Project Management: What is Stakeholder?

In the realm of project management, stakeholders should be a vital consideration from planning through to execution. Their perspectives, needs, and actions can significantly impact the outcomes and success of your endeavours making their identification, engagement, and effective management crucial for achieving desired goals and outcomes.

Visual PMP Academy
September 14, 2023

Understanding Stakeholders: Unveiling the Hidden Depths of a Project

In the realm of project management, stakeholders should be a vital consideration from planning through to execution. Their perspectives, needs, and actions can significantly impact the outcomes and success of your endeavours making their identification, engagement, and effective management crucial for achieving desired goals and outcomes.

Envision a project as an iceberg, with much of its complexity concealed beneath the surface. When embarking on an assignment, initial assumptions about its scope and the necessary considerations might lead you to believe that you have a clear grasp of the situation without input from other individuals. However, as the project unfolds, previously unseen stakeholders may emerge with vested interests, wielding the potential to influence your objectives, strategies, and the overall success of your endeavour. Hence, it’s important to engage stakeholders early in the planning process.

What is Stakeholder?

A project stakeholder can encompass a wide spectrum, ranging from employees, investors, and customers to governmental bodies, communities, and business partners. A project stakeholder is someone who supports or is involved with a project and, due to their input— whether financial, reputational, or otherwise—are subsequently affected by its outcome. These stakeholders hold a vested interest in the project's success and can originate from both within and outside the sponsoring organization. Recognizing and acknowledging these stakeholders serves as a pragmatic compass, facilitating the formulation of impactful engagement strategies, identifying moments for their participation, and evaluating whether the project's scope is smaller or larger than initially anticipated.

What is a ‘Stake’?

In the context of a project, decision, or activity, a "stake" refers to the personal or vested interest that individuals, groups, or organizations have in the outcome, success, or impact of that project or activity. It can encompass various factors, including financial, emotional, strategic, or reputational concerns, that drive these stakeholders to be invested in the endeavor's results.

Stakes can be categorized based on the different aspects of involvement, interest, or influence that stakeholders have in a project or activity. Some common categories include:

Ownership: This refers to the extent of legal or financial ownership that a stakeholder holds in the project or organization.

Contribution: It relates to the tangible or intangible resources, efforts, or expertise that stakeholders provide to the project.

Interest: This category represents the degree of concern, benefit, or impact that the project's outcome has on the stakeholder.

Knowledge: Stakeholders with specialized information or expertise relevant to the project fall into this category.

Authority: Stakeholders who hold decision-making power or influence over key aspects of the project can be categorized based on their authority level.

Reputation: Some stakeholders may have a vested interest in the project's outcome due to the potential effects on their reputation or image.

Risk: Stakeholders who are exposed to potential risks or consequences as a result of the project may have stakes categorized under this aspect.

Expectations: This category involves identifying the expectations and requirements that stakeholders have regarding the project's results.

Involvement: Stakeholders can be grouped based on the degree to which they are actively participating in or supporting the project.

Dependency: Some stakeholders might rely on the project's success for their own objectives or initiatives.

Categorizing stakes helps project managers and teams better understand the motivations, concerns, and contributions of various stakeholders, which in turn aids in effective communication and stakeholder management.

Stakeholders Categories:

When you approach stakeholders on a group-by-group basis, you are far less likely to inadvertently omit key individuals. To make your identification process more thorough, think about sorting stakeholders into two main groups:
Internal Stakeholders: This encompasses individuals or groups within your organization, including project managers, team members, consultants, functional managers, and operations managers.
External Stakeholders: Encompassing individuals and groups outside your organization, this includes entities like vendors, suppliers, contractors, the public, and customers.
From this point, you can progress to stakeholder mapping and start grasping the individuals or groups you'll need to engage in your project.

What is Stakeholder Mapping?

Stakeholder mapping is a valuable tool used to visualise all relevant stakeholders on one map to better understand the way they interact and categorize their authority and influence over a project. Categorizing stakeholders also assists the team in building relationships with the identified project stakeholders. Stakeholder maps can take different forms depending on your needs or concerns, but they should always be easily comprehendible, succinct, and organised into understandable groups. Most stakeholder grids group stakeholders by power and a secondary category.

Common Stakeholder Grids:

Power and interest grid: This approach appropriately places stakeholders on a scale based on their level of authority and interest in the project’s outcome.

Power and influence grid: This approach prioritises stakeholder influence in project planning alongside their power.

Impact and influence grid: This method categorizes stakeholders according to their potential to influence project outcomes or affect the project's planning and execution.

