Stakeholder Identification and Categorization

Abstract

‘Stakeholders’ generally means any group or individual who can affect or is affected by the achievement of the organization’s objectives. Stakeholder analysis is an essential part of project management, which can help recognize the people related to the project, so that project managers can analyze the impacts of different stakeholders, get more support and resources to facilitate the project. It is important to analyze stakeholders early in the project because it can provide a guide to decide the direction for a project.

This article explains how to identify and categorize the stakeholders by introducing the definition, purposes, applications, and limitations, aiming to provide readers with a guide to apply the methods.

Definition

Stakeholder is a group, corporate, organization, member, or system that affects or can be affected by an organization's actions. . Stakeholders can also be defined as actors who have an interest in the issue under consideration, who are affected by the issue, or who – because of their position – have or could have an active or passive influence on the decision-making and implementation processes.

Stakeholder analysis comprises different methods, processes and has developed a lot of tools utilized in different industrials and business structure. Whatever approach is used, there are three essential steps in stakeholder analysis:
1) Identifying the key stakeholders and their interests.
2) Assessing the influence of, importance of, and level of impact upon each stakeholder;
3) Identifying how best to engage stakeholders .

The processes of stakeholder identification and categorization mainly belongs to the first two steps.

Purpose

Stakeholder analysis has many benefits for projects, not only in improving the satisfaction of those involved with or related to the project, but also in the progress and outcomes of the project.

On the one hand, stakeholder engagement can achieve mutual understanding and trust between the organization and the stakeholders in order to achieve a comfortable relationship of coexistence and mutual success. Considering the expectation and concerns from people related to the project is important to increase the reputation of the project and influence the process. Meanwhile, some stakeholders have veto power to some key decisions, which can also impact the execution and results. So, it is essential to figure out the key stakeholders, the impacts from different stakeholders, the purpose of engaging them, and their expectations.

On another hand, it can provide project managers with more comprehensive views to estimate risks that could happen in the future. Firstly, transitions between phases of a project have significant impacts on stakeholders. For example, project ramp-up from scoping to construction is particularly dramatic. There is usually a sharp increase in employees, construction activity, traffic, dust, noise, and other impacts. The reverse is true for transition from construction to operations where there could be job losses and a decrease in the local economy. In order to avoid unnecessary concerns and manage project impacts, it is essential to get key stakeholders ready for project transitions. Secondly, getting information from stakeholders has a great impact on defining the scope of a project because project managers can more accurately understand economic planning, the needs of users and communities, the impact assessment, and find opportunities to optimize the project.

Application

The identification and classification processes are important steps in stakeholder analysis, and stakeholder engagement is a complex process that needs to determine the scope, impact, and workload. That should be comprehensive and flexible so that subsequent cooperation and communication can be smoothly advanced. It is necessary to use some tools to analyze. The purpose of these tools is not limited to representing or communicating, these visualization tools can also work as “conversation facilitators”, they can be used collaboratively to trigger discussion in a management process. In this way, they may support the collaboration of different people in multiple ways.

This article focuses on three tools to mine and sort out stakeholders and find their influence on the project, including stakeholder map (circle style), interest/influence matrix, and system map.

Stakeholder map (circle style)

Introduction

Stakeholder map is a representation of all the stakeholder involved in a project, aimed at clarifying roles and relationships. In addition to identifying stakeholders, stakeholder maps are frequently used to estimate or forecast their influence. People from different organizations could use the stakeholder map as a discussion tool during early project meetings to express their points of view and to gain mutual understanding.

Application

A public institution dealing with migrants in Geneva, Switzerland wanted to improve their service offering by a design team. As a result of the stakeholder map, a new form of dialogue between the public institution and stakeholders was developed.

The problem of previous phase is that designers are difficult to access and involve end-users, so the project team created a mini workshop using the stakeholder map to establish a mutual understanding by the conversation and define a new direction for phase two. The purposes were that having stakeholders engage in a dialogue about this issue, clarifying the organizational structure, and making the the public institution to paticipate in the dialogue about stakeholders. They envisioned an ecosystem with a user/people/citizen-centred perspective where all newcomers - recipient of the public institution and others - would have the most central role together with local citizens. It is likely that small, local organizations that already offer numerous programs and services will be crucial to communicating information, facilitating communication, and coordinating activities. Even though designers are already in the second circle, they'd be close to the center when they're designing the program, evaluating it, and engaging local residents. By placing the card next to the designer‘s card, this suggests an advisory role rather than a leadership role, enabling direct contact between designers and citizens. This is a way of positioning actors that could facilitate the practice of a people-centred approach.

Stakeholder map of a future vision done by the design team before the workshop

Following this, a decision was made that the head of the communication department would firstly select its position on the stakeholder map. Other stakeholders would do the same, resulting in a current and future stakeholder map. After that, the focus of the map shifted to service recipients, migrants, and local residents instead of public institutions.

The details unearthed from these stakeholder maps are

1) The project team tends to mix up who should actually benefit the project with who funded and facilitated it.

2) The public employees expressed a desire for more solidarity, exchanges, and equality among themselves.

3) The project was open to people other than the public institution, and the ambassador was able to moderate communication between the recipients and other migrants as well as locals.

Present situation, future vision, and final future vision

In light of stakeholder maps, the project team concluded that the communication department chief was primarily concerned about public institutions and other government entities. The project manager played a significant role in the participatory process, while the communication chief monitored the project remotely. It is important that public servants stay abreast of developments outside the public sector. They was obviously trying to balance out the worry that insufficient resources and effort would be put into migrant projects compared to other projects. Considering this, it may be possible to extend the use of this method to other groups of social applicants who may be eligible for such assistance. Meanwhile, the public institution wished to lessen its monopolistic position in serving migrants and to establish closer ties with other smaller organizations.

