What is a Stakeholder?

A stakeholder is an individual, group or organization that is impacted by the outcome of a project. They have an interest in the success of the project, and can be within or outside the organization that is sponsoring the project. Stakeholders can have a positive or negative influence on the project.

There are a lot of people involved in getting a project from inception to a successful completion. You’re going to have to know how to manage each and everyone one of them, even those who don’t work directly under you.

Keeping track of your stakeholders with project management software is a great way to stay on top of things and ensure your stakeholders remain satisfied and productive.

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Who can be a stakeholder? That’s a long list. Some examples are as follows.

  • Project leader
  • Senior management
  • Project team members
  • Project customer
  • Resource managers
  • Line managers
  • Project user group
  • Product testers
  • Group impacted by the project as it progresses
  • Group impacted by the project after its completion
  • Subcontractors to the project
  • Consultants to the project

A stakeholder is a person, like any other member of the project, and some will be easier to manage than others. You’re going to have to learn to deal with a variety of personalities and make sure you’re having a productive dialogue with them to know the project goals you’ve been hired to meet.

Why is Stakeholder Management Necessary?

You should treat stakeholders as you would any other task on your to-do list: by prioritizing them. Over the course of a project, one stakeholder might be more valuable in terms of the project objections than another, whereas some stakeholders might demand more attention than others.

When we talk of stakeholder management, what we mean is creating a positive relationship with your stakeholders by meeting their expectations and whatever objectives they agreed to in the project. This relationship isn’t just granted, however. It must be earned. You can earn the trust and build a positive relationship with stakeholders through proactive communication and by listening to their needs.

One way to do this is by interviewing the project stakeholders—not all of them, but certainly the most important ones. You might need to speak to experts to get the background you need for particular fields or groups, so when you do have one-on-one conversations with the stakeholders, you’re well-informed and ready to get the most out of that time together.

But know that stakeholders aren’t infallible. Like we noted earlier, their impact can be negative as well as positive. Stakeholders might have inaccurate or out-of-date information. That’s where your stakeholder management part comes into play. You want to vet any data stakeholders give you as true and accurate so that you don’t make key project decisions based on the agendas of others.

There is a process for this, like there is a process for everything in project management. The major points of that process is outlined below.

Document Stakeholder Communications

Do this formally in your project plan. Note their names and their roles in the organization they represent. Document every conversation you have with these key project partners, both to record their interests and requests, but also to be able to review their information later for accuracy. If you’re conducting interviews, ask the stakeholders if you can record those conversations, as any record of interaction is important to document.

Enforce Process

Next you want to keep to a process of communications with stakeholders, and make sure that process is transparent, so everyone knows what to expect. This includes project requests or feedback, and how you will document and respond to those requests needs to be subject to a formal process of review and approval. This lets the stakeholders know that requests are subject to review, and that you have a process that you adhere to for those formal requests. This protects both parties from scope changes and miscommunications that can impact the project.

Provide Frequent Status Reports

Providing regular and timely project status reports that are appropriate for the stakeholders is crucial. You can go into details with team members, while executives are going to want more of an overview. So, tailor the reports to the audience. Don’t forget to follow up with stakeholders as well, asking questions to see if they have any feedback. That way you’re managing them, and you’re communicating with them proactively, to know if there’s discontent or some decision has been made that will impact the project.

status report for stakeholder

ProjectManager.com can produce status reports for stakeholders in a matter of minutes—Learn more.

Dispel Myths

Your stakeholder might be working on multiple projects, which means they’re not going to have the same closeness to the project as you. But that doesn’t mean they’re not getting other information about your project from other sources. You don’t want them to be subject to gossip or get incorrect information that might sway their opinions in the project. If they do make an assumption or get misinformation, you have to nip that poison in the bud and provide them with the truth. Sometimes they might not want to hear that truth, but better it comes from you, so you can control and manage it.

Stakeholder Analysis: Identifying Key Stakeholders

If your stakeholders aren’t satisfied with the results of a project, you’ve failed. Therefore, in order to successfully complete a project, it’s essential to gain a clear understanding of who your stakeholders are, what their expectations are and what motivates them. This process is called stakeholder analysis.

