Identifying Stakeholders

1. Stakeholder Overview

Stakeholders are individuals or groups who care about or have an interest in a project. Therefore, stakeholder management is the process of identifying, analyzing, and engaging the people or groups who have an interest in, influence over, or are affected by a project, program, or organization’s activities. As a project manager, you will be managing stakeholders throughout the life of a project. We go through this process in project management so we are able to engage people who have an interest in our project. To do this, we follow the process of stakeholder management, which includes three main steps:

1. Identifying stakeholders (We’ll discuss how to do this in this lesson.)
2. Analyzing the communication needs of stakeholders to determine how best to manage them (We’ll address this in the next lesson.)
3. Creating a stakeholder register to help manage stakeholders throughout the life of the project. (This will also be in the next lesson.)

These three parts of stakeholder management are done during the initiation phase, while the actual “management” and communication with stakeholders will occur throughout the life of a project.

Once the stakeholders are identified, the stakeholders’ need analysis is conducted to evaluate their level of influence, interest, and potential impact on the project. This helps prioritize stakeholders and develop appropriate engagement strategies. You will learn about stakeholder analysis in the next lesson.

The results of this analysis are documented in a stakeholder register. A stakeholder register is a document used in project management to record detailed information about all project stakeholders. It includes key data such as stakeholder names, roles, interests, influence, impact on the project, and preferred communication methods. The stakeholder register is updated throughout the project lifecycle as new stakeholders are identified, or existing ones change in relevance.

With this identification during the initiation phase, project managers can successfully manage stakeholders throughout the life of a project, including during the planning and execution phases.

Let’s first look at the different types of stakeholders we might want to identify and why we do it as project managers.

A project is considered successful when it achieves its goals and satisfies or surpasses the expectations of the stakeholders. They are directly involved in the project’s activities and stand to gain or lose something from its outcome.

EXAMPLE

If a project involves adding lanes to a highway, drivers who benefit from less traffic are stakeholders who are positively impacted. On the other hand, people living near the highway might be negatively affected by the noise during construction and the increased traffic noise and pollution afterward.

While all stakeholders are important to a project, key stakeholders are those that are more heavily invested in the outcome and play a critical role in a project’s success. As a project manager, we must know who they are so we can better understand their needs and how to best communicate with them. Even if the project meets all its goals, if the stakeholders are unhappy, the project is considered unsuccessful. Therefore, the first step when considering stakeholders is to identify them. Stakeholders can be any of the following individuals or groups:

Stakeholder	Role
Project sponsor	Provides funding and has ultimate accountability for the project’s success
Project manager	Oversees execution and is responsible for meeting project goals and timelines
Project team	Carries out the work and directly influences project outcomes
Top or executive leadership	Ensures the project aligns with organizational strategy and provides high-level support
Employees or people that work for the company	May be affected by the project’s outcomes, processes, or changes it introduces
Government	Enforces regulations, permits, and policies that the project must comply with
Suppliers	Provide necessary materials or services that impact project quality and delivery
Contractors	Perform specific tasks or services that contribute to the project’s completion
External or internal customers	Use or benefit from the project deliverables and influence project requirements
People in the community	May be impacted by the project’s environmental, social, or economic effects

Project managers often have a challenging job because they have to work with people both inside and outside their organization. For instance, if a supplier from outside the organization is late in delivering critical parts, it can cause the entire project’s schedule to fall apart. This situation is made even more difficult because project managers usually do not have direct authority over these external people. They have to rely on communication and negotiation skills to ensure everything stays on track despite having limited control over these external factors. Let’s take a look at what is typically considered when identifying stakeholders in a project.

terms to know

Stakeholders

Individuals or groups who care about or have an interest in a project.

Stakeholder Management

The process of identifying, analyzing, and engaging the people or groups who have an interest in, influence over, or are affected by a project, program, or organization’s activities.

Stakeholder Register

A document used in project management to record detailed information about all project stakeholders. It includes key data such as stakeholder names, roles, interests, influence, impact on the project, and preferred communication methods.

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2. Stakeholder Identification: Internal and External Stakeholders

Now that you have an idea of the types of stakeholders, let’s look at each of them in a bit more detail and address how we can categorize and identify them. The importance of doing this now, during the initiation phase, is the fact we need to identify stakeholders first, which results in more understanding later regarding how to manage them and their needs.

