Who Are the Project Stakeholders and How To Manage Them

Even before starting a project, it is fundamental to be aware of who will impact or be impacted by your actions. I am not talking just about the final customer who will receive the product or service created during your project, but also about the supplier who will provide any necessary input, the team who will make the project possible, the society who will judge your reputation based on your actions, and… Well, we could keep going for quite some time here.

As you can see, it is important to have a clear notion of who are the parts somehow involved in your project: your stakeholders. There are four stages in the Project Stakeholder Management process:

1. Identifying Stakeholders: it’s the process of identifying all people and organizations impacted by the project and of documenting relevant information about them in a stakeholder register.
2. Planning Stakeholder Management: it’s the process of planning how you will interact with each group of stakeholders, when the communication will take place, which groups will receive different types of information, etc. The outputs of this process are the power/interest grid, the responsibility matrix and the communication plan.
3. Managing Stakeholder Engagement: it’s the process of actively implementing the plan you created during the previous step.
4. Monitoring and Controlling Stakeholder Engagement: it’s the process of analyzing how each stakeholder is responding to your efforts, how they are interacting with the project and whether you need to correct anything in your plan.

Let’s see each one in more details.

[Identifying] Who Are the Project Stakeholders?

To put it simply, a project stakeholder is a person or an organization that is positively or negatively impacted by your project. As you can see, the definition is broad, meaning that your group can be considerably broad as well. In fact, if you’re running a large project, it’s possible that almost everyone around you is impacted in some way. The important thing is to define (with a good degree of accuracy) who are your stakeholders. Here are a few questions to help you define them:

• Who ordered the project?
• Who will use the the output (product or service) of the project?
• Who will have to adapt their jobs (or share tasks) because of this project?
• Who is the person responsible for making decisions about this project?
• Who controls the supply of resources for the project?
• Who are the persons above (and influencing) the decision makers of the project?

Why Should You Worry about Your Stakeholders?

Ok, now why should you worry about them? The word “stakeholder” doesn’t sound very important, and the definition of the concept is so broad that it discourages you to focus on the topic. Maybe when you hear “stakeholder” you think more about “shareholders” (the words are quite similar, so they can cause some confusion), and your idea of a shareholder is someone who, most of time, is outside of the company and not really concerned with your daily operations. You think “meh… Shareholders are only interested in the annual reports and in the profitability of the company”, and you unconsciously extend such idea to the similar word stakeholder. There are two problems here: one, your idea of what a shareholder is; two, the extension of the concept to the term stakeholder. While the first problem is not the focus of this article, let me try to show you why you should really focus on your stakeholders.

As I already said, stakeholders are all the people affected, directly or indirectly, by your project. Your team? Stakeholders. Your boss? Stakeholder. Your client? Stakeholder. The PR agency that can ruin your project by causing a media scandal? Stakeholder. Maybe if I use other names for some specific types of stakeholders, you will see that there is actually a lot of important theories here.

Since all those theories are not mentioned (and hardly ever remembered) when we say the general term “stakeholder management”, it is understandable that we underestimate the importance of it. But by now I hope you have a clear idea of what it really means to be responsible for managing all the stakeholders of your project. Quite a tough task, right?

The Main Groups of Stakeholders

Let’s go through several groups of stakeholders to see how they relate to the project and what are their duties and responsibilities.

The Project Manager

The project manager is the person who coordinates all the efforts to make sure the project is successful. Usually this person is not directly responsible for the direct work, but without his coordination abilities, the project is not able to run smoothly. Picture a project manager like a symphony conductor: he doesn’t play any instruments, but without him the symphony just doesn’t happen. The project manager is responsible for identifying who are the major stakeholders of the project and what are their roles (including his or her own tasks), as well as for balancing all the tasks necessary for the project.

The Project Team

If the project manager is responsible for coordinating every task, someone has to be responsible for implementing the necessary work. This group is the project team, and they will effectively execute several operational processes in the project (some processes will be executed by external contractors and third parties). Everyone who dedicates time, effort and skills to the project can be considered a part of the project team. Not only that, but external stakeholders – customers and vendors, for example – can be a part of the project team in order to empower it with an external perspective of the product or service being developed.

