Stakeholder management strategies
applying risk management to people
Projects bring together a mix of advocates and adversaries. Project teams attempt to satisfy regulators and consumers. Who will triumph – those wishing the project success or failure? Or will it be those who are pushing for the project to switch direction only slightly, in order to add a savory bit of scope? And who will judge the project's success? In short, a project is surrounded by people who wish to influence or will be influenced by the project. These people are known to the project management community as stakeholders and they represent both a threat and an opportunity to the project manager. This paper proposes that the traditional process of assessing threats and opportunities – risk management – can be applied to the people swirling around the project.
A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (PMI, 2004, p. 24) is very clear about the proper treatment of stakeholders: “The project management team must identify the stakeholders, determine their requirements and expectations, and to the extent possible, manage their influence in relation to the requirements to ensure a successful project.”
That is what we should do. This paper presents a process for how to do it.
Risk management attempts to identify all threats and opportunities to a project, assess their relative importance, then develop strategies to minimize the threats and capitalize on the opportunities. If we accept that the people surrounding the project pose threats and offer opportunities, it follows that stakeholder management can be viewed as “risk management for people.”(Giesen) To continue the analogy, a stakeholder management process should also identify stakeholders, assess their relative impact to the project, and develop strategies to address their interests in the project.
The goal of this paper is to provide a useful framework for understanding and satisfying stakeholders. There are many techniques for communicating and influencing stakeholders – far more than can be covered in a paper of this length. Therefore, the emphasis is on presenting the parallels between risk management and stakeholder management. The specific techniques presented are intended to be useful examples and each may require further reading to be fully understood.
A Stakeholder Management Process
The three major activities a project team performs to understand and plan for stakeholders are as follows:
- Stakeholder Identification. As with risk management, the first step is to know all the potential stakeholders.
- Stakeholder Response Development. Determine what these people expect and create a strategy for working with them.
- Continuous Stakeholder Management. Execute the plans to engage at the appropriate level with each stakeholder throughout the project.
The parallels to risk management begin with this three-step process. The most important parallel is that following this process means that stakeholder management is proactive rather than reactive.
Step One: Stakeholder Identification
Who among us has not been blind-sided by the requirements of the unknown stakeholder? These requirements emerge downstream in the project, often during the implementation or product release phase and they come from a group whose interests have been completely ignored by the project. Had the project team known of this group they surely would have accommodated them. But the product or system being rolled out is now fully formed and it is too late to change it. Except that the newly emerged stakeholder group has sufficient authority to block the progress of the project. Their requirements must be accommodated, the new product, process, or system must be re-engineered with the expected inefficiencies (meaning cost goes up disproportionately for late requirements), and the schedule must be delayed beyond all previous imaginations. All because the project team ignored or was unaware of an important stakeholder.
Stakeholder management begins with energetically searching for stakeholders. As the five techniques below demonstrate, you can be systematic in this search.
Brainstorming is free-form and a great place to start. Bring your project team together and include your sponsor in this activity. Use some silent brainstorming techniques to begin the process, and then shift to the more well-known ‘out-loud' brainstorm technique. For instance, on the wall in front of your team post the questions “Who cares about this project? Who wants to influence this project? Who will be affected by this project?” Then give each person a stack of sticky notes and give them ten minutes to list as many stakeholders as possible – one stakeholder group or individual per sticky note. This list is then sifted for duplicates and becomes the starting point for the traditional brainstorm where participants suggest stakeholders out loud.
Stakeholder Role Profile
Stakeholders play certain, predictable roles in our project. In the same way that a risk profile is used to scan for common project risks, the stakeholder role profile is used to identify stakeholders common to every project. Answering the questions in Table 1 will encourage the team to view the project from many perspectives, thus increasing the likelihood that all important stakeholders are identified. If any project team finds they still missed a key stakeholder, they should update the profile with new questions so they won't miss him or her on the next project. This list also indicates the stakeholder roles that experience has taught us must be filled, such as sponsor and project manager. The list in Exhibit 1 is not industry or organization specific, but you can build one that matches your organization.
Exhibit 1. Stakeholder Role Profile
Follow the Decision Trail
Projects are full of decisions and authorizations. Who has the authority to make decisions for the project? Review your project plan and list out all the decisions and authorization points then consider who'll make the decision at each point, including who will have veto authority. Veto authority means that this stakeholder can hold up a decision or halt progress and is often held by supporting organizations such as human resources, purchasing, or information technology.
Seek the Secondary Stakeholder
Make a special effort to find secondary stakeholders, people whose interests might be initially ignored because they aren't involved in the execution of the project. Classic secondary stakeholders include:
- Regulators that won't get involved unless we break a rule.
- Customers of customers – they may be the ones really driving the demand for the project or they might fight the project once they find out the impact it will have on them.
- Project opponents – people who will be hurt in some way by your project.
Secondary stakeholders can easily emerge as powerful primary stakeholders if their interests are violated.
Stakeholders are People
Where possible, name the stakeholders. ‘Jane Smith, Regional Sales Director’ is much more specific than ‘Sales’ as a stakeholder. The more we are able to identify our stakeholders as individual people, the better able we are to understand their stake and influence their involvement. It's true that some projects have stakeholder groups such as system users, or in the case of a mass transit system, riders, but even here we can attempt to identify individual people that can accurately represent a group.