An internal stakeholder is someone within an organization that is working on a project. This can include any stakeholder that works for the company, including top/executive management, the project manager, the project team, the project sponsor, internal customers, and employees/people that work for the company.

An external stakeholder is someone that cares about the project but does not directly work for the organization. This can include contractors, suppliers, and the government.

Let’s get into more details about the roles each of these stakeholders might be involved in. First, let’s look at the internal stakeholders.

terms to know

Internal Stakeholder

Someone within an organization that is working on a project.

External Stakeholder

Someone that cares about the project but does not directly work for the organization.

2a. Internal Stakeholders

The first internal stakeholder includes top management/executive leadership and may include the president of the company, chief executives, vice presidents, directors, and division managers. These people direct the strategy and development of the organization.

As a project manager, and as a stakeholder, you may be held accountable to these individuals, along with the project sponsor (who may be one of these individuals).

When a project is signed off by the project sponsor (who is also a stakeholder), you are likely to have top management support, which means it will be easier to recruit the best staff to carry out the project and acquire needed material and resources; also, visibility can enhance a project manager’s professional standing in the company. However, project failure can be quite dramatic and visible to all, and if the project is large and expensive (most are), the cost of failure will be more substantial than for a smaller, less visible project.

Some suggestions in dealing with top management are:

• Develop in-depth plans and major milestones that must be approved by top management during the planning and design phases of the project.
• Ask top management associated with your project for their information reporting needs and frequency.
• Develop a status reporting methodology to be distributed on a scheduled basis.
• Keep them informed of project risks and potential impacts at all times.

Another internal stakeholder is the project team. The project team is made up of those people dedicated to the project or borrowed on a part-time basis. As project manager, you need to provide leadership, direction, and above all, support to team members as they go about accomplishing their tasks. Working closely with the team to solve problems can help you learn from the team and build rapport. Showing your support for the project team and for each member will help you get their support and cooperation.

Here are some difficulties you may encounter in dealing with project team members:

• Because project team members are borrowed and they don’t report to you, their priorities may be elsewhere.
• They may be juggling many projects as well as their full-time job and have difficulty meeting deadlines.
• Personality conflicts may arise. These may be caused by differences in social style or values, or they may be the result of some bad experience when people worked together in the past.
• You may find out about missed deadlines when it is too late to recover.

Managing project team members requires interpersonal skills. Here are some suggestions that can help:

• Involve team members in project planning.
• Arrange to meet privately and informally with each team member at several points in the project, perhaps for lunch or coffee.
• Be available to hear team members’ concerns at any time.
• Encourage team members to pitch in and help others when needed.
• Complete a project performance review for team members.

Your direct manager may or may not be the project sponsor, but in any case, your manager is still an internal stakeholder. Keeping your manager informed will help ensure that you get the necessary resources to complete your project.

If things go wrong on a project, it is nice to have an understanding and supportive boss to go to bat for you if necessary. By supporting your manager, you will find your manager will support you more often.

• Find out exactly how your performance will be measured.
• When unclear about directions, ask for clarification.
• Develop a reporting schedule that is acceptable to your boss.
• Communicate frequently.

People that work for your company and employees can also be peers. Peers are people who are at the same level in the organization as you and may or may not be on the project team. These people will also have a vested interest in the product. However, they will have neither the leadership responsibilities nor the accountability for the success or failure of the project that you have.

Your relationship with peers can be impeded by:

• Inadequate control over peers
• Political maneuvering or sabotage
• Personality conflicts or technical conflicts
• Envy because your peer may have wanted to lead the project
• Conflicting instructions from your manager and your peer’s manager.

Peer support is essential. Because most of us serve our self-interest first, use some investigating, selling, influencing, and politicking skills here. To ensure you have cooperation and support from your peers:

• Get the support of your project sponsor or top management to empower you as the project manager with as much authority as possible. It’s vital that the sponsor makes it clear to the other team members that their cooperation in project activities is expected.
• Confront your peer if you notice a behavior that seems dysfunctional, such as bad-mouthing the project.
• Be explicit in asking for full support from your peers. Arrange for frequent review meetings.
• Establish goals and standards of performance for all team members.

