Revision as of 17:12, 28 September 2015

Stakeholders are referred to as actors (persons or organizations) with a vested interest in the decision or policy that is being promoted. They may be affected or have an affect as a result of the project execution. ^[1] Stakeholder analysis is the important method or process used to identify these actors or key individuals/groups that will have an affect on a project, and how to win them over. It is used to identify all key stakeholders and analyze their needs. Stakeholder analysis allows policy and/or decision makers to interact more effectively with key stakeholders; detect and act to prevent potential misunderstandings about and/or opposition to the policy or program; and increase support for a given policy or program.

Background

Freeman ^[2] published in 1984, Strategic Management: A Stakeholder Approach. It was a landmark of a book and since then there has been many books and articles with the main emphasis on the stakeholder concept. Thomas Donaldson and Lee E. Preston (1995), from Georgetown and Maryland University, has presented three aspects of stakeholder theory. These are as follows:

• Descriptive/empirical theory: When stakeholder theory is descriptive, it means that it presents a model describing what the corporation is. Questions that may arise when working with this theory may be such as: Is the model used by the corporation more descriptive than that of the rival corporation? If so, do observers and practitioners see it that way? How is the corporation actually managed?

• Instrumental theory: If there is any connection between stakeholder management and the organization, the organization will benefit from taking stakeholders under consideration. Many instrumental studies that make references to stakeholder perspective, use conventional methodologies. Other studies are based on direct observation and interviews.

• Normative theory: It is the fundamental basis, and evaluates why a company/organization should consider their stakeholders. This study has dominated the classic stakeholder theory since the beginning. ^[3]

These theories are all used in stakeholder analysis, whether it depends on need and/or interest. Different companies/organizations will use different approaches. Another form for stakeholder analysis that can be used is the Triple Task Method. This approach is more recent, and uses a unique form of action research ^[4]

Stakeholder Analysis

The stakeholder analysis can be useful in the way that policymakers and managers can identify key players and assess their knowledge, interest, position, alliance, and importance to the project or policy. By using the analysis, managers can interact more effectively with key stakeholders and increase their support. The stakeholder analysis is conducted before a program is implemented. This allows managers or policymakers to prevent potential misunderstandings about and/or oppositions to the program or policy. ^[5]

The analysis characterizes stakeholders and provides the information that is needed for a manager to know where his focus should be during the program or policy. The analysis includes the stakeholders’ interests in the project, positions for or against it, potential alliances with other stakeholders, and also their ability to affect the process.^[6] When this analysis is done before a project, managers can find possible misunderstandings and act accordingly. When the stakeholder analysis is used as a guide while the project is running, it is more likely to succeed.

Process

Figure 1 Stakeholder Management Process ^[1]

The first and most important thing to do when analyzing your stakeholders is to figure out who your stakeholders are. They are important to your project or policy and they can have an affect (both positive and negative) depending on where your focus is. The next step is to figure out their power, interest and influence. Finally, develop a good understanding of the most important stakeholders. This way you know how they will respond, and how you can win their support. ^[7] Figure 1 describes all the different, yet important steps a company/organization needs to go through for the analysis to be clear and understandable.

1. Identify stakeholders

The use of stakeholders is important to identify which are likely to be affected and which will affect the activity of the organization. In this first step brainstorming is the way to go. Think of all the people that are affected by the work in progress. Who has an interest in it, how has power over it, etc. The table below includes people or organizations that might be stakeholders.

Table 1 Possible Stakeholders

2. Prioritize stakeholders

Assess how the stakeholders could be impacted or have an impact upon the organization. The stakeholders that will or will not somehow affect the work has to be mapped out. Figure out who wants to hurt the project and who wanted to help. This is done with a stakeholder matrix and described further down.

3. Understand key stakeholders

Identify the stakeholders' 'success criteria' by anticipating the consequences of any change in the organization's activities. How will they feel about any changes in the work? And how can the company/organization engage them for a positive outcome? Talk to the stakeholders directly. When being open about things it will build a successful relationship with them.

