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Stakeholder Analysis Process

21 Dec 2022
Stakeholder Analysis Process

A stakeholder is anyone who has an interest in the outcome of a project. This includes, but is not limited to, the project sponsor, the project team, customers, and other people affected by the project.

Stakeholders are involved in a project in different ways. They may be directly involved, such as being a project team member. Or they may be indirectly involved, such as being affected by the project but not having a direct role.

The involvement of stakeholders can vary from project to project. Some projects may only have a few stakeholders, while others may have many.

In an organisational project, there are multiple interested stakeholders, and keeping track of their needs and expectations can take time and effort.

The stakeholder analysis process is crucial in determining who these stakeholders are before the project starts, what they want, what their goals are, what their concerns are, and how best to understand each one's interests.

What is a Stakeholder Analysis?

A stakeholder analysis is a process used to identify and assess the importance of key stakeholders in a project. It is a tool to help project managers plan and execute their projects in a way that will optimise results and minimise the negative impact on key stakeholders.

The stakeholder analysis process begins with the identification of all potential stakeholders in a project. Once all stakeholders have been identified, they are prioritised according to their level of interest and influence in the project. The next step is assessing each stakeholder group's needs and expectations. The project manager can now develop a plan of action that considers all stakeholders' interests.

Finally, project managers can engage with stakeholders and build relationships of trust through regular communication, consultation and collaboration. It is important to remember that all stakeholders should be treated equally and allowed to have their say in the decision-making process.

A robust stakeholder analysis can differentiate between a successful project and one that fails to meet its goals. By taking the time to understand the interests and needs of all stakeholders, project managers can ensure that their projects are designed and implemented in a way that maximises benefits for all involved.

Why Use Stakeholder Analysis?

Conducting a stakeholder analysis ensures that the project meets the needs of as many stakeholders as possible and identifies potential sources of conflict.

A stakeholder analysis can help prevent problems by ensuring that all stakeholders have a voice in the decision-making process. It can also identify potential areas of conflict, which can be addressed before they become significant problems.

In addition, stakeholder analysis can help you build relationships with key stakeholders. By understanding their needs and concerns, you can develop strategies for communication and engagement that will result in a better outcome for all involved.

Stakeholder analysis has several advantages; it can help in the following ways:

To enlist the help of key organisational players

When conducting a stakeholder analysis, it is essential to engage key organisational players in the process. These individuals can help you identify and assess stakeholders and understand their interests and needs.

Engaging key organisational players early in the stakeholder analysis process can help ensure that the process is efficient and effective. It can also build buy-in for the findings of the analysis and increase the likelihood that stakeholders will support and implement recommendations.

There are several ways to engage key organisational players in the stakeholder analysis process:

  1. Identify key individuals who have a vested interest in the result of the analysis. These individuals could be decision-makers, managers, or other influential figures within the organisation.
  2. Schedule regular meetings with these key individuals to inform them of the progress of the stakeholder analysis and solicit their feedback.
  3. Invite key organisational players to participate in workshops or focus groups related to the stakeholder analysis. This can allow them to share their perspectives and contribute to developing recommendations.
  4. Encourage key organisational players to review and comment on draft reports before finalisation. This will ensure that they can provide input on the findings and recommendations of the stakeholder analysis.

To gain early alignment among all stakeholders on goals and plans

The stakeholder analysis process is a critical step in ensuring that all stakeholders are aligned on the goals and plans for a project. By identifying and assessing each stakeholder's interests, needs, and expectations, the project team can develop a plan that meets the objectives of all involved parties.

An effective stakeholder analysis will:

  • Identify all stakeholders involved in or affected by the project
  • Assess the interests, needs, and expectations of each stakeholder
  • Make a plan of action to address the concerns of each stakeholder
  • Communicate the results of the analysis to all stakeholders

Stakeholder analysis is essential for any project manager looking to ensure a successful outcome.

To help address conflicts or issues early on

It's important to address conflicts early to prevent them from escalating. By conducting a stakeholder analysis, you can identify potential conflicts and take steps to mitigate them.

For example, you and your team members have started the project in your company without a stakeholder analysis. The project goes well, and someday your CEO directs some of your team members to work on a different project, i.e. redeploy your human resources. You did not actively involve this CEO during the initial phases.

In a scenario when you have conducted a stakeholder analysis at an early stage, you would have identified your CEO as potentially significant to your project's success. You would have attempted to communicate your plan to the CEO and worked hard to get them on board. The CEO, instead of redeploying your resources, would have been more supportive towards the project.

By understanding the interests and concerns of all stakeholders, you can develop strategies to prevent or resolve conflict. In the above situation, if your CEO needed to use some of your team members for some other significant work, you would have planned with your CEO and these team members in advance how to allocate them best.

