Stakeholders are critical to the success or failure of a project. That is why stakeholder analysis is a critical part of project management as well. Briefly, stakeholder analysis will help to determine stakeholders of a project.
We will see who the stakeholders are, why we need stakeholder analysis, and top 5 stakeholder analysis techniques in this article.
Who are Stakeholders?
Stakeholders are all those who have a stake in a project. This includes individuals, organizations and professional bodies. When we say stake: these stakeholders can influence, impact or can be affected by the project. Stakeholders can have a positive or negative effect on the project or vice-versa, the project can have a beneficial or detrimental effect on the stakeholders. They can be part of the organization working on the project, customer organization or outside of these organizations, example Government, Regulatory body, Trades, etc.
Why do we need Stakeholder Analysis?
Let us examine why we need to understand the different stakeholders in the project and how they influence/impact the project.
Need for Stakeholder Analysis:
There are different types of stakeholders. Some have higher degree of power and can decide the course of action, approve or veto decisions on a project. Another set of stakeholders can help with their expert opinion, so you consult them. A few other stakeholders need to know the progress of work as their activity starts when this piece of work is done. There are also stakeholders who want to know when the project will be complete. These stakeholders could be interested as the output of this project as that may help them in their work. All stakeholders are not equally involved or impacted in the project. So, project manager needs to know how to engage these different types of stakeholders. And this is the main reason why we need stakeholder analysis.
Stakeholder Engagement in Stakeholder Analysis:
Based on stakeholder identification and stakeholder analysis, Project Manager (PM) will know what are the interest levels and decision making capability and specific requirements of stakeholders. which stakeholder will approve a design or a change or a specific decision in the project. After a stakeholder analysis, PM will arrive at:
- Are they going to be helpful or are they going to hamper the work?
- Who are the allies, who are oblivious to the project and who are the adversaries?
- What is the current level of engagement of stakeholder, where should the stakeholder be?
- What is the level of interest/power/influence on the project?
- Which stakeholder gets involved at what stage?
- What is the purpose – consult/inform, approve, perform various activities?
- Who needs to know about the changes happening in the project?
Communication Management in Stakeholder Analysis:
After stakeholder analysis, PM can plan and manage communication across the project among the stakeholders
- What kind of reports need to be sent to each category of stakeholders?
- What is the level of detail and how often the communication should happen?
- Who are the picky stakeholders, how should he/she address their needs?
What are the top 5 techniques used for Stakeholder Analysis?
We will be going over the top 5 stakeholder analysis techniques one-by-one now.
1-) Power Versus Interest Grid
First stakeholder analysis technique is, power-interest grid. Let's go through this stakeholder analysis technique with the help of following figure.
Following are the steps for constructing power-interest grid during stakeholder analysis in a project.
- Identifying the different Stakeholders who are part of the project
- Determine the interest (concern) stakeholders have and how much power(authority) they have to change the direction of the project
- A 2x2 matrix with Power on the Y-axis and Interest on X-axis is plotted as shown in the figure above. The power of stakeholder increases as one move from bottom to top along the Y-axis. Interest of stakeholders increases from left to right on the X-axis.
- Classify stakeholders based on their power and interest
- The stakeholders in the top right corner of the grid have high power and interest. PM needs to work closely with these and ensure that they are consulted, collaborated with and engaged completely
- The stakeholders in the top left corner of the grid have high power but less interest. PM needs to keep this category satisfied but not go into the details and on daily basis
- The stakeholders in the bottom right corner of the grid have low power but high interest. PM needs to keep them informed about the progress and changes. These stakeholders can be allies on project and help prevent issues.
- The stakeholders in the bottom left corner of the grid have low power and low interest. PM needs to keep an eye on them and monitor their interest levels. Engage them with generic communication methods that need less effort with less detail and frequency.
2-) Influence-Impact Grid:
Second stakeholder analysis technique is influence-impact grid.
- Similar to the Power Versus Interest grid, an influence versus impact grid can be plotted.
- Influence is how actively a stakeholder is involved or, the extent to which a stakeholder can persuade/force others in decision making. Impact is the ability to bring a change or result by the stakeholder.
- Helps to prioritize stakeholders
3-) Power-Influence Grid:
Third stakeholder analysis technique is power-influence grid.
- Similar to the Power Versus Interest grid.
- Influence is how actively a stakeholder is involved while power is the level of authority
4-) Importance – Influence Grid:
Fourth stakeholder analysis technique is importance-influence grid.
- Similar to the Power Versus Interest grid.
- The order in which the interest and needs of each stakeholder should be addressed is defined by ‘Importance’.
In all the above four stakeholder analysis models, the top right corner category stakeholders need to be managed closely.
5-) Salience Model:
Salience stakeholder analysis model helps PM to sieve the important stakeholders from the not so important ones. This is a three dimensional model that considers the power, legitimacy and urgency of the stakeholders. The intersection of these three factors is plotted similar to a Venn diagram. We already saw what power is. Legitimacy is the appropriateness/rightfulness of the stakeholder’s involvement in the project. Urgency tells the PM how quickly the stakeholder’s needs are to be addressed.
In addition to the time, urgency also tells the project manager how important the stakeholder’s need is to the project objectives. Salience means ‘prominence’. So this stakeholder analysis model helps project manager in prioritizing the stakeholders. The greater the number of factors the stakeholder has, higher is the salience.
A Venn diagram as following shows the intersection of power, legitimacy and urgency. From this figure, seven categories of stakeholders are formed. Let us see what these are:
- Discretionary category: Rightful stakeholders but do not have urgency or power. Not much pressure for PM from this category. Could be beneficiaries like educational institutions
- Dormant category: Has high power but no legitimacy or urgency. These people don’t get involved much, could be sponsors
- Demanding: Has neither power nor do they have legitimacy but want things to be addressed immediately. PM to be careful.
- Dominant category: Has both power and legitimacy but not urgency. There is a certain level of expectation from this category and could be the ones mostly identified during analysis. Have formal power
- Dangerous category: Have both power and urgency but are not really authorized to be on the project. Could be traders/activists protesting on the perceived loss of their business due to the overpass construction.
- Dependent Category: Has urgency and are part of the project but do not have power, so lean on to someone else to have their say on the project. Could be people living around a chemical factory coming up who may be affected by effluents from the factory.
- Definitive category: Have all three factors and hence highest salience. Key members of the team. Or, could be the dependent or dominant who lean on to the other salience factor to get more importance
Stakeholder analysis is the identification and classification of stakeholders in the project. This helps project manager to prioritize the stakeholders and plan for their engagement. Stakeholder Analysis also helps in understanding the communication needs in the project.
Author: Sunanda Gudavajhala
Sunanda Gudavajhala, B.Tech, M.B.A, PMP has over 25 years of project management experience. She is a consultant and trainer on project management. She is the recipient of “Recognition of Excellence” award from PMI, USA and Woman Volunteer award from Hyderabad, India Chapter of PMI. She has contributed to the “Practice Standard on Scheduling, PMI”. She has worked as the Liaison officer for PMIEF (Education Foundation) for the Hyderabad, India Chapter of PMI.
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