Interest / Influence matrix

Introduction

Interest/influence matrix is a tool to categorize stakeholder. Interest is the positive or negative concern or interest that stakeholders have with you, your teams and/or your products/services. A stakeholders’ interest is typically classified as high or low. Knowing the interests that your stakeholders have, helps to build a better relationship and to manage them more effectively. Influence can be distinguished into formal influence and informal influence. Formal influence is based on a stakeholders’ formal, hierarchical position, which gives them formal power/influence. Informal influence is the power or influence that a person has without a formal position, but it was obtained through inspiring leadership or knowledge authority.

Most useful supporters or most dangerous opponents are likely to be those with more power. In general, the Stakeholder Interest/influence matrix assists project managers in prioritizing stakeholder segments to focus on. It is one of the best ways for project managers to understand the support and opposition they could expect for recommendations.

A simple quadrant diagram can be constructed with two axes (degree of influence and interest) depending on the specifics.

Stakeholder interest influence matrix

Application

Low interest and low influence people are generally not important, but keeping in touch with them in writing is a good idea.

As long as people with high interest and low influence do not derail the change, it is easy to ignore them. They may, however, gain influence if sufficiently upset to resist change. In addition, their higher level of interest enables them to provide more useful information for the project. This makes active consultation a suitable decision.

Stakeholders with low interest and high influence may become formidable opponents if they oppose. To maintain their interest, it is crucial to keep them well-informed.

It is particularly important to involve those people who have a high level of interest and influence in the project. It is imperative for them to understand the program and be able to take ownership of it. This requires more direct communication with them in person.

System map

Introduction

A system map is a synthetic representation that shows in one single frame all the different actors involved in a service delivery, and their mutual links. The system map clarifies how the different service components and roles are connected one to the other, highlighting the values they exchange. Connect the components in loops: there is always an input and output under each exchange.

System map gives an overall picture of the network of actors and components in the system. Roles, groups, and relationships are the key topics. As part of the technique, each participant is grouped according to their role.

As a result of different points of view, different maps can be created. As a system map focuses on users, for example, it is possible to visualize products, services, and interactions between users and other actors. While a user-centered representation of a system may be representative of the viewpoint of the user, this type of representation is not necessarily user-centered. In fact, it may not be appropriate for communicating with users.

Using a System Map, you can represent an existing system or create models of a new one. In this case actor interactions could be mapped, in order to represent different possible configurations of the new system and analyze the interaction between the actors in each configuration.

Application

This case is a public welfare reading project I have worked on in Xuzhou, China, which developed a service platform for encouraging users to borrow books and share reading resources. By integrating the reading resources scattered around the city, the product tries to break the traditional barriers of physical book borrowing, so as to achieve the goal of knowledge flow.

The library needed to improve the circulation rate of libraries and the readers needed a more efficient lending platform and wanted to share their own books. After the identification of the need list of key stakeholders, the project team made a system map in order to visualize the final design concept and show the relationship between stakeholders of the project.

The stakeholders in the diagram be connected by three ways, material flow, information flow and capital flows, which illustrates what kind of value is exchanged between them. Since users have different needs, such as borrowing and donating books, the project designers should pay increased attention to identifying and categorizing the needs of users. The businesses in the community and the users formed a close bond, so the project team should establish a closer connection with the businesses in the community during the subsequent phase.

System map of urban decentralized library system

Limitations

The method of analyzing stakeholder also has some limitations.

Involving stakeholders and soliciting their feedback are important, however, they may not always be beneficial since they may change the stakeholder's position, which will reduce the value of the analysis. Due to the large number of stakeholders, each has a different impact on the project, both in terms of size and scope. In addition, stakeholders may engage with the company on an individual basis, as well as engage in dialogue together, which allows for a more flow of information between them and influences each other's views. Feedback of outputs may also be inappropriate if the stakeholders are in a position to influence or control the outcome of the analysis, where a preliminary assessment is not favorable to them. In addition, the premature use of tools to analyzing stakeholders may lead to the neglect of important issues and the premature. Rather than test a variety of hypotheses, it is imperative to identify the most important issues and actors. In order to avoid a premature assumption regarding the direction of the analysis in the future, it is necessary to exercise careful judgment.

Despite the importance of engaging stakeholders and receiving their feedback, it is not always positive as it can potentially change stakeholder opinions, which limits its usefulness. It would also be inappropriate for stakeholders to provide feedback on the outputs if they have the potential to influence or control the results, in which case an initial assessment would not be favorable to them. In addition, the premature use of tools to analyzing stakeholders could lead to the neglect of important issues. In the beginning, it is imperative to identify key issues and actors, rather than test various hypotheses. Prudence is required to prevent incorrect assumptions about the direction of the analysis in the future. It is dangerous to have an overly narrow focus that predetermines which questions and issues are important, and where agreement or disagreement need to be developed. A wide focus can cause chaos; stakeholders may not see any purpose or benefit for getting involved and spending time on it, and they may quit or refuse to commit to it.

Conclusion

There are many facets to stakeholder engagement, not all of them can be considered and included. Understanding and using scientific theories and tools to identify and clarify stakeholders is critical to making the right decisions by listening to the "right" stakeholders in the appropriate manner. In particular, when it comes to the definition of project responsibility. A successful outcome for any project is the result of balancing the interests of stakeholders, identifying their types, and deciding how to interact with them.