Stakeholder Analysis

Introduction

According to the ISO 21500 standard a stakeholder is defined as:

Person, group or organization that has interests in, or can affect, be affected by, or perceive itself to be affected by, any aspect of the project.

Many other versions of this definition can be found in the literature but in general containing the same content. It is important to distinguish between shareholder and stakeholder, and understand that stakeholder analysis includes analysis of the shareholders but also takes all other stakeholders into consideration.

Management of a projects, programs or portfolios happens to be complex and require an extensive overview of several aspects and constraints. But in order to act appropriate and create sustainability the management often has to consider these aspects and constraints not only from their own point of view but also from a number of other stakeholders views.

It is important for the management to know who their stakeholders are and there characteristics in relation to the project, program or portfolio. This might be their influence, impact, interest, attitude etc.

In stakeholder analysis all stakeholders first have to be identified and relevant information gathered. The stakeholders are then mapped based on relevant parameters. Some of the most typical parameters when mapping are power, interest and influence, which is often visualised in a 2D diagram. The map gives an overview of the stakeholders and can be foundation for planning how to deal with stakeholders.

Background

In 1932 Dodd started one of the first arguments that a company should not only focus on shareholders but also consider the entire spectra of stakeholders when managing a company. However Dodd did not use the term stakeholder since this was not developed within this field of study yet. The term stakeholder arose in the first half of the 1960´s. Among others Freeman (1984) are crediting an internal memorandum from Stanford Research Institute in 1963 for being the first to apply the term Stakeholder in this field of the literature. In 1995 Donaldson and Preston described their view on stakeholder theory as the existence of three types:

• Normative stakeholder theory:
• Instrumental stakeholder theory:
• Descriptive stakeholder theory:

Baker and Nofsinger (2012) use Coca-Cola for examplifing the three types of stakeholder theory:

• A normative stakeholder theorist might say: Coca-Cola has a duty to protect the environment, so it should pay more attention to its water policies.
• An instrumental stakeholder theorist might say: Coca-Cola should manage its water policies so as to minimize the negative impact of reputation effects on firm value.
• A descriptive stakeholder theorist might say: Coca-Cola´s water policies are an important defining characteristic of the firm.

• Dodd (1932)
• Friedman (1962)
• Stanford Institute, SRI (1963)
• Hirschman (1970)
• Friedman (1970)
• Freeman (1984)
• Milgorm and Roberts (1992)
• Donaldson and Preston (1995)
• Freeman (1998)
• Mercier (1999)
• Jensen (2002)

Process

• Identify stakeholders (brain storm, stakeholders could for example be: Employees Shareholders Media Suppliers Government Customers Community Managers Directors Competitors Sponsors Consumers)
• Define key stakeholders
• Collect relevant information
• Stakeholder table
• Stakeholder map
• Dealing with stakeholders

Mapping stakeholders

• Why mapping stakeholders?

Types of maps

• Power/Interest diagram
• Interest/Influence diagram
• 3D mapping
• Stakeholder Circle

3D mapping visualised as 3x3 matrix.

Other methods

Methods/tools to use together with the stakeholder analysis

Further reading

http://sustainable-learning.org/wp-content/uploads/2012/01/Who’s-in-and-why-A-typology-of-stakeholder-analysis-methods-for-natural-resource-management.pdf

Dodd Jr., E. Merrick. 1932. “For Whom Are Corporate Managers Trustees?”. Harvard Law Review 45 (7): 1145. doi:10.2307/1331697.