What Is Stakeholder Analysis?

Stakeholder analysis identifies and prioritizes stakeholders before the project begins. It organizes stakeholders into groups according to how much they participate in the project, what their interest level is and how much influence they have. Once these people are identified and organized, then you must figure out the best way to involve each stakeholder in the project, including the best channels for communication based on their needs. Our stakeholder analysis template can help you with this process.

Communication is key to stakeholder analysis because stakeholders must buy into and approve the project, and this can only be done with timely information and visibility into the project. The former puts the project in context, while the latter builds trust. All this leads to the project being in strategic alignment with stakeholders and the overall business goals of the company.

Identifying a Project Stakeholder

A good place to start figuring out who your stakeholders are is by reviewing the project charter, which documents the reason for the project and appoints the project manager. Among the information about objects, budget, schedule, assumptions and constraints, project sponsor and top management, you can discern the stakeholders.

Also, review the contracts, as stakeholders might be mentioned in these documents. Are there environmental factors or other organizations with key ties to the project? Look those over too, as they might supply you with the names of stakeholders. For example, if there are environmental factors dictated by the government, then the government is a stakeholder. Review their regulations and standards to stay in good terms with them.

Difference Between Internal and External Stakeholders

Part of identifying the different stakeholders is dividing them into groups. There are two basic camps in which you can place your stakeholders: internal stakeholders and external stakeholders. This determines their relationship to the organization.

An internal stakeholder is someone whose interest in the project is directly related to being a part of the organization that is managing that project. They can be team members, execs, owners or even investors in the organization.

External stakeholders are those who aren’t directly related to the organization, but they’re impacted by the project to some extent. These are usually suppliers, creditors and public groups.

The issue that arises with all these stakeholders floating around the project is that often their interests might be in conflict with one another. Therefore, it’s critical that project managers not only identify these stakeholders but also work out a plan in which to manage their sometimes contradictory expectations.

Why It’s Important

Stakeholder analysis is a way to get help from key project players. Once you determine who these key stakeholders are, then you can bring them into the kickoff to help align the project with strategic objectives. Their experience helps a project avoid pitfalls and getting their help builds stronger relationships. They can also help with conflict resolution during the project execution.

Stakeholders are also crucial for delivering the resources you need to get the project done right. When there is good communications between a stakeholder and a project manager, then the stakeholder can help deliver the people, tools and other resources necessary to get the project done.

The process of going through a stakeholder analysis is also a way to build a relationship of trust with stakeholders. Once you have a line of communications open with stakeholders, develop a good rapport and show transparency into the project, you encourage trust. These elements should be considered in your stakeholder management plan.

Stakeholder Mapping and How to Do It

Stakeholder analysis uses a technique called stakeholder mapping. Before getting started, you first must decide on the focus of the project. This will determine who is most important in terms of stakeholders. Once that is figured out, then you can follow these steps.

List the Stakeholders

As noted above, stakeholders come in all shapes and sizes. While it’s important to narrow the focus that comes in later. At this point you want to list everyone who is a stakeholder, no matter the level of their significance to the project. As you list your stakeholders, keep in mind that they fall into two main categories: those who are affected by the project and those who contribute to it.

Analyze Stakeholders

What are the roles and expectations of all those stakeholders that you have listed above? Some stakeholders are going to have more importance to the project and their expectations will have more of an impact than others. This is where you make those determinations.

You can discern this by using an influence-interest matrix, which is a box broken into four sections. You should place your stakeholders in one of the four boxes based on their interest and influence levels.

The top of the box is broken into two sections: keep informed and manage closely.

The lower half of the box is also broken into two sections: minimal contact and keep satisfied. Anyone placed to the right of the box has more influence, while anyone placed near the top of the box has more interest. If a stakeholder is placed in the top right, then they have a lot of interest and influence, making them important players in the project.

Prioritize Stakeholders

Once you have a thorough list, you can begin prioritizing them by importance to the project. Decide who among them have the most influence on the project and are affected by it. You can use the influence-interest matrix again to help with prioritizing stakeholders.