There are also enhanced grid models, which merge grid elements into a three-dimensional model, offering project managers and teams a valuable tool for recognizing and engaging their stakeholder community.

How Does Stakeholder Analysis Benefit a Project?

Stakeholder analysis results in the identification of stakeholders along with relevant information, including their organizational positions, project roles, vested interests, expectations, attitudes, and their appetite for project details.
Stakeholder analysis can contribute to the project by facilitating effective delivery of project objectives, organizational outcomes and understanding the organizational power dynamics and structure. This can lead to the potential securing of funding or additional resources.

What is Stakeholder Engagement?

Stakeholder engagement refers to the set of practices, procedures, and efforts undertaken by an organization to actively involve stakeholders in various organizational endeavors. The overarching goal of engaging stakeholders is to encourage enthusiasm for a project, negate the possibility of hostility or resistance and to secure their commitment.
The process of stakeholder engagement involves several considerations: understanding the needs, expectations, and perspectives of stakeholders; integrating the insights and knowledge offered by stakeholders; and executing the strategies and plans devised through comprehensive stakeholder analysis, such as stakeholder mapping.
Central to stakeholder engagement is the identification of tailored approaches based on stakeholder engagement profiles, all finely tuned to accommodate the previously recognized and categorized expectations and requirements of stakeholders.
Creating engagement profiles involves evaluating the genuine perspective held by selected stakeholders and defining the ideal attitude required from them to ensure the project’s success. To do this, it’s imperative to first recognise the present level of stakeholder support, understand their openness to shifting their position (if not currently receptive), and pinpoint the preferred level of support from the relevant stakeholders to move forward.

What is an SEP (Stakeholder Engagement Plan)?

A stakeholder engagement plan (SEP) serves as a structured framework that delineates the extent of engagement and influence that various project stakeholders hold. Beyond this, the SEP maps out the project's communication strategy with stakeholders, encompassing details like the timing of interactions with each stakeholder, the communication platforms to be utilized, and the extent of information to be conveyed. This plan is a pivotal segment of the broader project management plan, functioning to establish the methods and actions essential for fostering meaningful involvement of stakeholders throughout the decision making and execution processes. Tailored to the project's requisites and stakeholder expectations, the stakeholder engagement plan can adopt a formal or informal approach, spanning from in-depth strategies to more generalized outlines. Its contents encompass strategies and approaches dedicated to engaging distinct individuals or groups among the stakeholders, ensuring a productive and collaborative project environment.

Understanding The Stakeholders Engagement Assessment Matrix:

The Stakeholders Engagement Assessment Matrix plays a pivotal role in evaluating and comparing the existing engagement status of stakeholders with the optimal engagement levels required for the successful execution of a project. This matrix gauges stakeholder support on a five-tier scale, ranging from Level 5, signifying highly supportive stakeholders, to Level 1, indicative of active opposition. The scale is as follows:
Level 5 – Highly Supportive
Level 4 – Passive Support
Level 3 – Neutral
Level 2 – Passive Opposition
Level 1 – Active Opposition

Additionally, the Stakeholders EngagementAssessment Matrix also assesses stakeholder receptiveness through five levels,encompassing attitudes from eager interest (Level 5) to complete disinterest(Level 1) in receiving information. Level 4 which is medium and will agree to receive information, level 3 which is ambivalent and may agree to receive information, and level 2 which is not interested to receive information. For instance, when aiming for an engagement profile characterized by active support(Level 5) and a keen interest in receiving information (Level 5), this specificlevel of support might be necessary only from key stakeholders like sponsors.

In certain scenarios, stakeholders might have motivations beyond conventional support. For instance, a stakeholder could be a competitor seeking to gather insights for ulterior purposes, such as a competitor business. Alternatively, they might be an internal manager whose contributions aren't directly pivotal for project success but require extensive information access. In such cases, measures should be undertaken to limit the volume of information accessible to these stakeholders and safeguard sensitive project details.

Stakeholder Engagement Scenarios:

Example (1): Consider a scenario where a stakeholder's assessment places them in the category of passive opposition and ambivalence towards receiving information.

The project team's objective is to shift this attitude towards neutrality and a willingness to agree to receive information. In this situation, the disparity between the stakeholder's current standpoint and the targeted attitude determined by the team is relatively small. The project team recognizes that bridging this gap is crucial for the activity's success.

Example (2): A stakeholder's assessment indicates a neutral attitude coupled with a complete lack of interest in receiving information.