How to Conduct a Stakeholder Analysis

A stakeholder analysis is a process used to identify and assess the importance of stakeholders in a project. It is typically conducted early in the project planning process and can be used to inform decisions about how to engage with different stakeholders throughout the project.

Several methods can be used to conduct a stakeholder analysis. The most crucial part is ensuring that all potential stakeholders are considered and that their interests and positions are accurately represented.

The steps to conducting a stakeholder analysis are as follows:

Step 1: Determine who your stakeholders are.

Before beginning the stakeholder analysis process, you first need to determine your stakeholders. A stakeholder is anyone who has a vested interest in the outcome of your project or initiative.

At this step, it is crucial to be as creative as possible and consider all potential project stakeholders. Remember, you can always cut down the list and include all likely people affected by your project.

The list of potential stakeholders could include the following:

  • Customers
  • Chief Executive Officer
  • Employees
  • Marketing department
  • Shareholders
  • Sales department
  • Finance team
  • Suppliers
  • Partners
  • The heads of all affected business units
  • Consultants
  • Operations/IT and others

Once you have identified your stakeholders, you need to determine their interests. This will help you understand what motivates them and how they might react to changes related to your project.

For example, customers may be interested in the purchase price and product quality, while employees may be more concerned with job security and working conditions.

Once you better understand your stakeholders' interests, you can assess their influence level. This will help you, in your next step, to prioritise your stakeholder engagement activities. Those with high levels of influence will be more likely to have a major impact on the success or failure of your project, so it's important to keep them happy.

Step 2: Group and prioritise these stakeholders

After you have listed all of the stakeholders for your project, the next step is to group them according to their interests. You can use a simple spreadsheet to do this, with columns for each stakeholder group and rows for each stakeholder. In the first column, list all the stakeholders in the sequence you want to prioritise them. In the second column, list their interests.

Some projects will have multiple stakeholders with conflicting interests. In these cases, it is important to find a way to satisfy all interested parties. This might mean compromising some aspects of the project, but it is usually worth it.

Another common approach is to create a grid or table with all of the stakeholders on one axis and their level of interest or support for the project on the other. This helps quickly identify which stakeholders are most important to engage with and what level of engagement is required.

Another approach is to map out the stakeholders and their relationships with each other. This can help identify a potential conflict between different stakeholders and how best to manage those relationships.

Once you have grouped and prioritised your stakeholders, you can move on to Step 3. It is essential to communicate this information to everyone involved in the project. This will ensure that everyone understands who needs to be kept informed about developments and who should be consulted about decisions.

Step 3: Figure out how to communicate with and win buy-in from each type of stakeholder

It is essential to take the time to ascertain how to communicate with and win buy-in from each type of stakeholder. Depending on the type of stakeholder, you may need to use different tactics to get them on board.

For instance, if you are dealing with a sceptical stakeholder, you may need to spend more time convincing them of the merits of your project. On the other hand, if you are dealing with a supportive stakeholder, you may need to keep them updated on your progress.

Some of the different types of stakeholders and how best to communicate with each are:

Sceptical stakeholders: These stakeholders will require more convincing to get them on board with your project. Be prepared to answer their questions and address their concerns.

Supportive stakeholders: These stakeholders are more likely to support your project from the start. Keep them updated on your progress and involve them in decision-making whenever possible.

Uninterested stakeholders: These stakeholders may not have a strong opinion about your project. However, it is still essential to keep them informed so that they can provide feedback if necessary.

Example of a Stakeholder Analysis

When conducting a stakeholder analysis, it is essential to identify and analyse the positive and negative influences that different stakeholders may have on a project. For example, a company may be trying to determine whether to build a new factory in an urban or rural area. Some of the key stakeholders in this decision could include:

-Government officials could offer tax breaks or other incentives to locate the factory in their jurisdiction.

-Environmental groups may oppose the construction of a factory in certain areas due to concerns about pollution.

-Local residents could be either for or against the factory, depending on how they feel it would impact their quality of life.

Each stakeholder would have different interests and objectives concerning the factory project, and the company would need to weigh all of these factors before making a decision.

Iran conducted a stakeholder analysis of COVID-19 management and control. The research highlighted some significant setbacks in strategies towards crisis management; for instance, due to the lack of transparency in the role of each stakeholder in crisis management and control, the measures and interventions taken were uncoordinated; active stakeholders faced managerial, financial, and facilities obstacles, its essential to increase participation of less active stakeholders etc.

Thus, stakeholder analysis before the project initiation can play a key role in bringing out such crucial points and lead to successful project delivery.

IPM offers Stakeholder Management and Communications course to help you explore the process of identifying stakeholders, analysing their diverse roles and investments in the project, managing stakeholders, dealing with problem stakeholders, and listening to stakeholder concerns. After course completion, you will be skilled to effectively identify, manage, influence, and lead key stakeholders and make an efficient stakeholder management plan.