But how to choose who will be part of the team? What if you create a team of 10 people and, some time after the beginning of the project, you notice that only 5 would have been enough? Here are some guidelines to help you defining the size and composition of your team:

1. Use the Work Breakdown Structure to define the specific tasks and processes of the project.
2. Use the tasks to estimate how many people are necessary. The project manager and the sponsor can then proceed to recruit the required personnel.
3. After having recruited the staff, the project manager presents the entire plan to everyone and makes sure people fully understand what they will be doing while working in the project.
4. After having everyone’s “ok”, the details of the tasks should be documented in the project plan for further reference whenever necessary.

The Functional Management

The functional management is that annoying guy or group who will come to you and say “mate, stop draining the energy of my staff with your project. They’ve got other tasks to do in my department and cannot dedicate this much time to you.”

Ok, maybe they are not annoying (best case scenario they are supportive people who actually want to see the project running successfully), but it might be the case that there will be some conflict of interest between the project and an organizational department.

You should focus on getting their support and avoiding any disagreement with them. They are the managers of long established sectors (which are not related to a specific project) of the company – for example, marketing, sales, research and development, customer service, etc. In order to do so, make sure to fully explain your project and its benefits for the organization. Also, explain to the functional managers that the recruited staff will still be available for the necessary work (if that’s the case), and that your project will barely affect the outcome of their activities.

Here are a few functional managers that you should focus on:

1. Managers whose departments and processes will be affected by the outcomes of the project.
2. Managers that represent other stakeholders, such as the supply chain manager or the customer manager.
3. High management: the manager of the project manager, as well as any closely related position in the organization.
4. Managers that can affect the project through their organizational influence: usually they have veto powers or budget privileges, something on these lines.

By determining such groups, you will have a great picture of how your project externally relates to the organization. This is as important as the internal relationships among stakeholders in the project.

The Sponsor

The sponsor is THE guy in the project. He is the one with formal authority and who is ultimately responsible for the project. Usually, the sponsor has some (or a lot of) authority in the company, and this makes him a good connection between a specific project and the rest of the organization. His role can be broken down into two main functions:

1. He is responsible for the good progress of the project;
2. His main responsibility is to support the project team and help it be successful.

As uncle Ben said, “with great power comes great responsibility”. So here are several (but not all!) duties of a sponsor:

1. Support the project and the project manager by means of a project charter.
2. Help with the construction of a responsibility matrix.
3. Review and approve the project plan.
4. Be in touch with the project manager and discuss the developments of the project on a regular basis.
5. Make sure the project stands in the right place when compared to other departments and projects. By this, I mean that the sponsor is responsible for assigning the right priority to the project and make sure it doesn’t receive more nor less attention than it requires.
6. Help the project manager with organizational issues. As we already saw, some conflicts might arise due to the sharing of responsibilities between projects and functional departments. The sponsor has the duty of managing such conflicts to make sure both sides are running smoothly and according to what was planned.

The Customer

Last but not least, the customer! Without him, the project is worth nothing. So why is the customer listed here? Because, well, as he will be paying for the product or service being delivered, the customer has the final decision about it. This logic, however, cannot always be used. If your project involves an internal update of the softwares in the computers of a certain department, who would you consider as the “final customer” of the project? Answering such questions is crucial for identifying who you should ultimately satisfy.

[Planning] Building a Stakeholder Register

Now that you know who are your major stakeholders, it is time to gather some information about them. You will definitely want to do this as early as possible in your project. A stakeholder register contains the key information about your stakeholders. Its purpose is not just to have some information that will rest there forever without ever being looked at… The stakeholder register must be constantly visited (and, when necessary, revised) because it is used to strategically manage your stakeholders. Here are a few things you might want to keep updated in your stakeholder register:

1. Assessment information: What are the stakeholders’ main requirements? When will they be most active in the project?
2. Information for contact and identification of your stakeholders;
3. Stakeholders’ classification: Who supports the project? Who is leading some part of the project? Who are the resistants?

Here is a handy template for Stakeholder registration.

Understanding the Stakeholders’ Expectations

Now that you know who you should focus on, the next step is to think about how to approach them. Should it be through a phone call? A face-to-face meeting? E-mails? And how often? Whenever possible, meeting these preferences can give a good reputation among your main stakeholders.

