Stakeholder Analysis: A Complete 5 Step Guide (2021)

Introduction

The decision to do anything big is appreciated but this has an indirect impact on the plan that is formulated and executed. Fewer resources put together to achieve a bigger objective is implementable, but not recommended. With a greater number of resources, whether it be people or capital, the entire process becomes easy. And, when it comes to project management, irrespective of the size of the company, the concept of stakeholder analysis finds its relevance.

First of all, it is essential to know what is meant by the term ‘stakeholder’. This word is used often, but laymen find it difficult to decipher it.

1. Definition
2. What is Stakeholder Analysis?
3. What is the purpose of stakeholder analysis?
4. Why should product managers conduct a stakeholder analysis?
5. How to do a stakeholder analysis?

1. Definition

A formal definition of a stakeholder is: “individuals and organizations who are actively involved in the project, or whose interests may be positively or negatively affected as a result of project execution or successful project completion” (Project Management Institute, 1996).

To put it in simple words, a stakeholder is an individual or a group that is interested in the company and can either affect or be affected by the process/project undertaken. Examples are customers, employees, investors, etc. All the mentioned examples are of primary stakeholders in an organization, however, with increasing reach and complexity in value streams, the concept extends to governments, communities, and trade associations as well. A stakeholder to a business venture can be both internal and external.

So, to begin with,

2. What is Stakeholder Analysis?

A stakeholder analysis is a process of identifying the potential stakeholders even before the project begins and grouping them based on their levels of significance. How they impact the expected outcome or how they will be affected at the end are the major factors considered. Their interest and willingness to be a part of the project are also taken into account. Once the groups are formed, steps to ensure effective communication and involvement among them are devised and executed until the anticipated goals are achieved.

3. What is the purpose of stakeholder analysis?

A) To determine the key organizational players

The stakeholders involved in any project can be categorized as players, context settlers, crowd, and subjects. A detailed analysis before the project begins will enable you to identify the potential holders and initiate discussions with them. Moreover, by establishing a bond it is possible to get their assistance and support throughout. Not only does this strengthens the entry-level professionals but also boosts the feasibility of the project.

B) To gain early momentum

Not everyone listed as a stakeholder needs to be included right from the beginning. This is where a stakeholder analysis can prove beneficial. Once having identified the most important stakeholders, early discussions and gatherings can be scheduled. This provides an impetus for a successful commencement and completion of the project.

C) To help address conflicts or issues early on

The analysis can help you clear the issues among the various groups. If there is no stakeholder analysis, a person can feel left out and might work in a manner that negatively impacts the project. With identification and categorization, it is possible to ask feedbacks from everyone and turn threats into potential resources.

4. Why should product managers conduct a stakeholder analysis?

In the entire process of product development, numerous stakeholders are involved. The impact they have maybe direct or indirect, but their wholehearted participation is crucial to the successful development of the product. There might be many who aren’t pleased with your idea and looking for chances to hamper the progress. So, identifying them at an early stage can substantially influence the enhancement of your product. Therefore, at any cost, product managers are recommended to analyze so that they can differentiate between enthusiastic stakeholders and pretenders.

5. How to do a stakeholder analysis?

Once clear with the fundamentals, it is important to know how to do an effective stakeholder analysis.

A) Identify who your stakeholders are:

From a list of people who might seem as valuable stakeholders, identifying them is a must. The identification can be done through a brainstorming session with the whole team. Enlist all those people who are pivotal for the project and ensure you do not miss out on anyone. This list can be reduced later, but since this is the first stage, no further filtration needs to be done.

B) Prioritize the stakeholders:

As mentioned before, grouping stakeholders can make your job to give instructions a lot easier. Classify them based on their participation, interest, and influence. An easy approach to this vital step of classification is to use the stakeholder analysis matrix.

A stakeholder analysis matrix is an effective project tool that enables you to identify the most important stakeholders. The power interest matrix is a commonly used one.

Based on the power interest matrix, you can prioritize and decide the future course of action.

This matrix is classified into four classes: –

• High power, high interest.

• High power, low interest.

• Low power, high interest.

• Low power, low interest.

Another approach of dividing them into players, context settlers, crowd, and subjects is also widely followed.

C) Ensure effective communication and maximum coordination:

Once the groups are formed, one must look into how this can be taken forward without any rough patches. It is important to involve all the groups whenever necessary. Maintaining a healthy professional relationship is quintessential because only then will they extend full support for the successful implementation of the project. Questions such as what motivates the stakeholder, what other priorities they have, will they have a positive view of the project are few of the suggestions to kickstart a constructive stakeholder relationship.

Conclusion

No project in an organization is a single-step process. It goes through several ups and downs and amendments are made at every single stage. To ensure the complete success of the undertaken project, it is best to have the approval of the company’s stakeholders. If otherwise, there is a possibility that the entire project may be stopped or its progress may be hampered all of which are obstacles.

However, if you enlist the help and approval of these stakeholders early on, you can turn many of these individuals into avid supporters of your initiatives. This is why it is a smart strategy to conduct a stakeholder analysis in project management to identify all potential stakeholders and determine how best to earn their support.

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