A stakeholder may be an individual, group of individuals, or organizations that have a profound impact on the performance of a project. The stakeholders can be customers, employees, managers, creditors, investors, partner organizations, government agencies, and regulators. Project managers need to conduct a stakeholder analysis to understand the impact of each stakeholder on the performance and scope of a project. The customers, employees, sponsors, and partner agencies have direct control and association with the project and thus are more likely and substantially expected to affect the performance of a project. The secondary stakeholders such as the government agencies and regulators have a limited impact on the project.
A stakeholder analysis provides information on the key stakeholders for a project and helps in the management of relationships with the stakeholders. The information that is typically included in a stakeholder analysis includes:
- Names and organizations of important stakeholders
- Role of stakeholders for the project
- Information about each stakeholder
- The interest level of each stakeholder in the project
- Impact of stakeholders on the project
- Management of relationships with each stakeholder
Developing a stakeholder management strategy
Based on the information obtained in stakeholder analysis, a stakeholder management strategy may be created. It does not matter how much is invested in a project, but poor stakeholder management may lead to project failure for sure.
As a project manager a stakeholder management strategy shall be developed based on the following information:
- The list from stakeholder analysis shall be studied in great detail to understand the impact of each stakeholder on the project’s success or failure.
- It shall be analyzed which stakeholders are supporting the project and which ones are opposing the project. The main strategy shall be to work in close association with the stakeholders that support the project to win over the stakeholders that are posing hurdles for the project completion.
- Communication shall remain an important key to project management. Communication mechanisms shall be set into place to inform each stakeholder about the progress of the project depending on the type of information that is needed by each stakeholder. For example, the investors need to be informed about the project milestones and progress periodically as they are an important stakeholder for any project.
- A stakeholder management system shall be implemented and maintained and the information about each stakeholder shall be updated in the system from time to time. The orientation of stakeholders may keep on changing as the project progresses and therefore effective stakeholder management system is important for positive results.
Challenges with stakeholder management
Some of the major challenges with stakeholder management include the alignment of the project objectives with the objectives that are set by the stakeholders. The stakeholders such as the investors may have their ideal objectives with respect to a particular project. It is challenging to align the project management process to meet the interests of all stakeholders at the same time as different types of stakeholders may have different interests in a project. Some interests may be monetary and others may be regulatory in nature. The challenge lies in addressing the concerns of all stakeholders.