Stakeholder Analysis: The Project Manager's Guide

The stakeholder analysis is an essential tool for you as a project manager to identify and clarify the people and interests you need to consider if your project is to have any hope of succeeding.

But how do you do that? What is a stakeholder? And how do you identify them?

In this article, you get the answers to these questions + a guide to conducting stakeholder analysis.

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So let's see who can influence your project - and how you take their wishes into account!

First, we need to understand what stakeholder analysis is.

What is stakeholder analysis? What is stakeholder analysis?

In addition to a project plan, all projects need a communication plan.

When to communicate with whom? And how?

But to make a communication plan, you must first do a stakeholder analysis.

A stakeholder analysis is an exercise where you, as the project manager (preferably in collaboration with your project team) identify:

• Who will be affected by your project?
• Who is involved in the project?
• Who has an opinion and influence on the project that you must consider?

Once you have identified the project's stakeholders, you can define how they are affected by the project, how they influence it, their attitude towards the project and how you need to communicate with them.

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A well-conducted stakeholder analysis lets you reduce any resistance to your project early on and leverage support to help drive your project to completion.

Why is stakeholder analysis critical? Why is stakeholder analysis important?

If you never do stakeholder analysis, you won't know who might oppose your project - or how to deal with resistance.

Let's look at an example of stakeholder analysis - one situation with and without stakeholder analysis.

A typical situation where a stakeholder delays a project:

Imagine a scenario where you have to lead a project commissioned by your manager, but you need people from another manager's team.

But without you realising it, the other manager is unhappy with the project.

Therefore, he/she makes sure that the people you need are unavailable to the extent your project requires.

As a result, the project is delayed, may be poorly executed or even falls through.

And as project manager, you bear the responsibility.

Same scenario - but with stakeholder analysis

In the (typical) situation above, the project manager only reacts late - after the resistance of the other manager.

Once a colleague or manager has resisted your project, changing their behaviour in a more constructive direction can be challenging.

They have difficulty climbing back down the tree they went up in.

But if you had done your stakeholder analysis beforehand and identified the other manager as a stakeholder with a strong influence on your project - and possible negative attitude - you could have initiated an early dialogue.

You could have identified why the person opposed the project and how you could meet the opposition before it erupted into full flame.

Another option was to actively involve the other manager in the project so that he or she felt ownership and would work actively to make the project a success.

What is a stakeholder in a project?

The stakeholder analysis example above applies to a person who significantly influences your project's execution.

But there are several stakeholders you also need to consider.

Stakeholders, broadly defined, are all affected by your project, have an opinion on it or can make it easier or harder to execute.

Stakeholders don't have to be individual people. It can also be an organisation or a company.

To make it easier to work with them, stakeholders are often grouped into four categories:

• Low interest, low power
• High interest, low power
• Low interest, high power
• High interest, high power

Often, a stakeholder analysis matrix like the one below places the stakeholders into these categories.

The matrix also helps you determine how much energy you should spend on them.

Let's look at what characterises the four stakeholder categories.

Low interest, low power

This group of stakeholders has little influence on the implementation of the project, nor is it significantly affected by it.

They are probably not interested either so that you can give them general information.

High interest, low power

This group is characterised by not having much influence on the project - while at the same time being significantly influenced by it.

They need to be informed along the way to relate to the changes the project will bring about for them.

NOTE (!) Although these stakeholders may not be necessary for the execution of the project, they are most often crucial for achieving the project's overall objectives, whether or not the project will be successful.

For example, you can technically carry out a project where your project team sets up an IT system or designs optimised workflows for a customer without considering the customer's employees.

However, it is unlikely to be successful if employees do not use your solutions afterwards.

Examples of high-interest, low-power stakeholders could be:

• Users of IT systems
• Employees who have to adapt to new processes and workflows
• Customers who receive less focus as a consequence of strategy projects

Low interest, high power

If you forget this group, you can easily set yourself up for trouble during the project.

This group is often not directly needed for your project - they may not contribute or be particularly affected by the project - but are often in a position to strongly influence project decisions.

Examples of low-interest, high-power stakeholders could be:

• Company management
• Sponsors
• Partners

If you don't include them from the start and keep them well informed, they can often exert their influence during the project process if they feel sidelined. Or if you haven't agreed on the project scope with them from the start.

High interest, high power

To complete your project, you must spend much time with this group.

These people often bring the level of expertise that is necessary for you to complete your project.

They also have much decision-making power, so you must inform and consult them frequently throughout the project.