The best way to learn all these things is also the simplest: ask people. At the beginning of the project, consider making interviews with the most important stakeholders to understand their preferences. This also gives you information about their expectations: some care more about budget than schedule, some care more about schedule, some care more about quality and scope, and so on.

By combining this information with the power/interest grid, you can provide the information your key stakeholders want even before they ask you to do so.

It is also important to know that the information you collect about your stakeholders at the start of the project is not static. It is dynamic, and you will want to update it as your project progresses and you learn more about your stakeholders. Better understanding their motivations and their characteristics will give you the tools you need to adjust your approach when necessary.

[Managing] Engaging with Your Stakeholders

Since your job is to manage your stakeholders and engage them throughout the project, it is considerably important to understand the different classifications of engagement that might appear on the course of your project.

The Person Who Is Unaware

The person who is unaware is that one that doesn’t know about the existence of the project. Since this person is also a stakeholder, your goal is for this person to learn and understand why this project is important. You want them to be supportive and, depending on the position they are, you may want them to assume a leadership role.

The Person Who Is Resistant

The resistant knows that your project exists, but doesn’t like it. Maybe this person thinks that things could be done differently, or that he or she should be running a project instead of you. Your role is to try to bring this person to a more neutral position, and understanding the reasons for the opposition is key to turning the tables on the situation.

The Person Who Is Neutral

The neutral person is aware of the project, but they’re neither supportive, nor resistant. You want to make sure they don’t become resistant, and depending on their power and interest, or their power and influence, you might want them to become supportive.

The Person Who Is Supportive

The supportive stakeholders are aware of your project, and they support it with positive inputs. Depending on their position in the power and interest grid, you might want them to become leaders in your project. For these people, you should always give opportunity to contribute, as well as show a genuine interest in what they think of the project. You don’t want them to become neutral nor resistant, so make sure to give the proper attention to their demands.

Use such information to note down who is resistant, neutral and supportive, and how they relate to each other. Maybe you have a resistant person who is close to someone in a leading position. Maybe by partnering them in the same team the leader can influence the resistant and make it neutral or supportive.

Practical Tools to Manage Your Stakeholders

After defining who are your stakeholders, an even more important decision is how to manage each of them. Planning the stakeholders management involves developing appropriate management strategies to effectively engage the stakeholders during the life cycle of the project. This involves considering their needs, interest and impact in the project.

If you manage your sponsors well by raising their expectations about the outcomes of the project, but you manage your team poorly by not providing the necessary motivation, it might be the case that in the end your sponsors will be deeply disappointed with the results of the project.

In order to avoid such surprises, you can use a very intuitive tool to position the different stakeholders according to their power and interest in the project. By power, I mean the capability of influencing the developments of the project, and by interest I mean the amount of information demanded by each stakeholder about the project. It might be the case that the most influential person in your stakeholder’s group also thinks like “meeh, just give me the final result within the budget and schedule, and I will be fine. Don’t bother me with every detail of your operations.”

The Power/Interest Grid

Here it is what we call a Power/Interest Grid:

This tool helps you to consider how much power and influence each stakeholder has on the project. Simply position them in each of the four following quadrants:

• Low interest, low power: you want to keep in touch with them and monitor their involvement to make sure they don’t start seeing the project as something negative. Despite their low power, if they start influencing the other stakeholders negatively, they might make some real damage to your project.
• Low interest, high power: you want to keep these people satisfied with the project. Show them good results, good forecasts and keep positive about it. Of course, challenges and sporadic bad numbers happen everywhere, but instead of focusing on them, you should focus on your strategies to turn the tables on the situation.
• High interest, low power: imagine that annoying colleague asking you “so how is your project going?” every five minutes. Of course, you will not ignore him, but you will not put him at the center of your world. For people who have a high interest and a low power, the best way to go is to keep them informed of the project status. And don’t cut them out: maybe in the future they become a strong influence and you will be in a good situation if you are friends with them.
• High interest, high power: these are the ones who should be at the top of your mind. Most of your efforts and your attention go here, so make sure you do a thorough job to keep the highly interested and powerful people satisfied.

