In all project management accreditation programmes there is a considerable emphasis on stakeholder management (SM). As said in the post to introduce this series, projects are about bringing change to organisations and society. And the projects do not take place in a vacuum…there are people all along the project path: those actively involved in promoting and striving for the change, the project beneficiaries, the sponsors or the investors, the passive bystanders and those who can be unintendedly affected by the project activities and outcomes.
Change can be uncomfortable and project progression is highly dependent on effective and continuous management of the stakeholders’ views and expectations. Managing their expectations is key for the project success.
In this first article I am looking at placing the stakeholder management in the context of the project lifecycle, providing basic definitions and reflecting on the reasons why SM is important. I will cover:
I hope this can be of interest and you enjoy reading.
What is stakeholder management (SM)?
Using a reputable source for the definition, the stakeholders are ‘persons or organizations (e.g., customers, sponsors, the performing organization or the public) who are actively involved in the project or whose interests may be positively or negatively affected by the performance or completion of the project. Stakeholders may also exert influence over the project, its deliverables, and the project team members’ (PMBOK® Guide—Fourth Edition; Project Management Institute, 2008, p. 23).
Stakeholder management is the process of managing the expectation of anyone who has an interest in a project or will be affected by it.
The stakeholders have to be related clearly to the specific project and its sector, field, outset and environment. In this post the author points to 33 different types (see table below). This can give an example that can be adapted to the specific circumstances.
Why do we need SM?
Reasons for managing stakeholders are various, all key in driving the project to success, with acceptance of the change and its sustain. Some of these reasons for a project SM are spelled out in the list below (not necessarily in order of priority):
- Managing expectations;
- Extend support to the project;
- Increase the “social capital” introduced with the project network;
- Increase organisational learning;
- Better threats and opportunities management;
- Legal or statutory requirements.
Managing expectations
Stakeholders have various types of expectations from the project. These could be expectations for the project outcome (the product or service generated from the project, the change in a policy or regulation etc). The stakeholders will have in mind specific attributes for the outcome, for example a product or service of a desired quality, a favourable change in a policy. They will also have some requirements about the processes that are to be followed in the project execution, for example, an equitable treatment of the workers, a fair and transparent selection of contractors or a sustainable use of materials or resources. Stakeholders will also have expectations about the communication about the progress of the activities, for example be informed of possible changes in the work, change of locations or about delays with the schedule etc.
“Some groups of the stakeholders will be more interested in the softer measures on how things are done, others more on the harder measures of what is done”.
Adapted from Eddie Obeng, “All Change! The Project Leader’s Secret Handbook”
Although a project may succeed on the outcomes, many projects ‘fail’ on the process side with uncommunicated changes, decisions taken in a non-transparent way, not keeping stakeholders informed about what was going on.
I remember this interesting quote:
“A customer can have a car painted any colour he wants as long as it’s black“
Henry Ford
Apparently, there is no record of Henry Ford having ever said that, in a serious tone. He has allegedly said it in a meeting with his sales team. This quote has however stood for a long time and used (sadly) for years in marketing and business development as a mantra. It points to the dilemma that product manufactures or service providers have in relating a product/service to the customer expectations. (In recent years much has been done actually in manipulating elegantly the customer expectations to morph them to be more positive toward the intended product – see, for example, the digital sector!)
If stakeholders of the modern age are not managed (and engaged with!), they may be left with the impression of neglect, lack of involvement, and they may be led to reject the project outcome. The organisation’s reputation will also be at stake.
I will look at methodologies in a future article, but it is clear that it is essential to have a clear understanding of the expectations and get alignment of outcome, process and communication requirements. Stakeholder management becomes essential and deserves as much attention as any other project deliverables.
Extend the project support
Projects have finite resources and budget. It is an interesting proposition: the idea of having the opportunity to leverage support for internal and external stakeholders. This could be outside the channels of a formal consultation or allocation as a dedicated resource, simply by having an effective communication plan that allows information and engagement.
Having trust, support and commitment from those who might help in steering the project in the right direction could facilitate the project operation.
Projects are nowadays an intricate network of people, agents, organisations and relationships and we can have a greater value with its effective management – see also the next point below. [This may be up for a debate, so I would appreciate any views and opinion on this.]
Increase “social capital”
I mentioned the project “social capital” in an earlier article on the blog. Experts have been placing a growing emphasis on the role of projects as ‘Temporary Knowledge Organisations’ (TKOs), with the concept of “social network” also associated with the TKOs. Project teams become “social networks” that are both independent of the large organisational network and also integral parts of it. There is a level of “social capital” in the form of relationships as a network and the experts suggest that availability, quality and reach of this “social capital” can be incremented by an effective network, with stronger relationships, a better alignment of the agents’ objectives and an effective collaboration.
There is a clear scope for having an effective SM in the project.
Increase organisational learning
Project stakeholder management can be an incredible vehicle of knowledge for the organisations’ learning. Modern knowledge-based organizations often have decentralized structures, highly digitalised but disconnected information platforms, knowledge dispersed in sub-units across the globe and many project teams working sometimes in silos.
There is a clear scope for a good SM at project level, but, more importantly, a systematic, coordinated stakeholder management across the portfolio as well. This will support organizational learning, enabling access to knowledge-relevant stakeholders, building long term relationships with valuable key opinion leaders or subject-matter experts, understanding the change in the stakeholders’ expectations and evolving views. This would help in focusing and evolving the organisation strategy for the future.
Better risk management
This is clearly linked with the point above. An effective SM allows one to sense how the project context is evolving, allowing for active threats and opportunities management. The participation of stakeholders in the project risk management process is becoming increasingly recognized as helping the decision process in getting it more responsive to varying circumstances, interests and values.
The benefits of engaging with stakeholders are many and include a better understanding of the risks (as threats and opportunities), building also trust and credibility (which help reputation). Engagement can also generate mutual understanding and sharing of responsibility if things go wrong.
By engaging effectively with the stakeholders’ network, the project team and the organisation will stay tuned and receptive, at different stages of the risk management process, increasing the effectiveness and responsiveness of the risk analysis and risk treatment.
This would help not only the project, but also the enterprise risk management.
Legal requirements
Consultation and engagement with internal and external stakeholders may not be an option when there are legal or statutory requirements for compliance to law and regulations. Think of compliance to various financial requirements, antitrust, various ISO requirements in terms of data management, environment, security, health and safety at work, privacy, shipment of dangerous goods, equitable sharing of benefits etc.
Engagement with the stakeholders might not be optional.
In this article I tried to go over the basic definitions and to illustrate why SM is important. With the next article I will try to dip into the mechanics of the stakeholders management, reflecting also on the attributes that a “good” SM should have. Please do not hesitate to contact me for any comments and constructive feedback.
Marco Bottacini, Senior Portfolio Manager, GALVmed
The views and opinions expressed in this blog are those of the author and do not necessarily reflect the views and opinion of GALVmed.
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