Internal customers are individuals within the organization who are customers for projects that meet the needs of internal demands. For example, an IT department may have a project that involves upgrading all computers, therefore, all people with a computer within the company would be considered customers. Likewise, suppose the sales team is dependent on the marketing team to create materials they can use on sales calls. Think of an internal customer as anyone that depends on you to help them do their job well. The internal customer is also anyone in the organization who holds the power to accept or reject your work.

Early in the relationship, the project manager will need to negotiate, clarify, and document project specifications and deliverables. After the project begins, the project manager must stay tuned in to the internal customer’s concerns and issues and keep the customer informed.

Common stumbling blocks when dealing with internal customers include:

• A lack of clarity about precisely what the customer wants
• A lack of documentation for what is wanted
• A lack of knowledge of the customer’s organization and operating characteristics
• Unrealistic deadlines, budgets, or specifications requested by the customer
• Hesitancy of the customer to sign off on the project or accept responsibility for decisions
• Changes in the project scope

To meet the needs of the customer, client, or owner, be sure to do the following:

• Learn the client organization’s buzzwords, culture, and business.
• Clarify all project requirements and specifications in a written agreement.
• Specify a change procedure.
• Establish the project manager as the focal point of communications in the project organization.

Now that we’ve looked at some concepts to consider when identifying internal stakeholders, let’s look at our external stakeholders and consider how we might identify them.

terms to know

Peers

The people who are at the same level in the organization but may or may not be on the project team.

Internal Customers

Individuals within the organization who are customers for projects that meet the needs of internal demands.

2b. External Stakeholders

External customers are people or groups outside of your organization that buy your product or use your services.

EXAMPLE

It could be a client that’s hired your company to build a mobile app, or it might be a patient that seeks medical care at a hospital. In fact, by taking this course, you are an external customer of Sophia Learning—that is, we are creating a product for you to use.

There are some industries that are highly regulated, and in those industries, the government and regulatory agencies would be an example of the government as an external stakeholder.

EXAMPLE

In a factory that produces plastics, the Enviromental Protection Agency (a government agency) would be considered a stakeholder because this government organization is concerned with hazardous materials and emissions.

Another external stakeholder to consider would be suppliers. A supplier is a group or a person that provides materials needed for a project. They are important to consider because if a project is dependent upon getting materials, the project could be held up without good communication and relationships with the suppliers.

EXAMPLE

If you are managing a project that invloves building 25 new homes in a community, but your supplier is experiencing a lumber shortage, your project timeline or quality could be negatively impacted.

There are times when an organization may not have the expertise or resources available in-house and work is farmed out to contractors or subcontractors. A contractor is an individual or a company hired to perform specific work or services for a project, usually under a formal agreement or contract. This can be a construction management foreperson, network consultant, electrician, carpenter, architect, or anyone who is not an employee. Identifying and managing contractors or suppliers requires many of the skills needed to manage full-time project team members.

Any number of problems can arise with contractors or subcontractors:

• Quality of the work
• Cost overruns
• Schedule slippage

Finally, another example of an external stakeholder would be the people in a community. Depending on the type of project, people at large could be impacted by a project.

EXAMPLE

Large construction projects that impact traffic or projects that assist in improving community infrastructure, such as the building of parks.

IN CONTEXT

Remember our day spa owner, Maria, who wants to develop a scheduling app for her business? This might look like the stakeholder list for this project. In this part of stakeholder management, we only identify the stakeholders, and later, we determine their interest and influence levels. Then, based on that information, we address their communication needs. We’ll be addressing that in the next tutorials, so by the end of this challenge, the entire table will be filled in.

Stakeholder Name/Group	Role	Internal or External	Interest and Influence	Communication Needs
Maria Lopez	Project sponsor	Internal
James Chen	Project manager	Internal
Marketing department	Content and branding support	Internal
IT contractors	Technical support	External
Employees/staff	Intranet users	Internal
Customers	End users of a public website	External
Visual design agency	Visual design contractor	External
Freelance web developer	Web development	External
Community members	Local public audience	External

Now that you have an idea of the types of stakeholders and the ways to identify them, in the next lesson, we will look at the next steps, which include analyzing the stakeholders and creating a stakeholder register.

terms to know

External Customers

People or groups outside of your organization that buy your product or use your services.

Supplier

A group or a person that provides materials needed for a project.

Contractor

An individual or a company hired to perform specific work or services for a project, usually under a formal agreement or contract.