Stakeholders Secrets that You Should Know for Efficient Project Management

What is meant by a Stakeholder?

A stakeholder is someone who has a stake in a venture. In a general sense, a “stake” refers to a share, interest, or involvement in something, especially a business or project. It represents the degree of ownership, investment, or concern one has in a particular matter.

In that sense, a stakeholder is any individual, group, or organization that has an interest in or is affected by a particular project, business, or decision. Stakeholders are directly or indirectly get affected or impacted by the results of the project in a positive or negative way. Thus, stakeholders can influence the project in any way and can have a significant impact on the success or failure of a project. And so, the stakeholder’s needs and concerns must be considered in the planning and execution of the project.

For example, investors in a company have a financial stake, employees have a professional stake, and community members might have a social or environmental stake. Essentially, having a stake means having something to gain or lose based on the outcomes of the situation. That’s why engaging stakeholders is crucial for the success of any initiative, as their stakes can significantly influence decisions and results.

What are the different types of Stakeholders?

Stakeholders have varied interest in a project, organization, or initiative and are affected by the actions, decisions, or outcomes of the business. Hence, stakeholders can be categorized into different types based on their roles, interests, and influence. Some examples of different types of stakeholders of a project or an organisation are:

Internal Stakeholders: Stakeholders that exist inside a business and are directly affected by a project, like employees, managers, leads, owners, etc.
External Stakeholders: Stakeholders those who have an interest in the success of a business but do not have a direct affiliation with the projects at the organization, like customers, suppliers, investors, regulators, community, partner, etc.
Primary Stakeholders: Those who have a direct and significant impact on the project’s success or failure. Examples include project team members, customers, and sponsors.
Secondary Stakeholders: Those who have an indirect or less significant impact on the project. Examples include local communities, media, and advocacy groups.
Key Stakeholders: Individuals or groups with significant influence, power, or interest in the project. They are critical to the project’s success and may include senior executives, major investors, or regulatory bodies
Direct Stakeholders: Individuals or groups directly involved in or affected by the project’s activities. Examples include employees, customers, and suppliers
Indirect Stakeholders: Individuals or groups not directly involved in the project but still affected by its outcomes. Examples include local communities, environmental groups, and future generations

Understanding different types of stakeholders is crucial to understand their expectations and levels of influence that can significantly impact the success of a project or organization. This knowledge also helps in building strong, positive relationships, fostering collaboration, and ensuring that decisions are well-informed and balanced, ultimately leading to more sustainable and successful outcomes.

Project Stakeholders vs Organisational Stakeholders

How do Stakeholders impact Project Management?

Stakeholders play a crucial role in project management by influencing various aspects of the project. A proper project management involves identifying and engaging with the diverse stakeholders, through which organizations can tailor their strategies to address specific needs, mitigate risks, and leverage opportunities. Some ways how stakeholders can impact project management are:

Decision Making: Stakeholders often have a say in key project decisions, such as scope, budget, timelines, and resource allocation. Their input can shape the direction and priorities of the project.
Funding and Resources: Many projects rely on stakeholders for funding and resources. Investors, sponsors, and partners can provide the necessary financial support and materials needed for project execution.
Requirements and Expectations: Stakeholders, especially customers and end-users, define the project requirements and expectations. Their feedback helps ensure that the project meets their needs and delivers value.
Support and Advocacy: Stakeholders can champion the project within their organizations or communities, helping to secure buy-in and support from others. Their advocacy can be vital for overcoming obstacles and achieving project goals.
Risk Management: Stakeholders can identify potential risks and issues based on their expertise and experience. They can help the project team develop mitigation strategies and contingency plans.
Communication and Collaboration: Effective communication with stakeholders is essential for keeping them informed and engaged throughout the project. Regular updates, meetings, and feedback sessions help maintain transparency and build trust.
Influence and Power: Some stakeholders have significant influence and power over the project’s success. Their support or opposition can greatly impact the project’s outcome, making it important to manage their expectations and address their concerns.

