The importance of stakeholders in any organization means that stakeholder analysis is important and imperative as well.
Stakeholders in any organization help make sure that those initiatives are taken that align with the end result of a project.
This analysis will enable you to identify any red flags and overcome adversity throughout the lifetime of a project, or a program.
Here is a handy guide to let you know all the things necessary to conduct a stakeholder analysis for your company.
What are the Stakeholders?
Before we can get into what stakeholder analysis is and what steps you need to take. It is important to properly understand what stakeholders are, especially concerning your business.
Stakeholders can be defined as either singular individuals or a group of people that have an interest in the activity or any of the decisions taken for a particular organization.
Formally stakeholders, as defined by the Project Management Institute, are “individuals and organizations who are actively involved in the project, or whose interests may be positively or negatively affected as a result of project execution or successful project completion.”
Who Plays the Role of a Stakeholder?
As the definition suggests, anyone with a stake in the organization is a stakeholder. These people may include, but are not limited to:
- Resident and regional communities
- Customers or consumers
- Shareholders or investors
- Regulators
- Suppliers
- Members of the organization
- Employees or workers of the organization
How to Identify Stakeholders for the sake of Performing a ‘Stakeholder Analysis’?
There are different ways an organization can determine who its stakeholders are. The following questions may be able to aid in this identification.
- Who may be affected by the organization’s decisions?
- Who may be affected by the organization’s activities?
- The organization owes legal obligations to who?
- Who may express apprehensions about the decisions of the organization?
- Who has shown concerns or addressed such situations in the past?
- Who can aid in addressing specific impacts for the organization?
- Who affects the organization being able to meet its responsibilities?
- Who is disadvantaged if excluded from engagement?
- Is anyone in the value chain affected?
What is Stakeholder Analysis?
Stakeholder analysis is the process of identifying an organization’s stakeholders, and more specifically an organizational project’s stakeholders. Furthermore, the process involves deciphering their level of participation, interest, and influence and grouping them as such.
Once this is done, an organization decides what the best way is to involve and communicate with these groups throughout the project.
The first step in any Stakeholder Management is this analysis. This is an important process as it allows organizations to gain the support they need for their projects.
In other words, this process refers to methods and tools used to identify and appreciate the expectations and necessities of main interests inside or outside the project.
These relationships and attributes of those with stakes in the project and those involved in the project help the overall planning of any particular project.
Purpose of a Stakeholder Analysis
There are multiple reasons a project, product or program manager may conduct a stakeholder analysis:
Gaining Help
Approaching key valuable stakeholders may help your project in the initial and early stages. You can gain wisdom and knowledge from these stakeholders to help you complete a successful project.
Moreover, addressing them early on can also help ensure that you have these stakeholder’s support for your project.
Align Goals Like a Pro
Once you do the analysis, you will be aware of which people need to be involved in your project.
You will then be able to bring everyone together and inform them of the goals and objectives of the project, and thus give everyone a clear understanding of how they can contribute to the success of the project.
To Address Conflicts
Without analysis of your stakeholders, there is a possibility that you start a project without the agreement of a major stakeholder.
There is a chance that a stakeholder does not understand your project or does not see value in it. This in turn can lead to your resources being directed elsewhere and thus jeopardize your project’s success.
With the analysis of your stakeholders, you would have been able to identify this particular stakeholder and address the concerns they had and got them on board before your project began.
Why Conduct a Stakeholder Analysis?
Analyzing your stakeholders can be a great asset when starting any project. Knowing who your stakeholders are and how they will help your project can allow you to cater to their needs and understand the best way to communicate with them and involve them.
Understanding how much an organization is either involved in or affected by a project allows you to comprehend how important it is to analyze your stakeholders.
The way you decide to manage the stakeholders of your company who are impacted by your product begins with analyzing your stakeholders in terms of their hold on the project.
What Do You Gain from Stakeholder Analysis?
Benefits of creating such an analysis include:
- You will have a clear comprehension of the stakeholder’s interests
- It will allow you to fully understand all possible risks
- You will become aware of the negative stakeholders and how they can affect your project
- Allows for you to create devices to influence other stakeholders
- You can identify who your key stakeholders are and thus you ensure they are kept in the loop during the execution phase of your project.
Doing an analysis on your stakeholders and identifying who they are and then going on to do stakeholder management allows for you to do the following:
Collect Input:
There is always a chance that stakeholders have valuable information and knowledge that can help in the success of your project.
Gain Additional Resources:
Giving stakeholders the required information about your project will allow them to have a full picture of what it is exactly that you will require to deliver a successful end product.
In this way, there is an opportunity for stakeholders to aid you in acquiring resources, in the form of people or tools and such that you may need.
Increase in Trust:
Involving stakeholders in your project, and communicating and updating them as required will allow you to build a relationship with them.