Step Two: Stakeholder Response Development
Why do these stakeholders care about the project and what can we do to either leverage their support or mitigate opposition? In this step the project team understands the interests of each stakeholder and develops a plan to optimize the stakeholder's concerns. At a minimum, this plan will include our methods for communication. The key is that we take all stakeholder concerns into account and plan accordingly. As with developing a risk response, a stakeholder response is as individual as the stakeholders. The three techniques listed below will assist you in developing this response.
Prioritize the Stakeholders
In a risk management process we prioritize risks by probability and impact in order to give the most attention to the risks posing the greatest threats. Stakeholder management can borrow this concept, ranking the stakeholders by interest and impact as shown in Exhibit 2. According to Rachel Manktelow the four quadrants can be labeled Keep Satisfied, Manage Closely, Monitor and Keep Informed. (Gibbons Paul, 2005) As the labels indicate, the quadrants help us prioritize and weight the effort we devote to each stakeholder.
Exhibit 2 Stakeholder Prioritization Graph
Analyze High Priority Stakeholders
High interest, high impact stakeholders need further analysis. What do they really care about? How does the project align with their other interests? If managing and satisfying these people really matters, you need to understand them. The questions in Exhibit 3 provide a good start. Answer these questions for your stakeholders in the high interest and high impact quadrants.
Exhibit 3 Stakeholder Analysis Questionnaire
Organization Political Map Technique
Making the decisions fall our way, a.k.a. ‘working the politics’ requires an understanding of who can affect a decision and where they stand. Joel DeLuca, in his book Political Savvy, presents a method for understanding and influencing individual decisions within an organization using the following steps. (DeLuca, 1999) Begin by identifying who is involved in the decision – not just the final decision makers but also those who influence their thinking.
- Rank their position for or against the idea being proposed. Also indicate how strongly they hold this position.
- Rank their ability to influence the decision. Anyone who can make the final decision is on the high end of this scale.
- Graph these two factors (influence and position for or against) to illustrate who stands where on the decision.
- Map the relationships of these people. Neutral relationships are ignored. Strong positive and strong negative relationships are indicated with either solid or dashed lines.
DeLuca calls this graph the Organizational Political Mapping Technique, or OPMT. Exhibit 4 shows a simplified example. With this understanding of who is involved and where they stand, DeLuca advises us to work the positive relationships to move those with the most influence to our side of the argument. This is a powerful tool for understanding the politics of a decision and a must-read book for project managers working on organizational change.
Prioritizing the stakeholders, analyzing individual stakeholder interests, and using the OPMT are just three ways to understand project stakeholders. You can employ other methods as well. Your understanding of stakeholders will enable you to develop specific strategies for interacting with each one.
Exhibit 4 Organization Political Map Technique by Joel DeLuca
Step Three: Continuous Stakeholder Management
Actual stakeholder management occurs every day during the project. What we say, when we say it, how, and to whom affects the involvement and perceptions of stakeholders. Two well-known project management techniques can guide our actions.
This plan describes our strategy for providing the right information, to the right people, in a useful format, with the proper frequency. The knowledge gained about stakeholders during the Stakeholder Identification and Stakeholder Response Development steps will inform the communication strategy for each person or group. The mere act of consciously planning communication can transform stakeholder management from reactive to proactive.
Confusion over who must be involved in decisions can be a significant source of conflict during a project. This is particularly true for any project that changes systems or processes within an organization. The Decision/ Responsibility Matrix attempts to head this problem off by assigning authority and responsibility for the major parts of the project. Exhibit 5 shows a Decision/Responsibility Matrix. The vertical axis lists high-level activities and the horizontal axis lists stakeholders. The codes describe stakeholder involvement and authority during each of the major activities.
Both of the techniques described above described in further detail in many project management books, including two by the author of this paper: The Fast Forward MBA in Project Management, 2d edition, and The Portable MBA in Project Management. (Verzuh, 2005 and Verzuh, 2003)
Exhibit 5. Decision Responsibility Matrix
Projects are performed by and for people. People represent both opportunities and threats – they can smooth the path or create obstacles. Ultimately, it is people who judge the success of the project. Viewing these people through the lens of risk management provides a guideline for project managers. This paper used a classic risk management process as a basis for a stakeholder management process. As with classic risk management, ‘risk management for people’ puts the project manager in a proactive stance and increases the probability for project success.
Project Management Institute, (2004) A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – 3rd ed., Newtown Square, PA: Project Management Institute
Giesen, S. My thanks to my colleague Steve Giesen, PMP, who suggested this perspective?
Gibbons Paul, L., (2005) It's Your Move, PM Network 19(4) 34-38.
DeLuca, J. R., (1999) Political Savvy; Systematic Approaches to Leadership Behind-the-Scenes, Berwyn, PA: EBG Publications,
Verzuh, E., (2005) The Fast Forward MBA in Project Management, 2nd ed., New York, NY: John Wiley & Sons,
Verzuh, E. (2003) The Portable MBA in Project Management, New York, NY: John Wiley & Sons,
© 2005 Eric Verzuh
Originally published as a part of the 2005 PMI Global Congress Proceedings – Toronto, Canada