Hence, stakeholders are integral to project management and their involvement can greatly affect the project’s success or failure. Managing stakeholders effectively ensures that their needs and expectations are met, leading to a more successful project outcome.

What exactly is Stakeholder Management?

Stakeholder management involves identifying, analysing, and engaging with individuals, groups, or organizations that have an interest in or can be affected by a project, business, or decision. The goal of stakeholder management is to build and maintain positive relationships with stakeholders to ensure their needs and expectations are met, and to achieve project or organizational success.

Effective stakeholder management requires understanding the different types of stakeholders and their unique needs and expectations. This helps tailor engagement strategies and ensures that all relevant parties are considered and involved. The key components of Stakeholder Management are:

Identification: Determine who the stakeholders are, including internal (employees, managers, owners) and external (customers, suppliers, investors, regulators) stakeholders.
Analysis: Assess the influence, interest, and impact of each stakeholder. Tools like stakeholder matrices can help prioritize stakeholders based on their level of influence and interest.
Engagement Planning: Develop a stakeholder engagement plan that outlines how and when to engage with each stakeholder. This plan includes communication methods, frequency, and key messages to keep stakeholders informed and involved.
Communication: Maintain open and transparent communication with stakeholders throughout the project. Regular updates, progress reports, and feedback sessions help keep stakeholders informed and address any concerns early.
Listening and Addressing Concerns: Actively listen to stakeholders’ feedback and concerns. Show empathy and take their input seriously. Addressing their concerns promptly helps build trust and maintain positive relationships.
Involvement in Decision-Making: Include stakeholders in key decision-making processes, especially those that directly impact them. This fosters a sense of ownership and commitment to the project’s success.
Managing Expectations: Set realistic expectations with stakeholders from the beginning. Be clear about project goals, timelines, and potential challenges. Managing expectations helps avoid misunderstandings and disappointment.
Monitoring and Reviewing: Continuously monitor stakeholder engagement and adjust strategies as needed. Regularly review the effectiveness of your stakeholder management plan and make improvements based on feedback and project dynamics.
Acknowledging and Appreciating: Recognize and appreciate stakeholders’ contributions to the project. Acknowledging their efforts fosters goodwill and encourages continued support.

Effective stakeholder management ensures that stakeholders’ needs and expectations are met, leading to a more successful project outcome.

How to understand the role and impact of Stakeholders:

Stakeholders can have varying levels of influence and interest in the project. Effective stakeholder management through identifying and engaging with the “right stakeholder” is crucial for achieving project’s success. Their interests and influence plays key role in shaping the direction, success, and sustainability of various endeavours. Engaging stakeholders effectively involves understanding their needs, expectations, and potential impact, which helps in making informed decisions and fostering positive relationships.

Whereas, identifying the right stakeholders is very essential, but sometimes the task is not easy. However, there is a simple technique called Salience model of stakeholder analysis that helps in classifying stakeholders, to understand their influence, involvement, and usefulness in the project.

The Salience Model is a tool used in project management to classify and prioritize stakeholders based on three key attributes: power, legitimacy, and urgency. This model helps project managers identify which stakeholders should receive more attention and resources during a project. These attributes are elaborated as below:

Power: This measures the influence a stakeholder has over the project and its outcomes. Stakeholders with high power or level of authority to influence can significantly impact the project’s direction and success.
Legitimacy: This assesses the stakeholder’s rightful involvement in the project based on their knowledge of the project nitty-gritties. Legitimate stakeholders’ involvement is essential and have a valid claim or interest in the project’s activities and outcomes.
Urgency: This evaluates how quickly a stakeholder’s needs or concerns require attention. Stakeholders with high urgency need immediate attention to avoid potential issues.