Hidden Stakeholders

Stakeholders that have been talked about and mentioned up until this point have been the visible stakeholders. They are usually on your team. If they are not, they can be persuaded into becoming a part of your team. However, there are a type of stakeholders that are very dangerous to the project; the hidden stakeholders. The hidden stakeholders are sometimes forgotten by the project team ^[8]. Unlike visible stakeholders, hidden ones will not speak up, and they will probably appear at the worst possible moment in the project. Some examples of a project managers worst nightmare might sound something like this:

• "The project stalls at production because the IT team won’t install software that doesn’t meet their security requirements on their servers."

• "The great new product is not being used, because the end-users feel it is to complicated and they don’t need it anyway."

• "At delivery, the client refuses the product because it doesn’t meet an industry standard they forgot to inform you about." ^[9]

These are all examples of bad communication. The easiest way of not ending up in situations like these is to communicate. Say it like it is and let the stakeholders know how you want it. Get them on your team and make them visible.

Limitations

There are some limitations when working with stakeholder. Depending on the level of detail on the work the company/organizations is doing, the amount of stakeholders will usually be somewhere between 15 and 50. This means that there will be a lot of work when analyzing the stakeholders. When understanding the stakeholders there are some parameters that are difficult to obtain, such as interest in the project and influence. These conditions might have to be assumed, which means that the analysis will have a limited robustness. The assessment will also be subjective, which means that the management will decide who the organization will act towards the stakeholder. ^[10] It is also almost impossible for a company/organization to please all stakeholders and their demands completely. Managing becomes a balancing act of all interests according to importance or urgency.

Stakeholder Matrix

The usual method of stakeholder analysis is a stakeholder matrix. Stakeholders are plotted against two variables; importance of stakeholder and influence of stakeholder. In the Figure 2 is shown such a matrix divided into four boxes; A, B, C, D.

Figure 2 A stakeholders matrix showing which overall strategy one should choose for each of the four categories ^[11]

Box A

These stakeholders have a high degree of influence and they are important to the project at hand. The organization or company has to please this group of stakeholders to ensure their positive support.

Box B

These are stakeholders of high importance to the success of the project, but not some much influence. If their interests are to be protected, they require some initiatives. These groups might be users of a new place, that do not have much voice in the development.

Box C

Stakeholders in this box have a high influence. This means that they can affect the project outcome, but the overall goal is not necessarily aligned with the interests of the right people.

Box D

Stakeholders that are in this box are of low priority and do not require much evaluation or monitoring. ^[12]

How to make a Stakeholder Analysis Matrix

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? ^[13]

WWF (World Wide Fund for Nature) has made a stakeholder analysis matrix where they explain benefits, when to use it, and how to develop it. Some of their insights are listed below.

Stakeholder analysis is important and can help identify: ^[14]

• Interests of all stakeholders who may affect or be affected
• Potential conflicts or risks
• Opportunities and relationships that can be built
• Groups that should be encouraged to participate

Stakeholder participation:

• Gives people some say over how projects affect their lives
• Is essential for sustainability
• Generates a sense of ownership
• Builds capacity and enhances responsibility

Following is a table that WWF (among others) uses when analyzing their stakeholders in an up-coming project or program.

Table 2 Stakeholder Analysis Matrix ^[14]

The first column lists the stakeholders, while the second their stake in the project. Their mandate in the project refers to the limits of each stakeholder's stake in the resource. In column three describe each stakeholder's potential role in the project. If the stakeholder is marginalized, this is listed in column four (women, ethnic minority, youth etc.) "Marginalized stakeholders lack the recognition or capacity to participate in collaboration efforts on an equal basis, and particular effort must be made to ensure and enable their participation."^[14] In the last column, list which stakeholders that are key to the project/program. These would be the ones that have much power, authority, or responsibility.

