Stakeholder Analysis: Identify and Engage Key Players in Project Management

Stakeholder analysis is an important project management process that can help you identify and understand project stakeholders, as well as their influence on the project and its objectives. By systematically evaluating stakeholders, you can develop targeted strategies to engage them effectively. 

This process helps prioritize stakeholder needs and anticipate challenges that may arise during the project life cycle. A robust stakeholder analysis helps you develop clear communication, optimize resource allocation, address stakeholder concerns on time, and contribute to the successful execution and completion of the project.

In today’s blog post, I will discuss stakeholder analysis, its importance, and how to conduct it. First, let us know who the project stakeholders are.

What is a Project Stakeholder?

A project stakeholder is any individual, group, or organization that can affect or be affected by a project or its outcome. Stakeholders can be internal (e.g., team members, managers, and employees) or external (e.g., clients, suppliers, government agencies, and the community).

Key stakeholders include the project sponsor, who provides financial support; the project team, who is responsible for execution; and end-users or customers, who benefit from the project’s deliverables. Other stakeholders, like regulatory bodies, may influence the project through compliance requirements.

What is Stakeholder Analysis?

Stakeholder analysis is the process of identifying and understanding the people, groups, or organizations that are interested in a project. It involves determining the stakeholders, their interests and expectations, and how they might influence the project’s success.

First, you identify all stakeholders. After identifying them, you categorize them based on their level of interest and influence. Some stakeholders have much power to affect the project, while others are less influential.

Next, you analyze their needs and expectations. This step helps you understand what each stakeholder wants from the project and how they might react to different situations. You can then develop strategies to manage these stakeholders. For example, you might need to keep some stakeholders closely informed, while others might only need occasional updates.

Stakeholder analysis can help you manage relationships with all the people or groups involved in a project, thus ensuring that their needs are met and their influence is considered throughout the project.

The Importance of Stakeholder Analysis

Stakeholder analysis is required for the following reasons:

• To Separate Unimportant Stakeholders: A large project can have hundreds or thousands of stakeholders, and managing them is no easy task. Stakeholder analysis identifies the key stakeholders. Investing resources in low-power or low-interest stakeholders is a waste.

• To Group Stakeholders: Stakeholder analysis can help group stakeholders based on different attributes. These attributes can be high-power, low-power, high-interest, or low-interest.

• To Collect Project Requirements: The project exists to satisfy stakeholder requirements. This process can help you analyze stakeholders and collect their requirements, which in turn can help you develop the scope of work and other project management plans.

• To Develop a Stakeholder Engagement Strategy: After analyzing stakeholders, the next step is developing a stakeholder engagement plan. This plan can help you manage stakeholders and get their buy-in. Stakeholder support is required to complete the project successfully.

• To Help Build Relationships: Classifying and managing stakeholders early can help build good relationships. These relationships can help provide support when needed.

A  Step-By-Step Guide to Conducting Stakeholder Analysis

A stakeholder analysis requires the following steps:

Step 1. Identify Stakeholders

You must identify stakeholders for analysis.

The following are the key techniques to identify project stakeholders:

• Business Case: This document contains the project’s justification.
• Benefits Management Plan: Every project has benefits to deliver. This document proves that the project deliverables can satisfy the beneficiary after the project closes.
• Agreement: This is a contract between the performing organization and third parties (e.g., suppliers, contractors, or partners).
• Expert Judgment: Subject-matter experts provide expert judgment.
• Brainstorming: This activity can help generate ideas. All team members are invited to do this and identify stakeholders.
• Brainwriting: This is similar to brainstorming, but team members are told before the meeting to come up with ideas to be reviewed during the meeting.
• Survey: This allows you to retrieve data or information from non-project team members—especially the larger population. This is common in community projects.

After identifying stakeholders, you will record this information in the stakeholder register.

Every project has visible and sleeping stakeholders.

Visible stakeholders (e.g., customers and suppliers) are those whose influence is easily noticed. 

Sleeping stakeholders are quiet and pose the greatest risk because they are often not proactively managed. Examples are the procurement departments and regulators.

Some stakeholders can be risky as they can negatively influence the project outcome. These stakeholders are not always a threat. Sometimes, they provide an opportunity for project success.

Step 2. Categorize Stakeholders

After identifying project stakeholders, you will categorize them. The following two methods are the most popular models for categorizing stakeholders:

1. Salience Model

Mitchell, Agle, and Wood developed the stakeholder-salience model, which is a tool for prioritizing stakeholders in a project based on three key attributes: (1) power, (2) legitimacy, and (3) urgency.

1. Power: Power refers to the stakeholder’s ability to influence the project or its outcomes. Stakeholders with high power can either support or obstruct the project’s progress.

2. Legitimacy: Legitimacy is the perceived validity or appropriateness of the stakeholder’s involvement in the project. Stakeholders with high legitimacy have a rightful or socially accepted claim to the project’s resources or outcomes.

3. Urgency: Urgency represents the extent to which a stakeholder’s needs require immediate attention. Stakeholders with urgent claims demand prompt action due to time-sensitive needs or critical issues.