Don’t forget that the status of your stakeholders are not static, they can change throughout the course of the project. Stakeholder analysis is not a one-time thing, but is a process that should continue throughout the project.

Engage Stakeholders

Finally, with the information created in your stakeholder map, you figure out how to engage your stakeholders. This is the process by which you win over stakeholders, get their understanding and support to help fuel the project, putting it on the right course. This leads to a communication plan that outlines the channel and frequency of communications between you and each stakeholder. You can use our communication plan template to get started.

How to Make a Stakeholder Management Plan

To summarize all of the lessons you just learned and put them into practice, follow these five steps to make sure all of your bases in the stakeholder management plan are covered.

1. List Your Stakeholders

The first step to any good stakeholder management plan is knowing your stakeholders.

2. Prioritize Your Stakeholders

Note which stakeholders are going to have a bigger influence over the project, and at which stage their influence becomes lesser or greater.

3. Interview Your Stakeholders

Working with new stakeholders can be tricky at the start—some are easier to manage than others. Depending on the type of project, there will either be many voices from outside the company with different personalities and demands, or many voices inside the company with competing goals. Here are some example stakeholder interview questions to ask to get sorted:

  • Why are you interested in this project?
  • What are your expectations for this project?
  • If you have a team involved, what do you expect from them?
  • Which deliverables are you most interested in?
  • What inspired you to get involved in this project?
  • What do you hope this project changes after launch?
  • How quickly do you see this project rolling out?
  • If you feel positively about this project, why?
  • If you have worries about this project, why?
  • Do you prefer in-person meetings, phone meetings or email?

4. Develop Your Matrix

A quick mock-up of a quadrant to sort your findings will help you easily distinguish those with high interest, high priority versus low interest, low priority. It will also help to sort all those in between.

5. Set & Manage Expectations

Clearly identify which stages each key stakeholder will be involved in, and timelines by which their feedback is needed. Include a schedule of office hours for them to easily reach you so that they can have time to provide feedback either in a private setting or in a group. As always, be realistic, transparent and honest at every project phase—your stakeholders can tell, and will thank you for it.

Why is a Stakeholder Management Plan Important?

Stakeholders play a key role in making your project happen. They believe in the project, and are devoting time, money and resources to your project. Without proper management, they can make things extremely clunky with a lot of messy red tape along the way.

Communication Benefits

Stakeholder management plans are also important from a PR perspective. Consider this—stakeholders don’t work alone; they hear about the project progress from other resources and stakeholders involved.

It’s important that their interests are kept intact, and that you don’t find yourself facing the furrowed brow of a frustrated stakeholder who has heard some bad news. Keeping that line of open communication is the most important step to a good stakeholder management plan.

The Risks of Not Having a Stakeholder Management Plan

Again, stakeholders make the world go round. They’re your investors, customers, neighbors, producers. They can be your biggest cheerleaders or can make the project slow to a crawl.

Since stakeholders usually involve multiple key contacts across many different avenues, it’s important to communicate with them effectively and efficiently. Without having interviewed them ahead of time or gauging their priority or interest, you could end up spinning your wheels trying to validate the requirements of a stakeholder with low priority and low interest, leaving those with a high priority feeling frustrated at the process.

Worse yet, you can set your organization up for a lack of funds on the next project or a poor customer experience. Don’t leave your organization vulnerable to a lack of resources, funds or time.

How to Manage Stakeholders in ProjectManager.com

Managing stakeholders can be complex. It’s like a project grafted onto the existing project, which can make things exponentially more difficult. However, if you’re using project management software to manage your project, you can also use these same tools to manage your stakeholders.

ProjectManager.com is an award-winning tool that organizes your projects, teams and stakeholders to help you work more efficiently. A cloud-based software, it keeps you updated in real-time and facilitates communications keeping stakeholders informed. Here’s how it works.

1. Make a Schedule

Managing stakeholders begins with a schedule to capture activities and provide a space in which everyone can add their input.

A screenshot of the gantt chart in ProjectManager.com

Use our interactive Gantt chart to present stakeholders with the project plan and schedule. It can be easily shared and acts as a collaborative platform in which they can be included.

