How to Perform a Stakeholder Analysis

Stakeholders are to a project like players are to a team.  Having the best players is one of the easiest ways to win the game, but strategy and tactics led by the coach (project manager) can go a long ways.

Thus, successful projects know who their stakeholders are and what motivates them.  That’s where stakeholder analysis comes in.

Stakeholder Identification

Before stakeholders can be analyzed, they must be identified.  It is remarkably easy to overlook a small stakeholder who’s ability to derail the project becomes disproportionately large when they are not adequately consulted.  Don’t give the ball away early in the game else you will have a mountain to climb.

A stakeholder register is developed and updated regularly with stakeholder changes.  Here is a quick checklist to help identify project stakeholders:

• Executives are stakeholders from the parent level organization, including the project sponsor.
• Customers pay for the product or service (the deliverables) the project produces.
• The Project Team produces those products and services.
• Technical / Department managers provide expert advice and resources to the project.
• Lenders, creditors, and investors provide financing to the project.
• Suppliers provide external products and services.
• Governments produce regulations the project must abide by, and issue permits and approvals.
• Local committees and boards approve the project’s deliverables.
• Unions negotiate for better working conditions and pay for the project team.

Power and Interest

If you don’t know where the goal line is, you don’t stand a very good chance of winning the game.

There are two primary variables which define stakeholders and how they influence the project.

• Power is the ability of the stakeholder to change or stop the project.
• Interest is the amount of involvement the stakeholder has in the project.  It is the size of the overlap between the stakeholder’s and the project’s needs.

For this reason, the most common stakeholder analysis technique is a power-interest matrix.  This chart might seem very simple on the surface, but provides a volume of information about a stakeholder and how to manage them.

It contains the stakeholder’s interest level on the x-axis, and the power level on the y-axis.

The four quadrants where each stakeholder lies each have different management characteristics.

• Those with low power and low interest must by monitored to ensure that they are not able to stop or change the project.
• Those with high power, low interest must be kept satisfied to ensure that a minor stakeholder doesn’t derail the project.
• Those with low power, high interest must be kept informed to ensure they are on side.
• Those with high power, high interest must be actively managed as they have a major influence on the project.

For example, a government regulatory approval agency might have very high power, but very low interest in the project.  They must be kept satisfied or they might withhold permits.  Likewise, an environmental protester might have very low power, but high interest.  They must be kept informed so that they do not mobilize excessive resistance.

The power-interest matrix contains simply a dot that shows where the stakeholder sits on the chart.  A larger stakeholder analysis matrix can expand on the definitions of where that power comes from, how they exercise it, and what their interest in the project is.

The stakeholder analysis matrix gives you a few words to describe the power, interest, and engagement strategy, which is a little bit more information than the power-interest matrix.  But many projects require more than a few words.  In this case, these columns then expand into a written document called a stakeholder engagement plan.

The stakeholder engagement plan can also contain a written analysis of each stakeholder which includes support vs. resistance and underlying motivational factors.  I will address both of those next.

Stakeholder Support vs. Resistance

On most projects the stakeholders play on different teams.  They have different values and interests.  These competing interests mandate that project managers not only understand stakeholder needs and objectives but also possess strong conflict resolution skills, negotiation skills, and communication skills.

Supportive stakeholders don’t occupy alot of the project manager’s time because they won’t get in the way.  They also won’t occupy alot of my time in writing this article, because project managers who hoist the trophy are those who effectively manager stakeholders who are opposed to, not supportive of, the project.

There are five levels of support in which each stakeholder falls:

1. Unaware
   The stakeholder is unaware of the project and its potential consequences to them.
2. Resistant
   The stakeholder is aware of the project but opposed to it.
3. Neutral
   The stakeholder is neither supportive nor opposed to the project.
4. Supportive
   The stakeholder is in favor of the project, and wants it to succeed.
5. Leading
   The stakeholder is actively engaged in project success, and willing to lend assistance to the project management team.

The support levels of each stakeholder are tracked using a Stakeholder Engagement Assessment matrix.  This grid shows where each stakeholder is in terms of project support, versus where the project management team would like them to be.  It shows you where the ball is now, versus where the goal line is.  The letter “C” is used to denote where the stakeholder is currently, and the letter “D” is used to denote where the desired location is.

