Stakeholder Management

Stakeholder_Manage

Definition

Stakeholder management in projects is “… the continuing development of relationships with stakeholders for the purpose of achieving a successful project outcome”.[1] Because a project can be seen as a temporary coalition of stakeholders having to create something together[2], contributions from a strong coalition of supportive and influential stakeholders are necessary to carry out a project successfully and it is the responsibility of the project team to ensure such contributions through management of the stakeholders.[3]

In essence, stakeholder management is therefore about developing the support of, and managing the expectations of, key stakeholders so that they contribute to the project in a beneficial way as needed. Indeed, multiple research papers indicate that project “failure is strongly related to a stakeholder’s perception of project value and their relationship with the project team.” (Emphasis mine)

Project teams generally assume that stakeholders who are supportive can be expected to be more compliant with the project needs than stakeholders who are in some level of opposition. This makes the identification and management of stakeholders who are not supportive, and who have greater power and influence over the project space, a critical need for successful stakeholder management.

Underlying Premises

This leads to one of the central premises underlying the concept of project stakeholder management, which is that the project manager should make deliberate attempts to exert influence on project stakeholders so that they deliver their contributions to the project. [3] However, this assumes the following:

  • The project team can identify all stakeholders for the project;
  • The project team can correctly determine the level of support for the project among the various stakeholders;
  • That the level of Stakeholder support is consistent and does not vary across various aspects of the project;
  • And that the project team can positively influence stakeholder support and commitment.

Another central premise is that project teams have limited resources and should allocate these resources in such a way that they achieve the best possible results. The law of diminishing returns suggests that project teams are better off expending effort to engage and educate stakeholders across a range of stakeholders then concentrating on a few, because initial efforts yield a higher benefit then later efforts. Additionally, because the cost of making changes usually increases significantly as a project moves through its lifecycle, the likelihood of stakeholder discontent with rejected input rises as the project evolves (as the “cost” of the change must be then be borne by the stakeholder or they must continue to deal with a less than optimal situation that the change request may have addressed).

Stakeholder Categorization

Stakeholders can be categorized in multiple ways (see the Stakeholder Analysis entry for more on this), but two of the most common are by Salience and by the PSK categories.

Stakeholder Salience

Stakeholder Salience is mapped along three dimensions. Those are: Power, Legitimacy, and Urgency. See the Stakeholder Salience Diagram for more information.

PSK Categories

The PSK categories are Primary, Secondary, and Key. These are:

Primary
There are at least two different definitions of Primary stakeholders that are in common use. One identifies primary stakeholders as “those ultimately affected, either positively or negatively” [5] by an organization’s actions. The organization in this case is the project, which is a temporary organization. I would recommend that if you are going to use this definition that you add the modifier “directly” to “affected” so that primary stakeholders are those “directly affected” by the project.

The second definition of primary stakeholders is those that “are in a contractual relationship with the project such as customers or suppliers or have direct legal authority over the project” [4]. This is sometimes adjusted to define Primary stakeholders as those with “a formal, official, or contractual relationship with the organization or they are directly involved in the organizations decision-making process”.[4]

Secondary
Just with the definition for Primary stakeholders, there are at least two common definitions for Secondary stakeholders that I am aware of. One identifies secondary stakeholders as ” the ‘intermediaries’, that is, persons or organizations who are indirectly affected by an organization’s actions.” [5] Note that this definition already specifies that secondary stakeholders are those “indirectly” affected, so it is compatible as is with the modification I suggest above.

The second definition of Secondary stakeholders, corresponding with the second Primary stakeholder definition above, is that they “do not have a formal contractual bond with the project or direct legal authority over the project, but they can influence the project”.[4]

Key
Key stakeholders can be either Primary or Secondary stakeholders as well. Key stakeholders are defined as those who “have significant influence upon or importance within an organization.”[5]

Influence Strategies

The following table includes some common stakeholder influence strategies.[5] Note that these are strategies used by stakeholders to influence the project. In general, the project team is likely to only have recourse to the Coalition Building and Communication & Credibility Building strategies in their attempts to influence stakeholders.

 

Influence Strategy Description
Direct Withholding In this strategy a stakeholder restricts access to critical resources controlled by the stakeholder or placing additional conditions on access that are not part of the normal business transaction.
Indirect Withholding In this strategy a stakeholder attempts to include additional conditions on the use of resources needed by the project, but which are often controlled by a 3rd party.
Resource Building In this strategy a stakeholder attempts to gain access to and control critical resources needed by other stakeholders. Note that resources in this case include both material resources such as money, labor, and computers; as well as non-material resources such as leadership, consensus, influence with key stakeholders, and moral engagement.
Coalition Building In this strategy stakeholders build alliances with other stakeholders in order to achieve mutually desired goals, or to exchange support for individual goals (i.e. “I’ll support you on goal X if you support me on goal Y”)
Conflict Escalation In this strategy stakeholders attempt to involve other powerful stakeholders or powerful non-stakeholders in an attempt to increase the importance of their goals.
Communication & Credibility Building In this strategy use various communication methods (directly with other stakeholders, or through other communications mediums such as the media) to increase the importance or legitimacy of their goals or to acquire resources.
Direct Action In this strategy stakeholders take direct action such as protests, boycotts, demonstrations, and similar actions.

Associated Concepts

Stakeholders cannot be managed unless they are first identified and then analyzed. See the related wiki entries for those two subjects that are linked below.

 

Associated Techniques

Stakeholder Communications Matrix
Also referred to as a Stakeholder Reporting Matrix, this technique is used to document how the project team will communicate with each stakeholder.

Stakeholder Salience Diagram

Tips

  • Have an onboarding plan for project stakeholders that educates them on:
    • The project process at your organization
    • The project methodology you will be using and any peculiarities they should understand (waterfall, spiral, agile, etc.)
    • Their expected responsibilities to the project, and what their level of expected engagement is
    • Key decision points in the project plan
    • The process they can use to raise issues with the project team, to ask questions, or to request engagement from the other stakeholders
  • Reassess the Stakeholder Management plan frequently, especially if project goals or deliverables change.

 

References

  1. Research Paper: McElroy B, Mills C. Managing Stakeholders. In: Turner RJ, editor. People in project management. Aldershot: Gower; 2003. Pages 99 to 118.
  2. Research Paper: Andersen ES. Prosjektledelse et organisasjonsperspektiv. Bekkestua; NKI Forlaget; 2005.
  3. Research Paper: Stakeholder analysis in projects: challenges in using current guidelines in the real world. Anna Lund Jepsen and Pernille Eskerod. International Journal of Project Management 27 (2009) 335 – 343.
  4. Research Paper: A project lifecycle perspective on stakeholder influence strategies in global projects. Kirsi Aaltonen and Jaakko Kujala. Scandinavian Journal of Management (2010) 26, 381-397.
  5. Wikipedia Entry: Stakeholder Analysis

 

Resources

 



© 2013 by David Olson

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