Examples of high-interest, high-power stakeholders could be:

• Team managers or experts
• Key persons at external suppliers

Because they are central to the execution of your project - for example, if they are responsible for a partial delivery - it is also important that they update you on delivery status or any issues that could impede progress.

Of all stakeholders, spend the most time with this group of stakeholders.

How to do stakeholder analysis:

Let's see how you can do stakeholder analysis to avoid the worst resistance and make the most of your stakeholders.

First, you need to identify your project's stakeholders.

Step 1: Brainstorm with those involved in the project Step 1: Brainstorm with those involved in the project

As a project manager, you won't have a complete overview of who is needed to execute the project, who has influence, and who will be affected.

Because of this, it's a good idea to involve your project group in a brainstorming session to identify the different stakeholders.

The project group's input is also valuable for the next steps of the stakeholder analysis.

Use post-its (or an online tool such as Miro) to get all the stakeholders on the "wall" so you can sort them later.

Ask the group who they can imagine:

• Will be affected by the project
• Will be interested in the project
• Is necessary for the project's execution
• Can make decisions that affect the project

The project team should be composed of the relevant people from around your organisation - possibly also from the customer - so that you include as many relevant views as possible.

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Step 2: Use your stakeholder analysis matrix Step 2: Use your stakeholder analysis matrix

In this part of the analysis, you need to consider:

• How necessary are the stakeholders for the project's execution? / How much influence can they exert?
• How interested / affected are they by your project?

Use the stakeholder analysis matrix from earlier and place them in the four categories so you have a model to work from.

Step 3: Prioritise stakeholders and define their objectives Step 3: Prioritise stakeholders and define their objectives

Once the project team has identified all possible stakeholders, selecting the most important ones for the project's success is essential.

In most projects, you won't be able to handle all possible stakeholders, so it's essential to prioritise.

There is no formula for who you should prioritise, but the higher the influence and the more necessary a stakeholder is, the more crucial you include them.

For example, a high-interest, high-power stakeholder will always be more important to prioritise than a low-interest, low-power stakeholder.

Once you have prioritised, you can start to identify what is important to each stakeholder:

• What expectations, success criteria, and goals do they have for the project?
• What is their interest in the project?
• What are their priorities regarding their position, work focus and ambitions?

These questions also help you to identify any resistance to the project.

Step 4: Identify resistance and conflicts of interest Step 4: Identify resistance and conflicts of interest1

After prioritising the stakeholders, it is essential to identify conflicts of interest and crystalise them.

Does the project clash with the stakeholder's objectives or personal ambitions?

For this exercise, you can also list the advantages and disadvantages that stakeholders could experience from the project.

Your project group is particularly useful for identifying potential resistance because they are often closer to the stakeholders than you are as project manager and therefore know them better.

Once you've identified conflicts of interest, you're well-equipped to plan how to manage them.

Step 5: Make a plan to deal with stakeholders Step 5: Make a plan to deal with stakeholders

Now, we come to what you'll enjoy as a project manager: drawing up a plan for how you'll handle all the different stakeholders.

This is where you can be at the forefront of any conflicts. A good plan can give you peace of mind because there is less risk of being surprised by unexpected resistance during the project.

In this exercise, you have to answer three main questions per stakeholder:

• What type of communication do they need?
  • When should they be informed?
  • When should they be consulted?
• How often should you communicate with them? (The more important the stakeholder, the more often)
• How do you handle expected stakeholder resistance?

The last question can usually be met with early involvement, but sometimes it can be handy to have a negotiating tactic ready.

If their interests fundamentally conflict with the project's objectives, in what areas can you adjust the project to accommodate them? Who can influence the stakeholder/who can you use as a mediator?

What do you do about "unmanageable" stakeholders?

If you have identified key stakeholders you can't see any viable path to meet/manage, it is important to bring this up quickly with your steering group.

Such a stakeholder is a significant risk factor in the project, and as the project manager, you must identify risks.

Once you have completed your analysis and presented it to the steering group, you are ready to proceed with the project if necessary.

Use stakeholder analysis throughout your project

Like all other tools in project management, you need to keep your analysis up to date.

Because stakeholders often move or become less relevant as your project progresses.

Some stakeholders are only relevant at certain stages, while others may change their attitude towards the project as they gain more experience.

Review your stakeholders periodically, and feel free to bring them up with the project team.

Is the analysis still relevant? Have new stakeholders emerged?

Updating your stakeholder analysis throughout the project creates the best conditions for steering safely clear of conflicts of interest and unpleasant surprises.