Stakeholder analysis

Introduction

A stakeholder is any person or Organization who can be positively or negatively impacted by, or cause an impact on the actions of a company.

Stakeholder analysis is a form of analysis that aims to identify the stakeholders that are likely to be affected by the activities and outcomes of a project, and to assess how those stakeholders are likely to be impacted by the project. Stakeholder analysis has the goal of developing cooperation between the stakeholder and the project team and, ultimately, assuring successful outcomes for the project.

A stakeholder analysis is performed when there is a need to clarify the consequences of envisaged changes, or at the start of new projects and in connection with organizational changes generally.

It is important to identify all stakeholders for the purpose of identifying their success criteria and turning these into quality goals.

Types of Stakeholders

*Primary stakeholders: are those ultimately affected, either positively or negatively by corporation's actions.
*Secondary stakeholders: are the ‘intermediaries’, that is, persons or organisations who are indirect affected by corporation's actions.
*Key stakeholders: (who can also belong to the first two groups) have significant influence or importance in corporation.

Methods of Stakeholder Mapping

The following list identifies some of the best known and most commonly used methods for stakeholder mapping.

- (Mitchell, Agle et al. 1997) proposed a classification of stakeholders based on power to influence, the legitimacy of each stakeholder’s relationship with the organisation, and the urgency of the stakeholder’s claim on the organisation. The results of this classification may assess the fundamental question of “which groups are stakeholders deserving or requiring manager’s attention, and which are not?” This is salience - “the degree to which managers give priority to competing stakeholder claims” (Mitchell, Agle et al., 2007:854)

- (Fletcher, Guthrie et al. 2003) defined a process for mapping stakeholder expectations based on value hierarchies and Key Performance Areas (KPA),

- (Savage, Nix et al. 1991) offer a way to classify stakeholders according to potential for threat and potential for cooperation.

- (Turner, Kristoffer and Thurloway, 2002) have developed a process of identification, assessment of awareness, support, influence leading to strategies for communication and assessing stakeholder satisfaction, and who is aware or ignorant and whether their attitude is supportive or opposing.

Mapping techniques include the following sub-set of results from a Web search of analysis techniques being used by aid agencies, governments or consultant groups:

- Influence-interest grid (Imperial College London)

- Power-impact grid (Office of Government Commerce UK 2003)

- Power-interest grid (Moorhouse Consulting 2007)

- Three-dimensional grouping of power, interest and attitude (Murray-Webster and Simon 2005)

- The Stakeholder Circle (Bourne 2007)

The first step in building any stakeholder map is to develop a categorised list of the members of the stakeholder community. Once the list is reasonably complete it is then possible to assign priorities in some way, and then to translate the ‘highest priority’ stakeholders into a table or a picture. The potential list of stakeholders for any project will always exceed both the time available for analysis and the capability of the mapping tool to sensibly display the results, the challenge is to focus on the ‘right stakeholders’ who are currently important and to use the tool to visualise this critical sub-set of the total community.

The most common presentation styles use a matrix to represent two dimensions of interest with frequently a third dimension shown by the colour or size of the symbol representing the individual stakeholders.

Some of the commonly used ‘dimensions’ include:
* Power (high, medium, low)
* Support (positive, neutral, negative)
* Influence (high or low)

Two of the more sophisticated tools available are the three dimensional stakeholder matrix proposed by Lucidus Consulting Limited (2005) see http://www.lucidusconsulting.com/articles/045.pdf and the The Stakeholder Circle developed by Dr Bourne see http://www.stakeholder-management.com

Other Forms of Stakeholder Analysis

In Sweden, there is a data collected about stakeholders as maps – tabular, graphical or pictorial has been adopted by researchers and consultants from the earliest studies. The key element of an effective mapping process is as far as possible to replace subjectivity with objective measures and to make the assessment process transparent. This transparency will allow the basis of any assessment to be clearly understood by others and will facilitate review and updating as appropriate.

We would suggest there are three basic approaches used to help visualise, map and understand stakeholders.

The approach with the highest profile in general business is the ‘customer relationship management’ or CRM approach. This approach requires substantial data sets to be gathered about a key segment of the business’ stakeholder community (typically customers) followed by the use of data mining techniques allow trends and opportunities to be identified, graphed and communicated. These reports inform management decision making and help the business prosper. CRM works effectively in situations where the business is relatively stable and there are a large class of stakeholders interacting with the business in a reasonably common way.

A second approach that cannot be ignored is the extensive body of work focusing on influence networks. This research focuses on the importance of relationships through the study of ‘influence networks’, ‘social networks’, ‘social capital’, viewing projects as ‘temporary knowledge organisations’ (TKOs) and more recently the idea of CRPR (Complex Responsive Processes of Relating)(Weaver 2007). All of these theories emphasise the critical importance of the relationships between different stakeholders both within and around the project team. The strength and effectiveness of the internal relationships enable the project team to function effectively and allows the team (or the project) to interact and influence its surrounding stakeholder community. The difficulty in using these strands of research lies in building the influence/relationship maps; the work is difficult, time consuming and invasive requiring extensive interviews with the stakeholders. Consequently whilst an appreciation of these ideas is critical for effective stakeholder management, the opportunities to undertake a detailed analysis of a particular stakeholder community are very limited and typically only occur as part of an academic research assignment.

The need for a practical, useable approach to visualising many different stakeholder communities has led to the development of a range of listing and mapping techniques by academics, consultants and businesses over the years. These approaches trade the richness of data available under the CRM approach for a holistic view of the whole stakeholder community and largely ignore the complex network of relationships considered in CRPR and the other network theories outlined above for a simpler consideration of ‘importance’ in some form. Obviously the ‘importance’ of a stakeholder is directly associated with his or her ability to influence the project through their network of relationships; the difference in the analysis is in the way this is assessed. All of the mapping techniques discussed above use a qualitative perception of a stakeholder’s ‘importance’ rather than a quantitative analysis of the influence networks and relationships surrounding the stakeholder to determine an absolute value for that person’s ‘importance’.

References

* Weaver, P. (2007). A Simple View of Complexity in Project Management. Proceedings of the 4th World Project Management Week. Singapore.

* Mitchell, R. K., B. R. Agle, and D.J. Wood. (1997). "Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What really Counts." Academy of Management Review 22(4): 853 - 888.

* Fletcher, A., J. Guthrie, P. Steane, G. Roos and S Pike. (2003). "Mapping stakeholder perceptions for a third sector organization." Journal of Intellectual Capital 4(4): 505 – 527.

* Savage, G. T., T. W. Nix, Whitehead and Blair. (1991). "Strategies for assessing and managing orgnaizational stakeholders." Academy of Management Executive 5(2): 61 – 75.

* Turner, J. R., V. Kristoffer, et al., Eds. (2002). The Project Manager as Change Agent. London, McGraw-Hill Publishing Co.

External links

* [http://www.pmhut.com/?s=%22What+is+Stakeholder+Analysis%22+babou A Set of Articles on Stakeholder Analysis]