Discussion

Using stakeholder analysis to come up with a stakeholder matrix is not only a way to provide a clearer understanding of which stakeholders you have, but also how to engage these stakeholders into working in the right direction and towards a mutual goal. Outcomes of a well-planned stakeholder matrix are better project outcomes, and in the long run, better community engagement plans.

On one side, when using stakeholder analysis and matrices, there are some benefits. The methods used are easy to understand and simple to apply to any situation. On the other hand, there are some challenges and uncertainties. As explained previously, when plotting the stakeholders in the influence/interest matrix, it can be difficult to know how much influence and how interested they are in the project at hand. Therefore, it is important to talk directly to each stakeholder and figure out what they or their organization can do. If having all key stakeholders involved from the beginning is not realistic or possible, it could be an idea to gradually involve them.

One of the strengths of the stakeholder analysis is that it can be used very early for projects, or as a development plan in the later stages. A weakness is that this tool is very dependent on the data that is collected, and it may vary from person and situation begin used. ^[15] ‎

Conclusion

As should be clear from the article, the main objective of the stakeholder analysis and matrices is to provide a clearer understanding of the stakeholders and provide insight as to how to best engage them. In the beginning, with the help from Freeman, Donaldson and Preston, descriptive, instrumental and normative theory shows how different approaches can be used by organizations and companies with different goals and outcomes. The stakeholder concept is always the same; to manage stakeholders' impact on the project/program, and the most common way to do this is with a stakeholder analysis and the matching matrix. By identifying, prioritizing and understanding the stakeholders, the project at hand has a higher success rate than without. Some of the main questions one should be able to answer when using the analysis are such as; who is directly responsible? Who is influential in the project? Who will be affected? Who will obstruct/hinder? and so on.^[14] Questions like these will help the organization to analyze, map and figure out who to trust, who to keep close and who to further encourage.

The stakeholder analysis and matrix are a fine way to reach an organization's main goal, with the help of the community. Nevertheless, the analysis is not always realistic. If a company is sloppy with gathering of data, a stakeholders matrix will not give out the real information. Be clear with the stakeholders, this way a company can avoid mistakes such as hidden stakeholders and a poor outcome.

References

1. ↑ ^{1.0 1.1} PM Hut, 2008 "PM Hut (2008, 03 12). Project Stakeholder Management".
2. ↑ Freeman, R,E. 1984. Strategic Management: A Stakeholder Approach. Boston, MA: Pitman.
3. ↑ Donaldson, T., and LE Preston. 1995. “The stakeholder theory of the corporation - Concepts, evidence and implications”. Academy of management review 20 (1): 65-91.
4. ↑ Bell, S. and Morse, S. (2007) European Commission's Seventh Framework.
5. ↑ Schemeer, 1999 "Schemeer, K. (1999). Stakeholder Analysis Guidelines."
6. ↑ ‎Raybould, 2009 "Raybould, S. (2009, 07 23). Stakeholder Analysis."Birmingham Metropolitan College
7. ↑ The Tool Team (2015)United Kingdom.
8. ↑ ACProjectTeam, 2008 "ACProjectTeam (2008, 11 12) ACProject"
9. ↑ ACProjectTeam, 2008 "ACProjectTeam (2008, 11 12) ACProject"
10. ↑ 12 Manage - the executive fast track (2015).
11. ↑ Stakeholder Analysis-Stakholder Matrix "Department of Environment and Primary Industries.(2013, 04 26)." The State of Victoria
12. ↑ Stakeholder Analysis-Stakholder Matrix "Department of Environment and Primary Industries.(2013, 04 26)." The State of Victoria
13. ↑ Stakeholder Analysis-Stakholder Matrix "Department of Environment and Primary Industries.(2013, 04 26)." The State of Victoria
14. ↑ ^{14.0 14.1 14.2 14.3} Sourcebook for WWF Standards "WWF for a living planet. (2005, 10)." WWF-US
15. ↑ Stakeholder Analysis-Stakholder Matrix "Department of Environment and Primary Industries.(2013, 04 26)." The State of Victoria