2. Assign Work

The schedule is just an abstraction until it’s executed. That requires the team’s involvement. Stakeholders don’t need to be involved in these details, but they should be able to view it.

A screenshot of the task management window in ProjectManager.com

Create assignments by selecting team members to each task, add descriptions, attach relevant documents, set priority and add tags to make it easier to find in a search.

3. Monitor Progress

Stakeholders are very interested in how the project is progressing. They don’t need you to get in the weeds with them, but broad strokes are important.

A screenshot of the project dashboard in ProjectManager.com

View progress from a high-level with real-time dashboards that capture various project metrics, such as time and costs, automatically. They can also be easily shared with stakeholders.

4. Balance Workload

Keep stakeholders happy by keeping your teams productive. You want to be able to monitor their workload and adjust it as necessary to keep them from burning out.

A screenshot of the task workload page in ProjectManager.com

Generate workload reports or use the color-coded workload chart to quickly see who is overallocated and reassign to balance the workload. Keep resources matched to capacity.

5. Print, Share, Gantt & Reports

Keeping stakeholders updated is the cornerstone of stakeholder management. You need a tool that gives you the flexibility to share data with stakeholders the way they want to get it.

A screenshot of the project reporting feature in ProjectManager.com

Share your plan via the Gantt chart with your stakeholders. For more details, print or share one-click reports on project variance, status, costs and more.

6. Manage a Portfolio

Stakeholders are not only involved with individual projects, they can be invested in a program of like-minded projects or even a portfolio. You need a project management tool that can scale.

A screenshot of the Overview Projects page in ProjectManager.com

Track projects, programs or a portfolio with tools that give an overview of all the projects on one page. There’s also a portfolio dashboard and roadmap to align your portfolio to strategic goals.

Ready to start managing your projects and stakeholders with ProjectManager.com? Sign up for a free trial today!

How to Deal with Difficult Stakeholders

What do you do when dealing with difficult stakeholders? No matter how hard-headed they might appear to be, there are ways to build better relationships. Here are seven tips to help you win their support:

1. Accept Their Authority: Don’t Fight It

It’s best to pick your fights or you’ll always be at war. When dealing with stakeholders there are times to disagree, but those times are few and far between. Instead, give in on the smaller requests. Stakeholders are in a position of authority, and you must acknowledge that hierarchical structure. It spares you some grief, but also plants the seeds of trust. Your stakeholders will respect you, believe it or not, and probably pull back from their argumentative ways to some degree.

2. Remove Negative Emotions

It’s easy to get emotional. What starts as a disagreement, builds into a wave of anger and resentment. Kids have temper tantrums, not professionals. Also, kids don’t hold onto those negative emotions. We can learn from that. It’s not wrong to feel mad, however it is a problem to give into that negativity and, worse, keep stroking that fire. That will only destroy your relationship with your stakeholders, and the whole project with it.

3. Understand Their Negativity

Part of developing a compassionate relationship is having empathy. Empathy is the ability to feel others’ emotions, and should be incorporated into any stakeholder management strategy. If you can take a moment to step back, acknowledge what they’re feeling and then work towards remedying that, you’re on the road to enlightenment and a successful project.

4. Ask for Advice and Listen

Often difficult stakeholders are difficult for a reason. Some have just difficult personalities, of course, but others might be acting the way they are because they feel unheard. Imagine how you’d react if you thought no one was listening to you. Therefore, try to just be still, quiet and open. Hear what they have to say, even ask for their advice. This is not merely a psychological technique, but a practical one in terms of managing your project.

5. Be Tactful and Honest

Sometimes there are going to be valid reasons for conflict. When those occur in the project, you can’t just sweep them under the rug. Your job is to bring in a successful project within the quality expectations of your stakeholders. If you see that they’re acting against their best interest, it’s your job to address this. But to get the idea across, you must not only be honest, but tactful. No one likes to hear that they’re wrong, so find a way to say that in other words or, even better, don’t speak of right and wrong but of the project and its needs.