By analysing stakeholders through these three dimensions, project managers can better understand their importance and manage their expectations effectively. If we create a union of these three key attributes or parameters as shown in the image below, we can classify stakeholders into seven categories as listed below:

Dormant: These stakeholders have power due to their position, but are not much active in the project. They may or may not join meetings, may speak up sometimes but most of the time they will be inactive.
Discretionary: These stakeholders have knowledge of the project, and they are available for the project. But because of their position they may be participating as per their convenience or preference.
Demanding: These types of stakeholders have urgency all the time. They want everything urgently even if it may not be actually needed at that point of time.
Dominant: Because of their power and legitimacy, these types of stakeholders are dominant in nature; means they will show their dominance in the project; would ask for changes as per their need.
Dependent: These stakeholders have knowledge of the project and also know the urgency of the work, but they don’t have the power to enforce the changes. So, they are dependent on/to the project team.
Dangerous: With the dangerous combination of having both power and urgency, these stakeholders may ask for showing results of work anytime. So, people should be careful from them.
Definitive: These stakeholders are the most important of all. They have the power to ask for changes, they know the urgency of work, and they have right knowledge of the project.

How to engage with Stakeholders based on the Salience Model:

The Salience Model of stakeholder categorisation helps us in determining the level and type of engagements with them in the projects or activities. Stakeholders should be engaged in a project based on their obligations and roles identified during the stakeholder analysis; an activity that should start at the starting of the project. These obligations are:

Inform – Always keep these stakeholders informed of any new initiatives or ongoing development, especially with the stakeholders with power and legitimacy. Make them understand the project plans and activities. E.g., Business Owners, higher management, etc.
Consult – Always consult with the stakeholders with legitimacy for required information because they are the subject-matter experts on specific topics or domains, and so you need them but they don’t need you.
Collaborate – Include the stakeholders with legitimacy as equal partners in the project. You need to closely work with them for the progress of the project. E.g., Architects, Data analyst, Designers, etc.
Involve – These stakeholders do not work in the project but always involve these stakeholders, especially with the stakeholders with power and urgency to get their feedback and also to keep them happy, which helps in improving processes and mitigating issues.
Support – The stakeholders with urgency are always in demanding mode. Provide such stakeholders with advice, updates, help, or trainings on new releases to make them aware for their regular businesses. E.g., application users, and customers.

If you follow these engagement rules for handling the stakeholders based on their levels of authority, interest, and influence in the project, you can ensure project’s success fostering positive relationships and nice work environment, and your life will be bit easier.

What are effective strategies for Stakeholder Management?

And lastly, here are some strategies for effective stakeholder management that can help you manage stakeholders effectively, which are essential for the success of any project:

Identify Stakeholders Early: Create a comprehensive list of all potential stakeholders, including their roles, interests, and influence levels. This helps in understanding who needs to be involved and when.
Analyse Stakeholder Influence and Interest: Use tools like stakeholder matrices to assess each stakeholder’s level of influence and interest. This helps prioritize efforts and tailor communication strategies.
Develop a Stakeholder Engagement Plan: Outline how and when you will engage with each stakeholder. This plan should include communication methods, frequency, and key messages to keep them informed and involved.
Communicate Regularly: Maintain open and transparent communication with stakeholders throughout the project. Regular updates, progress reports, and meetings help keep stakeholders informed and address any concerns early.
Listen and Address Concerns: Actively listen to stakeholders’ feedback and concerns. Show empathy and take their input seriously. Addressing their concerns promptly helps build trust and maintain positive relationships.
Build Strong Relationships: Invest time in building strong, trust-based relationships with stakeholders. Personal connections can lead to better collaboration and support throughout the project.
Involve Stakeholders in Decision-Making: Include stakeholders in key decision-making processes, especially those that directly impact them. This fosters a sense of ownership and commitment to the project’s success.
Manage Expectations: Set realistic expectations with stakeholders from the beginning. Be clear about project goals, timelines, and potential challenges. Managing expectations helps avoid misunderstandings and disappointment.
Monitor and Review: Continuously monitor stakeholder engagement and adjust strategies as needed. Regularly review the effectiveness of your stakeholder management plan and make improvements based on feedback and project dynamics.
Acknowledge and Appreciate: Recognize and appreciate stakeholders’ contributions to the project. Acknowledging their efforts fosters goodwill and encourages continued support.

By implementing these strategies, you can effectively manage stakeholders and enhance the likelihood of project success.