeholders do not interest in just financial stake. They affect or may be affected in some way by the project. For example, in a city when a factory’s production system causes more carbon emissions, city-dwellers will suffer from increased pollution.
Stakeholders will be supportive if they obtain benefit from the project, conversely, if the project has a negative impact or damage their interests, they will seek ways to stop it. Therefore, stakeholder analysis, classification, and management are the important processes that help to enhance a project and receive support from the stakeholders. Establishing good communication channels with the stakeholders brings a project to a successful conclusion.
In this article, we discuss stakeholder analysis and stakeholder management. Note that this is an important concept for passing the PMP Certification Exam.
Wanda is the Director of Blue Horizons Professional Training Services which focuses on the delivery of PMI-SP, Stakeholder Management and other project related workshops, training, mentoring and consulting services. She holds a Doctor of Project Management from Harward University.