If this relationship is one of trust, you may be able to form a continuous working relationship, with particular stakeholders being involved in your future projects as well.
Planning:
Open communication and critical feedback from stakeholders can allow you to gain knowledge of your project and anticipate feedback.
This feedback can help you understand what feedback you may get in the future, and also what you will require to gain future buy-ins and how to secure them more quickly.
How to Perform a Stakeholder Analysis the Right Way?
Depending on your company, industry, and the type of team involved, such an analysis will vary accordingly.
However, certain steps are quite uniform across all of them. Below we list down a general guideline of how you can analyze your stakeholders, and with simple additions, you can customize them according to what will suit your organization.
Below are the three steps you can follow for the analysis of your stakeholders:
Step # 1: Identifying Your Stakeholders
The first step is to understand who exactly your stakeholders are. You can start by brainstorming all the people related to your work in some way or the other.
These people could be anyone who is affected by the success or failure of your work, anyone who influences your work in some way, or even those who have an interest in how your work turns out.
Make sure you are extensive in your brainstorming as you would not want to risk missing out on any key stakeholder by mistake.
As discussed, these stakeholders could include:
- People in operations or IT
- Consultants of your project
- Procurement staff
- The heads of affected units in your business
- People related to the product
- Finance staff
- Sales staff
- Those in manufacturing or development
- Executive staff
- Marketing individuals
Remember that stakeholders can be individuals and organizations. The purpose of this analysis ultimately is to ensure you are communicating with these people, so you will eventually have to identify the correct person or people within a stakeholder organization who you will need to communicate with.
Step #2: Divide Stakeholders Into Groups Based on Priority
The next step, once you have completed the brainstorming and identified your stakeholders, is to consider each stakeholder and prioritize them by the level of interest they have in your project and the level of influence they hold over it.
There are different ways you can accomplish this task. One of the most common methods is to use a power/interest grid.
The power/interest grid in stakeholder management is a tool that helps in organizing or categorizing stakeholders by the power or the interest they hold with your project.
Depending on the position you choose to categorize your stakeholder in, allows you to know what actions you need to take with them.
There are 4 categories that a stakeholder could fall into:
High Power, High Interest: You need to ensure you fully engage them and make an effort to satisfy them.
High Power, Less Interest: Make sure that you put enough effort with these people that they are satisfied but do not put too much that they become bored with what you are trying to relay.
Low Power, High Interest: You must keep these people informed. Make sure these people are adequately informed and that no issues are arising. People in this category can often play a supportive role in the details of your project.
Low Power, Less Interest: Make sure you monitor such individuals but try not to bore them with excessive amounts of communication or engagement.
Another approach for prioritizing stakeholders was discussed in the book “Making Strategy: Mapping out strategic success” by Fran Ackermann.
The method relayed groups stakeholders into four categories again, similar but different to those discussed.
Players: These are the high power, high-interest individuals that should be fully engaged in your project and you want to collaborate with them.
Subjects: These are low power, high-interest stakeholders. These people can suggest great insights and ideas for your project, but you should not feel bound to say yes to them always.
Context-Setters: These are the high power, low-interest stakeholders. These people can have a great influence on your project but should not be bored with the details, they should be kept up to date on the project, however.
Crowd: These are low power, low-interest stakeholders. Some communication with these people is good, but in comparison to other stakeholders, the least amount of communication is required.
Step #3: Understanding Stakeholders
Once you have categorized your stakeholders, it is time to decide what is the best way to engage and communicate with them.
Think strategically about how you can warrant ongoing support from each type of stakeholder you have categorized.
To be able to do this some good questions you can ask are:
- Is there a financial or emotional interest in the result of your work? Is this interest positive or negative?
- What motivates this stakeholder?
- What type of information are they hoping for? How is the best way you can communicate with them?
- How do they currently view your work? What information did they use to come to that conclusion?
- Who influences their opinions, and are these influencers also your stakeholders?
- What can you do to win their support on your project, if they do not do so?
- If you cannot win their support on your project are there ways you can minimize their opposition? What are they?
Once you have completed prioritizing your stakeholders and take the time to understand how they are towards your project, try and come up with a project management communication plan.
A project management communication plan is a plan that identifies how essential and important information with be communicated to stakeholders throughout the development of your project.
The plan includes the types of information you will need to relay, the method you will communicate with your stakeholders, and the frequency to which your stakeholders would like to receive this information.
Get Started on Stakeholder Analysis Already!
Organizational projects need contribution, approval, and direction from different people across the organization.
If these people do not completely comprehend or agree with the project’s goals, or the plan created to execute it, they may become a hindrance to the success of that project.
However, taking the time to gain approval and help of these stakeholders can aid your project in many ways.
Therefore, stakeholder analysis is such a vital part of any project. You should take the time to conduct such an analysis when commencing a project to give your project a good chance at success.
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