Stakeholder Management

Dr. Mona N. Shah Ph.D., MBA., DHL.

Ten views of the same project through the eyes of its stakeholders

Rationale • Project management, revolves around understanding and

meeting client expectations. • Even the most efficiently completed project will not count as

a success if the client and other important stakeholders are unhappy with the results.

• Project stakeholders can often exert considerable influence over the success of the project with their expertise, political influence, and additional resources, an essential element of such a plan will be on how to motivate the client to contribute to the team’s success throughout the life of the project.

• Stakeholders have the power to declare whether your project was successful or not, hence managing stakeholder expectations is an important part of the project manager’s job

Matrix of stakeholder power versus level of interest

StakeholdersProject stakeholders are individuals, groups and organisations who are actively involved in the project, or whose interests may be positively or negatively affected as a result of the project. Stakeholders can be internal or external to the project. Owners and funders, banks providing capital, senior management, government agencies and media outlets, individual citizens, temporary or permanent lobbying organisations and society at large are all potential project stakeholders. The project manager is an important link person between the different stakeholders, especially between those who direct the project (the project board) and those who carry out the activities (the project team). The people involved in a project and their role vary according to the size of the project and the approach used.

Project manager - the individual ultimately responsible for managing and leading the project to its successful conclusion Sponsor (or client or owner) - the individual, group or organisation that provides the financial resources, in cash or in kind, for the project Project board (or steering committee) – directs the project on behalf of the sponsor, and makes sure that everything goes according to planFinance providers - provide the finances required by the project over and above that contributed directly by the client Project champion - someone who strongly supports the project and communicates enthusiasm and charisma about it to others consultant - provides specialist advice, information and consulting services for a fee Performing organisation - the organisation or organisations whose employees are most directly involved in doing the work of the project Customer (or end user) - the individuals or organisation who will use the end product. The terms 'sponsor', 'client' and 'customer' are sometimes used indiscriminately, however, sponsor and client usually refer to whoever is paying for the project, while customer usually means the end \ user of the project's end products or services Project support office - where present, supports the project team as required with requests for information and training.

Meeting the needs of the other stakeholders:

All projects have a client, an end user (who might be different from the client) and possibly a number of other external stakeholders (such as suppliers and subcontractors). Such parties have expectations of the project which the project manager must seek to meet and it is often the case that they all want something different. Establishing who the stakeholders are in a project and what they really want is never simple. The first thing to do is to ask lots of questions. People are rarely clear in their first pronouncements and a good project manager can rapidly build credibility by helping them to clarify their ideas. Another aspect of this leadership role is to point out where their expectations clash with those of others and encourage the parties to talk to try to resolve areas of conflict. When developing a new product, for example, reconciling the expectations of finance directors, design engineers, production people, marketing and customers involves many leadership skills. The project manager often acts as a broker or negotiator to try to find a best-fit formula that meets as many needs as possible.

The position/importance matrix for project stakeholders

Importance of Managing expectations:There are often many stakeholders in a project and dissatisfied or disillusioned stakeholders can cause a project to fail. Managing stakeholder perceptions and expectations is about generating agreement and harmony between the different views and beliefs held by the stakeholders. The Critical Considerations box highlights the difficulties of perception between two married people; how much more difficult for a project manager to be sure of the thoughts, feelings and attitudes of a project's stakeholders. When all the stakeholders are 'dancing to the same tune', the project moves towards a successful outcome. One of the amazing wonders of nature is the way that insects such as ants, termites, and wasps can create intricate, delicate and wonderfully made structures. These 'projects' are executed successfully despite varying conditions and all manner of natural obstacles in their way. At each stage in these projects, hundreds or thousands of 'project participants' seem to know what to do, when and where; and seem able to make their own micro-contribution fit within a single overall projects objective.

The Impact of Stakeholders On the projectOnce the stakeholders and their expectations have been identified, they can be organised by mapping them in relation to their likely impact on the project. For example, it is important to know: 1. whether or not they are likely to support or oppose the project 2. the power and means available for them to do so 3. the predictability of their behaviour and expected level of interest in the project.

From Managing to Collaborating with Stakeholders

Recent research and consulting efforts have focused on changing the relationship between the project and its stakeholders from 'management' to 'collaboration'. Stakeholder management emphasises mechanisms of how an organisation can identity, monitor and respond to its stakeholders. The mechanisms include issue analysis, consultation, strategic communication and formal contacts. The impression created here is that managers can direct and control the interactions with stakeholders, and that the main purpose is to buffer the organisation or project from negative or challenging stakeholder activities. In the organisation, the responsibility for stakeholder management is generally assigned to functional departments rather than senior managers or executives.

The collaboration approach, on the other hand, focuses on building stakeholder relationships that are reciprocal, evolving and mutually defined, and that are a source of opportunity and competitive advantage. Collaboration is a meta-capability to establish and maintain relationships which allows the organisation to tap into a powerful source of creative energy, a large pool of innovative ideas and a wider network. The goal here is 10 increase the organisation's environmental stability and enhance control over changing circumstances. This approach is more integrated and company-wide, with responsibility for stakeholder collaboration assigned to a senior executive.

Matrix of stakeholder power versus predictability

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