What is stakeholder analysis?

Scottish poet Robert Burns coined the phrase: "The best laid schemes of mice and men gang aft agley". It happens

often with project management.

You put a great plan together, hire contractors, procure equipment, train staff and get management on board. Then,

out of nowhere it comes unstuck because somebody you didn't even think about has concerns with the way the

project is running and you have to start again from scratch or, worse still, scrap the whole thing.

People can just as easily grease a project's wheels as stop it in its tracks. Stakeholder analysis is about identifying all

persons, groups and institutions who may have an interest in a project and taking steps to manage their interests and

expectations so that the project runs as smoothly as possible.

This analysis needs to be done in the early stages of a project so that any risks and required communication can be

included in the overall project plan. In this respect, stakeholder analysis is closely linked to risk management and

change management.

Organisations and people at different levels have different motives, expectations and interests. Contemporary project

management considers not only the needs of the customer and the organisation but looks further afield to the way in

which it impacts on society as a whole. Environmental considerations are a classic example of this.

What is a stakeholder?

In general, a stakeholder is anyone who will make use of, develop, or have an impact on any aspect of your project.

Stakeholders can be either direct or indirect. Direct stakeholders are those people (developers, managers,

customers) whose actions can directly impact your project - they are involved in the project life cycle, or are impacted

by the project – they use the system or output the project puts in place. Indirect Stakeholders are those who have

some political power to influence the project or those who are interested in its outcomes. In short - stakeholders are

those who have a stake in the project.

Identifying stakeholders

Stakeholder identification and analysis is best conducted using brainstorming techniques. This procedure is generally

carried out in a workshop setting, with representatives of key participants in a project.

The first step is to list all parties which are likely to be affected by the development, both positively or negatively,

directly or indirectly.

It sometimes helps to use categories and think of all the individuals and sub groups within that category. Common

categories include: Management, staff, customers, media, community, finance.

Through the brainstorm process capture all the names of stakeholders who might:

Be concerned in any way with the project

Hold an influential position, or

Be affected by the problems addressed in the project

Often the project team will know the stakeholders intimately and have a good idea of their concerns. In other cases -

particularly if the stakeholders are removed from the project - the team will need to find out information to help assess

stakeholder needs. To do this research is conducted.

Gathering information

There are three main ways to get information on the needs of stakeholders. Which ones you use depend on the

resources available and the importance or level of the stakeholder. These are surveys, interviews and focus groups.

Online, telephone and mail surveys are the simplest and least expensive of the research methods. Surveys are

generally best used when there are a lot of stakeholders (e.g.: staff) many concerns are known and you need to know

the general feeling. Surveys use closed and multiple choice questions and statistical analysis. Surveys generally

have a low response rate but this increases with people's interest level in the project.

Focus groups are about getting together a representative group of stakeholders, asking them questions and

recording consensus and diverse views. Focus groups can be used to identify concerns that are then put into a

quantitative survey of stakeholders.

Interviews are the most time-costly and are best reserved for high-power stakeholders. The purpose is to get as

much information as possible about the stakeholder and their views on the project so that plans can be put in place to

address their needs or leverage their support.

Once the PM has gathered sufficient information on stakeholder needs they can conduct a thorough assessment of

the stakeholders and plan a communication strategy.

Assessing Stakeholders

Once you have a good list of stakeholders and you know what makes them tick, you can then make some judgments

about how much effort to put into dealing with their needs. This depends on their level of interest and their power to

influence project outcomes.

The interest/power grid below is a useful tool. You can plot each stakeholder or group on the grid and take

appropriate action as specified in the grid.

For those in the left and top squares, you then need to answer and record some basic questions about them to guide

your actions. This information can form the basis of a stakeholder report. The questions are:

What makes them stakeholders?

What do they need from the project team?

What does the project team need from them?

What issues does the project team need to brief them on?

What methods would be the best way to brief them?

How frequently do they need to be briefed?

Stakeholder Report

You can then start to prepare your Project Stakeholder Analysis report using all the information you have collected to

summarize stakeholder interests and recommend action.

For smaller projects a summary table is sufficient to capture the information on stakeholders. Prepare a table with the

following headings and contents:

Stakeholder group - broad heading for the group (e.g.: Executive, community, users)

Specific groups - List sub-groups within these (e.g.: Management team, CIO, Minister)

Main issues/concerns - Summarise what are the areas of interest you have learnt from your research. What are the

key risks posed by each?

Major communications channels - List the media with which you will communicate with each group (e.g.: Formal

meetings, email, fact sheet).

Frequency - State how often you will communicate with this group (e.g.: daily, weekly, quarterly, ad hoc).

Communicating with Stakeholders

The end product of a stakeholder analysis is a communication plan that forms part of the overall project plan.

Communication effort, mode and frequency depends on the cost and the level of influence of the stakeholder. Some

will require simple and infrequent updates, others will require regular, detailed and frequent communications.

