Why do you need to manage the stakeholders of your business? Like you, the project stakeholders are just as involved with a project as you are. Any form of dissension, lack of support or even a lowered morale among stakeholders can negatively influence your project. So by taking the time to communicate with them about certain aspects of your project, you can keep them in the know about what’s going on.
But what is a project stakeholder? These are individuals or organizations from inside or outside your organization that can sponsor a project, have something to gain upon the completion of a project or may have any form of influence in the completion of a project. They can be project leaders, members, customers, testers, upper management or just about anyone who has a stake in the success or failure of the project. Since they have quite an influence in how the project may be completed, it’s important to effectively foster a relationship with them that is centered on communication and trust.
Why is Project Stakeholder Management Important?
It often goes without saying that stakeholders have a huge impact on the success of a project. According to The Standish Group’s Chaos report, the top reason for project success is user involvement where there is a high emphasis on the following facets:
- A quality relationship built on trust
- Clearly managing the stakeholders’ expectations through objective means like metrics and timing
- Effective communication and transparency between project managers and stakeholders
- Executive support wherein there is visible sponsorship for the project
- The ability of the project manager to unite the stakeholders to a common cause
- The effectively using the organization’s ecosystem to help with the project
How Can One Manage Project Stakeholders?
The first step is identifying the stakeholders. In order to do this, you have to work with your project sponsor to find out who the potential stakeholders are. By talking to the key project participants, you can uncover even more stakeholders. The most common stakeholders are project managers, resource managers, the users, communities, and shareholders.
Next, you have to conduct a stakeholder analysis. Some projects have only a few stakeholders, while other have hundreds! The best way to do this analysis is to follow these crucial steps:
- Identify some basic but relevant information on the stockholders such as their interest in the project, their role in the success of the project, their level of authority, and their expectations.
- In relation to the relevant information you’ve gathered, find out the impact of each stakeholder or stakeholder group.
- Finally, find out how the key stakeholders are likely to react to different situations. For instance, would a stakeholder be highly sensitive to a budget change? Would a stakeholder be greatly affected if the project completion date were to be moved to later in the month?
By identifying the level of interest of the stakeholders (as in how much they’ll be affected by the outcome of the project) and comparing it with each stakeholder’s respective level of power (as in how a stakeholder can affect the outcome of the project), you can create a 2×2 grid to visually represent each stakeholder’s standing. The stakeholders with high power, but low interest should be the ones who are consistently kept satisfied. On the other hand, those with both high power and high interest must be managed closely. Those who have low interest and low power are the ones who should be monitored, and those who have high interest but low power are those who should be kept informed. In creating this guide, you’ve produced a general plan for how each stakeholder or stakeholder group should be approached when it comes to any updates or changes in the project.
When managing the actual stakeholders, the goal of the project manager is to watch out for potential warning signs that can indicate a problem with controlling stakeholder relationships. These warning signs include conflicts, confusion, and missed deadlines. These warning signs are often indications that the stakeholders have competing priorities, a lack of focus or a lack of commitment to the project.
How Can These Issues be dealt with?
First, communicating with the stakeholders is a crucial part of project management. When forming an effective communications approach, it’s important to tackle important points such as the stakeholders’ expectations and their subsequent response to any sudden changes. It’s also equally important to inform the stakeholders of what is happening in the project. In fact, sending out information is the top responsibility of a project manager. This can be done through the use of regular progress reports, but more intimate discussions with key players are also encouraged to be involved in decision-making.
The project governance structure refers to the ways in which the major decisions are carried out. This would often start as a meeting where roles and responsibilities are clearly outlined, and potential problems, changes, conflicts and other issues are escalated to higher management for decisions. In this setting it’s the project manager’s job to control the governance structure in order to facilitate better communication, easier transitions of decisions, and more in-depth monitoring of the stakeholders’ responses.
A Final Word for the Project Manager
Managing different people, and organizations is a daunting task for any department. More than 90% of your time will be dedicated to communicating with stakeholders in order to share information with them, which often affects their level of interest in the project. As stakeholders vary in terms of level of authority, what they gain from the project, and their sensitivity to changes in the project. So it’s important to find means of keeping them up to date on the latest and most important information so as to influence what they can do to help the project. When done correctly, project management can lead to a better outcome for a project, which in turn can lead to more fruitful relationships with these project stakeholders in other future ventures.