Stakeholder analysis

Abstract

A stakeholder can be shortly described either as an individual, group or organisation who is affected by the output of a project. Stakeholders have an engagement in the achievement of the project and can be inside or outside the organisation that is supporting the project.

Key words: Stakeholders, Stakeholders analysis, Project Management, Portfolio Management, Program Management

Stakeholders and stakeholder analysis

According to the classic definition of stakeholders from Project Management Institute that is relevant for any project case “Stakeholders of a project are individuals, groups, or organizations that are affected or recognized to be affected either in a positive or negative way by a decision, action, or output of a project”. Stakeholder analysis is referred as the systematic gathering and analysis of quantitative and qualitative data to decide whose interests should be taken into consideration throughout the project. The objective of performing a stakeholder analysis is to provide the project manager and project team an overview of the people who have interest in the project. It should be one of the first steps of each project. It aims to identify everyone with a concern who needs to be involved.

History

The term stakeholder in terms of definition, use and purpose constitutes a quite unclear concept in the literature and it tend to vary over the years. The first time the term ‘stakeholder’ appeared in the bibliography was in 1963 at the Stanford Research Institute (SRI) and originally included owners, employees, customers, supplier, lenders and society. However, it is truth that the business world was thinking and utilizing the stakeholder idea many years before 1960s. According to Dodd (1932), GEC was identifying shareholders, employees, customers, and the general public as the main groups that they had to handle. Sapieca (1990) stated that Johnson & Johnson determined customers, employees, managers, and the general public in 1947. Igor Ansoff and Robert Steward developed further the term based on the SRI’s approach. Freeman (1984) present the definition of stakeholders as “any group or individual who can affect or is affected by the achievement of the organization objectives” in his book “Strategic Management: A Stakeholder Approach. This is one of the most popular definitions as 20 out of 75 in total share this approach. In the figure below, the original stakeholder model from Freeman is presented.

Figure 1: The original stakeholder model Freeman(1984).

Stakeholder analysis process

There are several approaches regarding the stakeholder analysis process in the bibliography, but most of them have a common philosophy and can be summarised in four principal steps: Identifying, Prioritising, Profiling and Managing Stakeholders. In the initial stage, there is a need of recognising all the people who are affected or influenced by the project and have an interest in a successful or unsuccessful result. Stakeholders can be internal such as managers and employees or external like customers or suppliers. Stakeholders can also be characterized primary with a direct interest and stake to the project (employees, customer, suppliers) or secondary who do not engage in direct exchange but are affected by or can affect the project (business partners, competitors, regulatory authority). The next step is to asses and prioritize stakeholders according to their importance related to the project. Subsequently, stakeholder engagement follows, and the stakeholder analysis process finishes with stakeholder management process.

Identify stakeholders

The first key step in stakeholder analysis process is to identify all the people (individuals or groups) and organisations that are impacted by the project, and report all relevant information concerning their interests, engagement, influence and effect on project success. Possible project stakeholders may be people who are :

• employed on the project
• sponsoring it or supporting it
• competitors
• contributing to the requirements or are determined to use the final product, process, service, or outcome of the project like regulatory agencies and potential customers; *involved in the marketing and advertising of the product or the service;
• responsible for the financial sustainability of the project;
• offering goods and services that are consumed by the project (suppliers)
• using the result of the project (customers)

There might be also other stakeholders indirectly involved like those contributing in recruitment activities, suppliers who contribute to the project by offering resources to the project, shareholders, those performing administrative and logistic tasks, the project management office that might perform various activities like governance, standardisation, project management trainings and so on. It is of crucial importance that the project team starts with identification of right (and legal) stakeholders, identifying their needs, demands, wishes, preferences dreams and priorities. It is important to take into consideration that stakeholder identification is not a stable activity that is done only in the initial days of the project, but it is a dynamic process that needs to be continuously updated as the project is in progress. Once the stakeholders are identified, they are listed in a stakeholder table or represented in a diagram. In order to better understand the different categories of stakeholders, a diagram from ISO 21500:2012, Guidance on Project Management, an international standard developed by the International Organisation for Standardisation, is used. It includes any person inside and outside the project as is represented in the figure below.

Figure 2: Project Stakeholders (ISO 21500:2012).

It categorizes the stakeholders in three main groups:

1. Project organization that includes the project team, the project management team and the project manager.
2. Project Governance that may include the Project Steering Committee or Board and the Project Sponsor.
3. Additional stakeholders like Employees, Customers, Suppliers, Shareholders, Business Partners, Finance providers, Regulatory Authorities, Project Management Office and stakeholders with special interest.