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The Art And Science Of Stakeholder Management

Often project failures are not due to poor deliverables but due to poor stakeholder management

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Peter is the designated Project Manager on a new consulting project that his firm has recently won against stiff competition. The project being first of its kind, it is extremely important for the Consulting firm to ensure that they successfully deliver it to the satisfaction of the client.

Fast forward couple of months into the project, Peter is facing a major client escalation. In a recent project review meeting, few important function heads of the client organization have complained to the project sponsor about not being able to understand progress made by the Consulting team. At the same time, the IT Implementation partners on the project are getting anxious as they have ramped up their team but don't see the business requirements being finalized anytime soon. The morale of the consulting team is also at an all-time low as they face resistance on the ground from client teams.

While Peter and his team have been working very hard and been on top of the approved Project Plan, he is unable to understand why the situation is suddenly out of control. While there is no issue in planning and execution in general, one important aspect which cuts across both planning and execution seems to have been completely missed out - "Stakeholder Management".

Who is a Stakeholder?

A stakeholder is a person or a group who has an interest in a project or get affected by the outcome of a project. Typical examples include project sponsor, department or function heads, vendors, partners etc. Some stakeholders may be directly involved in the project whereas others may have an influence or may get impacted. Based on their interest they will exhibit certain behaviour types and based on their power or position they can influence outcomes.

There are three fundamental steps to manage stakeholders:

IDENTIFY: Understanding who is a stakeholder vs. who is not, set the boundary of engagement

The first step is to list out all individuals or group of individuals based on your current awareness of the eco-system and categorize them into different groups.

This process is an iterative one and can be performed at logical points in the project life-cycle. A few roles that can be used for grouping:

1.    Contractual: These stakeholders mainly consist of signatories or approvers from a legal standpoint and critical from contractual or payment aspects. Examples include Project Sponsor, Finance Head or Team etc.
2.    Business Operations: Typically post a project completion the handover of the end product/process is given to the Operations team who then manage the life-cycle in business as usual environment. Examples include Functional Head or Team.
3.    Technical: Subject Matter Experts (SMEs) would provide expert advice and inputs during the course of the project. Examples include Supply Chain expert, Finance expert, Sales expert etc.
4.    Consultants: They provide input on the process, people, technology and other aspects that help define the future state. They may not be an SME but still can provide valuable inputs based on their experience and familiarity with the environment.
5.    Not Involved: A set of stakeholders who are not directly involved in the project.

MAP: Understand the level of interest and influence of each stakeholder and build your strategy

Stakeholder mapping is an important aspect which helps you build a stakeholder management strategy. The stakeholders can be mapped against two dimensions:

1.    Interest: How interested or disinterested they are with the project outcome
2.    Influence: How powerful are they in terms of influencing the project outcome
Based on where a stakeholder gets mapped against these two dimensions, one can create a strategy for engagement. Figure 1. shows the spectrum of Interest and Influence and possible strategic actions. As you move from the inner wave to the outer wave, the importance of stakeholders increases.

 ENGAGE: Understand specific interest area and take actions to drive alignment to project outcome
Once, the mapping is complete, it is important that each stakeholder is handled in the right way as per the defined strategy. A good practice is that every individual in the project team own a few relationships and be accountable for the stakeholder management outcome. With shared responsibilities, it is not only easier to manage but also ensures that it look like a natural process of engagement.

It is important that the above steps are repeated in a defined interval to ensure that the stakeholder management strategy stays relevant in case of a major management change or restructuring in the client environment. Also, while Stakeholder Management can be done in a scientific way and a lot of risks can be mitigated by following the above three steps, there is always a degree of subjectivity involved which is difficult to predict.  Strangely some people are masters in the art of stakeholder management and can seamlessly engage and manage expectations whereas others struggle.

The Art of Stakeholder Management 

It goes beyond the three steps described above and depends on the ability to comfort the stakeholder as his trusted advisor. The important words to note here is "comfort" and "trust". Comfort comes when one is able to match the wavelength of the stakeholder and makes him feel at home. Trust comes when you deliver what you say and exhibit transparency. Once there is a feeling of comfort and trust, the stakeholders will go above and beyond to help especially when it is most needed.

Summing up…
Projects conclude successfully only after having met the acceptance criteria and sign-off from important stakeholders. While the science of stakeholder management is a must and needs to be followed, it is the art of stakeholder management that creates differentiation and drives repeat business. Hence, the building that trusted relationship with stakeholders goes a long way.

Steven Covey has aptly articulated "When trust is high, the dividend you receive is like a performance multiplier, elevating and improving every dimension of your organization and your life. In a company, high trust materially improves communication, collaboration, execution, innovation, strategy, engagement, partnering, and relationships with all stakeholders".

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Rahul Gupta

Rahul is passionate about Strategy and Change Management. He has around 15 years of experience in Management Consulting, Business Transformation and driving Strategy and M&A across multiple industries, business domains, technologies & geographies. Rahul holds an MBA from XLRI and is a Gold Medalist in Engineering from Jadavpur University

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