In this case, the current position, and the necessary position to secure enough support for the project is a lot wider, as the stakeholder needs to be willing to accept information and passive support. Unlike the first example, this scenario will require a robust communication plan with tailored strategies to generate interest in the project’s information flow.

The Importance of Stakeholders Communication:

In any funded endeavor, resource constraints and timelines necessitate efficient communication management. Focused communication is not only strategic but also increases the likelihood of a positive response from key stakeholders. Identifying essential stakeholders and addressing their expectations through structured communication minimizes conflicts. By adopting organized communication, projects benefit from efficient resource utilization, positive engagement, and successful outcomes.
Stakeholders' unique perspectives can also identify risks and offer solutions, making their engagement crucial. Involving stakeholders in communication ensures awareness of setbacks at all stages and input during planning, enhancing accuracy and risk management. Regular and open communication channels among stakeholders encourages openness and free expression of their needs and plays a pivotal role in maintaining project timelines and budgets.

How to Create a Stakeholder Communication Plan:

A stakeholder communication plan is a vital tool for engaging with those who impact a project or decision. This plan helps manage expectations, address concerns, and gain support. It involves defining clear communication objectives that align with decision goals and stakeholder analysis. Choosing suitable communication methods and channels, based on stakeholders' availability and preferences, is essential. Responsibilities for communication delivery should be assigned, and detailed planning of activities, including timing, content, and feedback mechanisms, ensures consistent and effective communication.

The must-haves in a communication plan include:

Stakeholder's identity and role:
What is their significance to the activity?
What is their vested interest?
What are their expectations?

Categorization of influence: (upwards, downwards, outwards, sidewards, internal, and external).

Engagement profile, preferably mapped in graph form:
Level of activity support.
Level of openness to activity-related information.
Targeted engagement: desired support and receptiveness levels.

Communication strategies:
Who will convey the message
Message content: regular activity updates or specific announcements.
Delivery methods: formal or informal, written, or oral; communication technology - emails, written memos, meetings.
Timing: frequency and duration of communication.
Purpose: mutual benefits for activity success and stakeholder needs.
Communication content: information to be shared, i.e., report or message details.

Stakeholder Communication Approaches

When interacting with stakeholders, it's crucial to grasp the required communication frequency and select the most fitting level of formality and communication channel to ensure effectiveness. Various approaches are available based on the stakeholder's current position in comparison to their ideal engagement stance.

Put simply:
If the current stakeholder engagement is already at the optimal level, continue the communication as is.
If the stakeholder is more engaged than desired, reduce the frequency and depth of information shared with this stakeholder.
If the current stakeholder engagement is less than the target level and the stakeholder is important to the success of the project, efforts should be made to improve their support and interest through targeted communication strategies.

Stakeholder Roles and Stakeholder Communication Requirements:

Stakeholders play various roles within a project or organization, and the level of communication needed for each role can vary. Here are some common stakeholder roles and their relevant levels of communication:

1. Sponsor: Sponsors provide overall support, resources, and guidance to the project. They typically require high-level and strategic communication that highlights project progress, key milestones, budget updates, and alignment with business goals.

2. Middle Manager: Middle managers oversee specific departments or teams within the organization. They need regular updates on how the project aligns with their team's goals, its impact on their department, and any changes that might affect their operations.

3. Team Members: Team members are directly involved in project execution. They require detailed communication about tasks, deadlines, expectations, and any adjustments to project plans.

4. End Users/Clients: These stakeholders are the intended beneficiaries of the project's outcomes. Communication with them should be user-friendly, focusing on how the project will address their needs and any potential changes that may affect their experience.

5. Regulators/Compliance Officers: Stakeholders responsible for ensuring compliance with regulations or industry standards require communication that highlights how the project adheres to these requirements and any actions taken to maintain compliance.

6. External Stakeholders: External stakeholders will benefit from consistent and organized updates regarding the activity, its outcomes, impact, and ongoing progress.

In essence, the level of communication for each stakeholder role depends on their level of involvement, responsibility, and impact on the project. Tailoring communication to meet the specific needs and interests of each stakeholder role is essential for effective stakeholder management.

Stakeholder Summary

Ultimately, the main objective is always to first identify your stakeholders and keep them well-informed on the project. In doing so, not only will you gain clearer guidance and improved project comprehension, but you will also keep your stakeholders satisfied, and secure support for future projects.

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Stakeholder Relationship Management: A Maturity Model for Organizational Implementation, Lynda Bourne
Project Management (All-in-One dummies 7 books in one!): Stanely E. Portny, PMP, et al.
A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition

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