The model identifies eight types of stakeholders by combining these attributes:

1. Dormant Stakeholders: These stakeholders have high power but low legitimacy and urgency. They can influence the project if they choose to, but they are inactive. 

2. Discretionary Stakeholders: These stakeholders have high legitimacy but low power and urgency. They are legitimate but lack power or urgency, so their needs may be addressed if resources allow.

3. Demanding Stakeholders: These stakeholders have high urgency but low power and legitimacy. They require attention due to urgency, but they may not have a strong claim or influence.

4. Dominant Stakeholders: These stakeholders have high power and legitimacy but low urgency. These stakeholders have a strong influence and interest in the project, and you should regularly engage with them.

5. Dangerous Stakeholders: These stakeholders have high power and urgency but low legitimacy. These stakeholders can disrupt the project and should be managed carefully.

6. Dependent Stakeholders: These stakeholders have high legitimacy and urgency but low power. They are important and should be supported, as their needs align with the project’s objectives.

7. Definitive Stakeholders: These stakeholders have high power, legitimacy, and urgency. These are the most critical stakeholders and should receive the highest priority communication and engagement.

8. Non-Stakeholders: These stakeholders have low power, legitimacy, and urgency. Therefore, they are considered non-stakeholders within the project’s context.

2. Power Interest Grid

The Power/Interest Grid is a strategic tool used in project management to categorize stakeholders based on their power (influence) level and interest in the project.

1. Power: Power refers to the stakeholder’s ability to influence the project’s outcome, direction, or resources. High-power stakeholders can significantly affect the project’s success or failure.

2. Interest: Interest indicates the stakeholder’s concern or involvement in the project’s progress and outcomes. Stakeholders with high interest are keenly invested in how the project unfolds and how it will impact their needs or goals.

The Power/Interest Grid divides stakeholders into four quadrants:

1. High Power, High Interest (i.e., Manage Them Closely): These stakeholders should be actively engaged and regularly informed. Their needs and expectations are critical to project success.

2. High Power, Low Interest (i.e., Keep Them Satisfied): These stakeholders should be satisfied with the project’s progress but not overwhelmed with too much detail.

3. Low Power, High Interest (i.e., Keep Them Informed): These stakeholders should be informed about the project’s developments. While they have little power, their interest means that they can be valuable supporters.

4. Low Power, Low Interest (i.e., Monitor Them): These stakeholders require minimal attention but should still be monitored if their power or interest changes.

Step 3. Prioritize Stakeholders

After grouping the stakeholders, you will prioritize them based on their requirements and influence on the project or its objective.

High-power and influential stakeholders will be at the top, while low-power, low-influence, and low-interest stakeholders will be at the bottom. They are placed on a watch list for future monitoring.

Step 4. Document and Update

Update the stakeholder register and document all identified stakeholders, their interests, power, influence, and your planned engagement strategy. Continuously update the stakeholder analysis throughout the project as relationships and project dynamics change.

Example of Stakeholder Analysis

The following image shows an example of stakeholder analysis:

When Should You Conduct Stakeholder Analysis?

A stakeholder analysis should be conducted at several key points during a project to ensure effective engagement and communication with all relevant parties. 

You can conduct stakeholder analysis on the following occasions:

• Project Initiation: At the beginning of a project, conducting stakeholder analysis can help identify all the individuals, groups, and organizations that could impact or be impacted by the project. This initial analysis is crucial for understanding stakeholder needs, expectations, and influences on the project’s success.

• Planning Phase: During the planning phase, more detailed stakeholder analysis can be conducted to refine the project’s communication strategy, risk-management plans, and resource allocation. This can help tailor the project plan to address stakeholder priorities and mitigate risks associated with stakeholder concerns.

• Project Changes: When significant changes occur in the project scope, objectives, or environment, it’s essential to reassess stakeholders. Changes can alter stakeholder power, interest, or influence, thus necessitating adjustments in how they are managed.

• Project Reviews and Milestones: Regular stakeholder analysis during major project milestones or reviews can help ensure ongoing alignment with stakeholder expectations and can allow for adjustments to engagement strategies as the project progresses.

• Problem Identification: If issues involve or affect stakeholders, conducting targeted stakeholder analysis can help identify the root causes, as well as develop strategies to address concerns and minimize negative impacts.

Summary

Stakeholder analysis is a key process in project management that helps you identify, prioritize, and engage individuals or groups that can impact or be impacted by a project. Understanding stakeholders’ power, interest, and influence allows you to tailor communication, anticipate challenges, and align project objectives with stakeholder needs. 

Conducting stakeholder analysis at key project stages ensures continuous alignment and effective management. This process builds stronger relationships, manages risks, and enhances the likelihood of project success by proactively and strategically addressing stakeholder concerns.

Further Reading:

• Stakeholders in Project Management
• Identify Stakeholders in Project Management
• Stakeholder Mapping: A Complete Guide with Examples
• Stakeholder Register in Project Management
• Stakeholder Engagement: How to Manage Project Stakeholders

Reference:

• What is Stakeholder Analysis?