6. Make Them Feel Good

Buttering them up helps, too. You don’t want to be insincere, but if you can make your stakeholders feel good, then there is almost nothing they won’t do for you. Even the most difficult one is going to change their tune. Don’t flatter, of course, do a good job. That’s where your stakeholders’ hearts are, and that’s how you’ll make them happy.

7. Tailor Your Communication

Not all stakeholders are the same. You need to know your stakeholders well. Just as you define who they are at the beginning of a project, you’ll want to determine what is the best course for communication. That can be practical, like do you prefer text, email, phone calls or face-to-face meetings? But it’s also psychological. Some might want you to boost their egos a bit, others might find that phony and it’ll backfire on you. Know your stakeholders and tailor your communications to fit their needs and personalities.

Stakeholder Theory: What Is It & Why It Matters

Stakeholders can influence everything and everyone in a project or organization, including senior management, project leaders, team members, customers, users and many others. With so many ways to sway a project, as a manager it’s critical to prioritize and focus on only the most important stakeholders, those with power, proximity and urgency.

This is the beginning of stakeholder theory. Stakeholder theory addresses business ethics, morals and values when managing stakeholders involved with a project or organization. It seeks to optimize relations with stakeholders, thereby improving efficiencies throughout the project or organization.

Benefits of Stakeholder Theory

Stakeholder theory posits that a company is only successful when it delivers value to its stakeholders, and those values can come in many forms beyond financial benefits.

Impact on Employees and Customers

One of the values produced by stakeholder theory includes greater productivity across the organization. If employees, who are considered stakeholders, feel as if they’re being valued, then they’re going to work harder and be more productive.

This also means that companies will have greater retention of their employees, but also of customers. If the productivity is up, then the product or service delivered to the customer is improved. With that improvement comes more customer loyalty, especially as they are one of the many stakeholders the company is considering when making decisions. Customers are also more likely to then refer other customers to the company.

Increased Investment

All this is leading to more investment from financiers. They too, of course, are stakeholders. While sometimes they are thought of as the only stakeholders or the most important to a company as they hold their hands on the level of capital, they’re really connected to other stakeholders. As other stakeholders are valued, the value of the company grows, and investors are more likely to add money to production to take advantage of this increased market share.

From there, it’s not only capital that is infused into the company, but talent. Everyone loves a winner, and as the company grows and dominates because of its care for stakeholders, it will inevitably attract new talent to its doors.

Ethical Benefits

Stakeholder theory drives more than profits and productivity. There are ethical benefits of practicing it as well. Companies find that the mental health of the workforce is greatly improved as their job satisfaction increases. It also will elevate the status of the company’s social-economic status in the local community. When one company practices stakeholder theory, it creates healthy competition among other companies, where all can thrive and help benefit their stakeholders.

Drawbacks of Stakeholder Theory

Some critics, such as political philosopher Charles Blattberg, say stakeholder theory is problematic. They claim that the interests of various stakeholders cannot be balanced against each other.

This is because stakeholders represent such a large and diverse group. You can’t please every stakeholder. One or more stakeholders will have to take a backseat to other, more dominant ones, which is likely to create discord. This will disrupt the benefits associated with stakeholder theory.

Also, who will wield the most influence? Some stakeholders might find that they’re not impacting decisions as much as another group. The different power levels and spheres of influence can be a problem. Even those with seemingly more influence might not feel that they’re getting what they want.

The key principle of stakeholder engagement is communication. Here are some key tips for making sure that stakeholder communication stays strong and efficient:

  • Make sure messages are targeted and delivered timely
  • Consult early and often
  • Know that stakeholders are people with feelings and need to be treated as such to build trust
  • Consider potential risks and opportunities with each stakeholder
  • Compromise
  • Know how success is defined
  • Take responsibility

Make Stakeholder Management Easy with ProjectManager.com

It’s clear that stakeholders are important to the success of the project and that means you have to manage them and their expectations to keep things moving smoothly.

ProjectManager.com is a project management tool that provides them with transparency into the work, keeps them updated in real-time so you can share the latest data and makes it easy for them to monitor and track the project plan as it moves into the execution phase.

See how it can help you improve your stakeholder engagement by taking advantage of this free 30-day trial today.

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