Information will need to be tailored to effectively communicate with, and sufficiently inform, different stakeholder

groups. Communications tools and channels can include:

Formal Meetings – with powerful stakeholders

Informal Meetings – with interested people

Mailing list – to disseminate information to people on project progress

Newsletters – either through the mailing list, email or printed – more information

Information displays – visual representation of project progress in public venues

Web site – regular updates of project information for ‘self service’

Individual briefings – for those with more interest who are prepared to attend

Tours and Demonstrations – for interested external people and organisations

Public forums – more appropriate where there are community stakeholders

Media releases – report on achievement of signigicant project milestones

Advertisements and Postings – Newspapers, magazines, notice boards

Liaison Committee – Representatives of larger groups. Distribute minutes.

Summary

A good project manager recognises the key impact stakeholders can have both in assisting and impeding project

progress.

A thorough stakeholder analysis and communication plan will maximise a projects chances of success in achieving

deliverables on time and on budget.

For information on how Transformed can help pave your pathway to success contact:

Michael Young, Managing Director.

Stakeholder AnalysisWinning Support for Your Projects

By Rachel Thompson, who has fifteen years experience of helping organizations and business leaders to manage change and work more effectively.

© iStockphoto/timsa

"Stakeholder management is critical to the success of every project in every organization I have ever worked with. By engaging the right people in the right way in your project, you can make a big difference to its success... and to your career."

As you become more successful in your career, the actions you take and the projects you run will affect more and more people. The more people you affect, the more likely it is that your actions will impact people who have power and influence over your projects. These people could be strong supporters of your work – or they could block it.

Stakeholder Management is an important discipline that successful people use to win support from others. It helps them ensure that their projects succeed where others fail.

Stakeholder Analysis is the technique used to identify the key people who have to be won over. You then use Stakeholder Planning to build the support that helps you succeed.

The benefits of using a stakeholder-based approach are that:

You can use the opinions of the most powerful stakeholders to shape your projects at an early stage. Not only does this make it more likely that they will support you, their input can also improve the quality of your project

Gaining support from powerful stakeholders can help you to win more resources – this makes it more likely that your projects will be successful

By communicating with stakeholders early and frequently, you can ensure that they fully understand what you are doing and understand the benefits of your project – this means they can support you actively when necessary

You can anticipate what people's reaction to your project may be, and build into your plan the actions that will win people's support.

How to Use the Tool

The first step in Stakeholder Analysis is to identify who your stakeholders are. The next step is to work out their power, influence and interest, so you know who you should focus on. The final step is to develop a good understanding of the most important stakeholders so that you know how they are likely to respond, and so that you can work out how to win their support – you can record this analysis on a stakeholder map.

After you have used this tool and created a stakeholder map, you can use the stakeholder planning tool to plan how you will communicate with each stakeholder.

The steps of Stakeholder Analysis are explained below:

Step 1 – Identify Your Stakeholders

The first step in your Stakeholder Analysis is to brainstorm who your stakeholders are. As part of this, think of all the people who are affected by your work, who have influence or power over it, or have an interest in its successful or unsuccessful conclusion.

The table below shows some of the people who might be stakeholders in your job or in your projects:

Your boss Shareholders Government

Senior executives Alliance partners Trades associations

Your coworkers Suppliers The press

Your team Lenders Interest groups

Customers Analysts The public

Prospective customers Future recruits The community

Your family

Remember that although stakeholders may be both organizations and people, ultimately you must communicate with people. Make sure that you identify the correct individual stakeholders within a stakeholder organization.

Step 2 – Prioritize Your Stakeholders

You may now have a long list of people and organizations that are affected by your work. Some of these may have the power either to block or advance. Some may be interested in what you are doing, others may not care.

Map out your stakeholders on a Power/Interest Grid on our free template as shown in figure 1, and classify them by their power over your work and by their interest in your work.

 

For example, your boss is likely to have high power and influence over your projects and high interest. Your family may have high interest, but are unlikely to have power over it.

Someone's position on the grid shows you the actions you have to take with them:

High power, interested people: these are the people you must fully engage and make the greatest efforts to satisfy.

High power, less interested people: put enough work in with these people to keep them satisfied, but not so much that they become bored with your message.

Low power, interested people: keep these people adequately informed, and talk to them to ensure that no major issues are arising. These people can often be very helpful with the detail of your project.

Low power, less interested people: again, monitor these people, but do not bore them with excessive communication.

Step 3 – Understand Your Key Stakeholders

You now need to know more about your key stakeholders. You need to know how they are likely to feel about and react to your project. You also need to know how best to engage them in your project and how best to communicate with them.

Key questions that can help you understand your stakeholders are:

What financial or emotional interest do they have in the outcome of your work? Is it positive or negative?

What motivates them most of all?

What information do they want from you?

How do they want to receive information from you? What is the best way of communicating your message to them?

What is their current opinion of your work? Is it based on good information?