How would I proceed to make things way simpler? I’d say: focus on the high interest/high power group. Do the tough job here (reports, meetings, etc.). Then take your thorough job and extract parts of it to present to the other groups. You don’t have to do all the job over and over to build different “versions” of reports to different groups. Of course, the type of information you will provide to different groups is different (for example, for someone who is outside your organization vs. someone who is inside), but apart from the sensitive information, pretty much all the rest is overlapping.

The Power/Influence Grid

Very quickly, the power/influence grid is very similar to the power/interest grid. Just substitute the “interest” by “influence” and… ta-da! If this sounds like a more useful version of our tool to analyze your stakeholders, go for it!

The Responsibility Matrix

We are already in a very advanced stage! We have finished building our project charter and identifying the stakeholders of our project, and now it is time to move to the next essential document for a successful project: the responsibility matrix. The project charter defines what is being done; the responsibility matrix defines who is doing what. See why this is important? Exactly: define the tasks and allocate them earlier enough, and avoid later headaches that come with unfinished processes and finger-pointing behavior.

How To Create a Responsibility Matrix

A responsibility matrix lists the major activities in the project and the key stakeholder groups. Then, it defines who is responsible for what. This document is great for helping with communication issues, since it makes clear who you should contact with respect to a certain task or process. In order to assemble a nice and functional responsibility matrix, you should follow these steps.

1. List the Major Activities of the Project

On the vertical axis, you should list the major tasks involved in your project. The details of each major task shouldn’t be listed in your responsibility matrix: they will be part of the project plan. Since the responsibility matrix is focused on establishing the big picture of who is responsible for what, you don’t need to write every single detail of the project. Each responsible party can refer to the project plan for further specifications about their tasks.

2. List the Stakeholder Groups

On the horizontal axis, you should list the stakeholders that will be taking part on the activities listed. It is totally acceptable to list stakeholder groups (like a sector of a company or a third party) when they are involved. The more detailed levels of responsibilities for each group will be listed in the project plan and they can be retrieved during the execution of the processes. If individual people are responsible for complete tasks or for making important decisions, you should their individual names in the matrix.

3. Code the Responsibility Matrix

Codes are used in a responsibility matrix to help making it simpler and more readable. They are not mandatory, but they help you keep the matrix concise and prevent you from delving into too many details. The codes are used to indicate the involvement analysis, authority roles, and the responsibilities of the stakeholders.

You have total freedom to come up with your own codes, and here are a few of the most common ones to help you through the process:

• E – Execution responsibility. These groups will realize and implement the process and get the work done.
• C – Must be consulted. These groups must be consulted while you are implementing the referred activity. Despite not being the decision nodes, their opinion still counts and they should be included in the discussions.
• I – Must be informed. This group is just interested in knowing how the project is going and which decisions are being made.
• A – Approval authority. This person (or group) has the final word on decisions or on acceptance of the work performed in each activity.

4. Incorporate the Responsibility Matrix into the Project Rules

The responsibility matrix must be a formal part of the documents, and once it is submitted, subsequent changes should be approved by those who originally designed it. Why? The reason is more organizational than formal: if people start making thousands of changes in a responsibility matrix to meet immediate needs of the project, the entire organization and planning of your efforts can be compromised.

[Monitoring and Controlling] Continual Stakeholder Engagement

Finally, after all the work identifying, planning the interactions and engaging with your stakeholders, now it is time to make sure that things don’t go out of control and you lose what you have built so far. Control Stakeholder Management is the process of monitoring overall stakeholder relationships and adjusting your strategies to make sure the engagement level doesn’t go down.

Information management systems can be very useful in providing, sharing and receiving information about the current situation with different stakeholders. Another way to monitor the general mood is to run meetings and presentations about the project (but remember not to waste neither yours nor your stakeholders’ time) that add value to the parts involved.

The key is: be proactive. Do not avoid your resistant stakeholders, and do not take any of your supportive or leading stakeholders for granted. Provide open and honest information about the true nature of the project, and ask for their help while solving critical problem along the course of the project. Keep stakeholders informed of critical issues, and when you and the team are not able to resolve an issue, bring it to them. Take the information you have about your stakeholders and use it to create a communication plan, then follow your plan and adapt it as needed.