A common scenario is that a stakeholder who is located in the “Resistant” category must be moved in the “Neutral” or “Supportive” category.  This scenario is difficult to accomplish and requires significant resources and effort of the project management team.  Nonetheless, the stakeholder engagement assessment matrix clearly articulates the predicament the team finds itself in.  You can’t say you weren’t told.

Some stakeholders in the “Resistant” category do not necessarily need to be moved, that is, the project might not need their blessing to proceed.  But they will probably get even more unhappy and could attempt to use their influence to derail the project.

Stakeholder Driving Factors

The underlying driving factors that influence stakeholder actions are unique to each stakeholder.  The stakeholder analysis must attempt to identify and interpret those underlying factors and address them as necessary.

• Financial interests
  The stakeholder will make or lose money (or income) because of the project.
• Moral and ethical values
  The stakeholder does or does not believe that the project represents a ethical undertaking that should be sanctioned but society.
• Rights
  Legal rights, such as Occupational Health & Safety, affect the stakeholder’s opinion of the project.
• Religious beliefs
  The stakeholder’s religious beliefs result in an opinion about the project.
• Political opinions
  The political opinions of the stakeholders cause them to support or resist the project.
• Business interests
  The stakeholder will realize an increase or decrease in business revenue as a result of the project.
• Knowledge
  The level of knowledge a stakeholder has about a project is often a large factor in determining their support.
• Demographics
  The age and population characteristics affect the support for, or resistance against, the project.
• Environmental stewardship
  The stakeholder is supportive or opposed to the project because of its environmental footprint.
• Value of ownership
  The stakeholder will gain or lose value of something they own, like a property.
• Communication preferences
  Stakeholders have vastly differing communication preferences which affect their support for the project.

To make things even more difficult (you didn’t think it would be easy did you?), the project’s effect on these underlying factors are often not clear.  For example, whether Mr. Smith’s house will increase in value due to the project is not known for sure.

Remember, those that exercise good sportsmanship will often have the favor returned, even if you don’t see the immediate payoff yet.

The Project Management Body of Knowledge (PMBOK)

The PMBOK contains stakeholder analysis as part of data analysis, a tool and technique of the Identify Stakeholders process, the Plan Stakeholder Engagement process, and the Monitor Stakeholder Engagement process, within the Project Stakeholder Management knowledge area.

The PMBOK specifies two documents to be produced as part of the knowledge area:

1. Stakeholder register
   Contains a listing of the project stakeholders.
2. Stakeholder engagement plan
   Contains the stakeholder analysis and communication strategies for each stakeholder in order to achieve project buy-in.

In addition, the Project Communications Management knowledge area is intricately linked to Project Stakeholder Management.

The IPMA Individual Competence Baseline

The International Project Management Association’s (IPMA) Individual Competence Baseline (ICB) for project managers includes competence element Practice #12: Stakeholders.  This element outlines the competence framework for project managers in the area of project stakeholders.

There are four key competence indicators:

1. Identify stakeholders and analyze their interests and influence
   The identification of the stakeholders is a foundational principle of stakeholder analysis.  The stakeholders must be identified to be analyzed, and it is remarkably easy to forget about small stakeholders who can disproportionately influence a project when they are not adequately communicated with.
2. Develop and maintain a stakeholder strategy and communication plan
   Development of a formal communications plan for each stakeholder ensures that they will be communicated with in the manner and frequency that they require, which takes giant steps toward aligning them with the project goals.
3. Engage with the executive, sponsors and higher management to gain commitment and to manage interests and expectations
   The ICB distinguishes between upward stakeholders (executives, managers) and others.  The upward stakeholders are already motivated to the success of the project.  They must be kept informed and involved with project decision making, generally where the project overlaps with the outside (parent) organization.  This key competence indicator involves the continuous engagement with the upward stakeholders throughout the project execution phase.
4. Engage with users, partners, suppliers and other stakeholders to gain their cooperation and commitment
   As with all areas of project management, the plan must be put into action.  The communications plan, and stakeholder engagement, takes place throughout the project execution phase.  The sideways and downward stakeholders all have different requirements and expectations, and their engagement must be tailored to them.
5. Organize and maintain networks and alliances
   Networks and alliances are other organizations that have parallel interests.  The project manager must maintain these in order to develop potential project supporters who become positive stakeholders who help the project to achieve its goals.

Stakeholder analysis ensures you know who the players are and how they’re going to win the game.  With practice and experience, the winning team learns to work together so well that it becomes a true champion.

Use these techniques to make sure your team, organization, and personal career just keep winning.

Good luck!