Who influences their opinions generally, and who influences their opinion of you? Do some of these influencers therefore become important stakeholders in their own right?

If they are not likely to be positive, what will win them around to support your project?

If you don't think you will be able to win them around, how will you manage their opposition?

Who else might be influenced by their opinions? Do these people become stakeholders in their own right?

A very good way of answering these questions is to talk to your stakeholders directly – people are often quite open about their views, and asking people's opinions is often the first step in building a successful relationship with them.

You can summarize the understanding you have gained on the stakeholder map, so that you can easily see which stakeholders are expected to be blockers or critics, and which stakeholders are likely to be advocates and supporters or your project. A good way of doing this is by color coding: showing advocates and supporters in green, blockers and critics in red, and others who are neutral in orange.

Figure 2 shows an example of this – in this example, you can see that a lot of effort needs to be put into persuading Piers and Michael of the benefits of the project – Janet and Amanda also need to managed well as powerful supporters.

Example:

You can create your own example of Stakeholder Analysis at work – whether for your current role, a job you want to do, or a new project.

Conduct a full Stakeholder Analysis. Ask yourself whether you are communicating as effectively as you should be with your stakeholders. What actions can you take to get more from your supporters or win over your critics?

Key Points

As the work you do and the projects you run become more important, you will affect more and more people. Some of these people have the power to undermine your projects and your position. Others may be strong supporters of your work.

Stakeholder Management is the process by which you identify your key stakeholders and win their support. Stakeholder Analysis is the first stage of this, where you identify and start to understand your most important stakeholders.

The first stage of this is to brainstorm who your stakeholders are. The next step is to prioritize them by power and interest, and to plot this on a Power/Interest grid. The final stage is to get an understanding of what motivates your stakeholders and how you need to win them around.

Stakeholder Analysis (Stakeholder Matrix)

Description:

Stakeholder analysis is an essential part of developing a useful Engagement Plan. A common method of

stakeholder analysis is a Stakeholder Matrix. This is where stakeholders are plotted against two variables.

These variables might be plotting the level of ‘stake’ in the outcomes of the project against ‘resources’ of the

stakeholder. Another is the ‘importance’ of the stakeholder against the ‘influence’ of the stakeholder. The

concept is the same, though the emphasis is slightly different.

Boxes A, B and C are the key stakeholders of the project. The implications of each box is summarised below:

Box A

These are stakeholders appearing to have a high degree of influence on the project, who are also of high

importance for its success. This implies that the implementing organisation will need to construct good working

relationships with these stakeholders, to ensure an effective coalition of support for the project. Examples might

be the senior officials and politicians or trade unions.

Box B

These are stakeholders of high importance to the success of the project, but with low influence. This implies

that they will require special initiatives if their interests are to be protected. An example may be traditionally

marginalised groups (e.g. Indigenous people, youth, seniors), who might be beneficiaries of a new service, but

who have little ‘voice’ in its development.

Box C

These are stakeholders with high influence, who can therefore affect the project outcomes, but whose interests

are not necessarily aligned with the overall goals of the project. They might be financial administrators, who can

exercise considerable discretion over funding disbursements. This conclusion implies that these stakeholders

may be a source of significant risk, and they will need careful monitoring and management.

Box D

The stakeholders in this box, with low influence on, or importance to the project objectives, may require limited

monitoring or evaluation, but are of low priority.

Objectives:

To provide a clearer understanding of stakeholders and, as a result, provide insights as to how best to engage

them.

Outcomes:

Better community engagement plans and project outcomes.

Uses/strengths:

Use for projects either in the early stages, or with a group developing a stakeholder plan. Not as rigorous

or as time consuming as a ‘CLIP’ analysis.

Special considerations/weaknesses:

All analytical tools are only models. The tool is dependant on subjective data, and will vary according to the

person and situation being used. It should probably not be a public document.

Resources required:

Paper

Stakeholder Matrix (see above)

Can be used for:

Engage community

Develop action plan

Number of people required to help organise:

Individual

Audience size:

Large (> 30)

Medium (10-30)

Small (<10)

Time required:

Short (< 6 weeks)

Skill level/support required:

Medium

Cost:

Low (< AUD$1,000)

Participation level:

High (Stakeholders participate in decision)

Medium (Options noted)

Low (Information only)

Innovation level:

Medium (Some new elements)

Low (Traditional)

Method:

1. Make a list of all stakeholders.

2. Write the name of each stakeholder on a post-it note or index card.

3. Rank the stakeholders on a scale of one to five, according to one of the criteria on the matrix, such as

‘interest in the project outcomes’ or ‘interest in the subject’.

4. Keeping this ranking for one of the criteria, plot the stakeholders against the other criteria of the matrix.

This is where using post-it notes or removable cards are useful.

5. Ask the following questions:

Are there any surprises?

Which stakeholders do we have the most/least contact with?

Which stakeholders might we have to make special efforts to ensure engagement?