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Project Stakeholder Management: Types, Stages, Strategies, and Examples

Written By : Bakkah

26 Mar 2024

Table of Content

What is Project Stakeholder Management?

Project Stakeholder Management Framework is a structured approach that helps identify, analyze, and engage stakeholders throughout the project lifecycle. It is part of the scope of project management and provides a framework for understanding and managing the needs, expectations, and influence of various individuals and groups who have an interest or stake in the project.

The goal of project stakeholder management is to effectively manage stakeholder relationships, ensure their involvement and support, and address their concerns and expectations. It helps project managers and teams to navigate the complex network of stakeholders and maintain positive relationships, ultimately contributing to project success.

Types of Stakeholders

Stakeholders are individuals, groups, or entities that have an interest in or are affected by a project, program, or organization. They can be categorized into various types based on their level of involvement, influence, and interest in the project.

Here are some common types of stakeholders:

1. Primary Stakeholders and Secondary Stakeholders

Initially, stakeholders can be divided into primary stakeholders and secondary stakeholders. Primary stakeholders are those who are directly affected by the actions, decisions, and outcomes of the organization or project, and they have a significant interest in its success. Examples of primary stakeholders include customers, employees, shareholders, suppliers, investors, and government bodies.

On the other hand, secondary stakeholders are indirectly affected by the activities of the organization or project compared to primary stakeholders, but they still have an interest or involvement in the matters. Examples of secondary stakeholders include government agencies, media, industry institutions, and financial institutions.

2. Internal Stakeholders and External Stakeholders

Furthermore, stakeholders can be classified into internal stakeholders and external stakeholders. Internal stakeholders are those within the organizational structure who directly participate in its operations and decision-making, such as employees and management.

While, external stakeholders exist outside the organization and can impact its success and reputation, such as customers, suppliers, and government.

3. Direct Stakeholders and Indirect Stakeholders

Lastly, stakeholders can also be categorized as direct stakeholders and indirect stakeholders. Direct stakeholders are those who directly participate in a project or organization and are directly affected by its decisions, such as customers and employees.

Indirect stakeholders are those who are indirectly affected by the activities of the organization, such as community members and competitors. Understanding these stakeholder classifications is essential for effective interaction with stakeholders and ensuring the success of the organization or project.

Also read: What are the 5 areas of project management?

Difference Between Internal and External Stakeholders

Internal stakeholders and external stakeholders are two distinct categories of individuals or groups that have an interest or stake in a project.

Understanding the distinction between internal and external stakeholders is important because it helps project managers and teams tailor their engagement strategies, communication approaches, and management techniques to effectively address the needs and expectations of different stakeholder groups. The main difference between them lies in their relationship to the organization or project being undertaken:

Differences	Internal Stakeholders	External Stakeholders
1. Definition	Internal stakeholders are individuals or groups who are directly affiliated with the organization executing the project. They are typically part of the organization's structure, workforce, or management.	External stakeholders are individuals or groups who are not part of the organization executing the project but have an interest or potential impact on the project's outcomes.
2. Examples	They include project managers, employees, executives, board members, and shareholders.	External stakeholders can include clients, customers, suppliers, regulatory bodies, community members, residents, and government agencies.
3. Relationship	Internal stakeholders have a direct and ongoing relationship with the organization. They are directly impacted by the project's outcomes and are often involved in decision-making processes.	External stakeholders have an indirect relationship with the organization. They may be affected by the project's outcomes or have a vested interest in its success, but they are not part of the organization's internal structure.
4. Influence	They usually have a higher influence over the project due to their direct involvement and decision-making authority within the organization.	External stakeholders' level of influence can vary, but generally, they have less direct influence compared to internal stakeholders. However, their influence can be significant, especially when it comes to regulatory compliance, customer satisfaction, or community impact.
5. Communication	Communication with internal stakeholders is usually more frequent and direct, as they are part of the organization's internal communication channels.	Communication with external stakeholders often requires specific engagement strategies and may occur through different channels such as public consultations, customer feedback mechanisms, or regulatory reporting.
6. Alignment	Internal stakeholders are typically aligned with the organization's goals and objectives and are invested in the overall success of the project.	External stakeholders may have diverse interests, perspectives, and objectives. They may not always align perfectly with the organization's goals, and managing their expectations and concerns becomes crucial for project success.

What are the 4 Stages of Managing Stakeholders?

It's important to note that stakeholder management is an iterative process, and these stages may overlap and require continuous monitoring and adjustment throughout the project lifecycle. Regular evaluation and feedback from stakeholders help in maintaining stakeholder engagement and managing any changes or evolving expectations.

1. Identify Stakeholders

In this stage, the project team identifies all individuals, groups, or organizations that may have an interest or stake in the project. This includes both internal stakeholders (such as project sponsors, team members, and employees) and external stakeholders (such as clients, customers, suppliers, regulatory bodies, and the community). The goal is to create a comprehensive list of stakeholders.

2. Analyze Stakeholders

Once stakeholders are identified, the project team analyzes their interests, needs, expectations, and potential influence on the project. This analysis helps in understanding the stakeholders' perspectives, assessing their level of support or opposition to the project, and determining the priority of stakeholders based on their impact. It also helps identify potential risks and opportunities associated with each stakeholder.

3. Plan Stakeholder Engagement

In this stage, a stakeholder engagement plan is developed. The plan outlines how stakeholders will be involved, informed, and communicated throughout the project. It includes strategies and activities for engaging stakeholders, addressing their concerns, and managing their expectations.

The plan also defines the desired level of engagement for each stakeholder and specifies the communication channels and frequency of communication.

Check also: How to make a project management plan.

4. Engage and Manage Stakeholders

This stage involves implementing the stakeholder engagement plan by actively engaging and managing stakeholders throughout the project.

It includes ongoing communication, involving stakeholders in decision-making processes, providing regular updates on project progress, addressing their concerns and issues, and seeking their input when necessary.

Effective stakeholder management involves building positive relationships, maintaining open lines of communication, and adapting engagement strategies as needed.

How Do You Identify Project Stakeholders?

Identifying project stakeholders involves a systematic approach to ensure comprehensive coverage of all individuals, groups, or organizations that may have an interest or stake in the project.

1. Stakeholder Analysis

Conducting a thorough stakeholder analysis helps identify potential stakeholders. This involves reviewing project documentation, conducting interviews with project team members, and consulting subject matter experts to gather insights and identify key stakeholders.

2. Brainstorming and Workshops

Facilitating brainstorming sessions and workshops with project team members and relevant stakeholders can help generate a comprehensive list of stakeholders. By encouraging open discussions and inviting different perspectives, all potential stakeholders can be identified.

3. Reviewing Organizational Structure

Analyzing the organizational structure of the project and the parent organization can provide insights into potential stakeholders. This includes identifying project sponsors, executives, functional managers, and other departments or teams that may be affected by or have an interest in the project.

4. External Research

Conducting external research can help identify stakeholders who may not be immediately obvious. This includes researching industry associations, regulatory bodies, local communities, and other relevant entities that may have an interest in the project or be impacted by its outcomes.

5. Document Analysis

Reviewing project documentation such as project charters, business cases, requirements documents, and stakeholder registers from similar projects can provide insights into potential stakeholders who were involved in previous projects and could be relevant to the current project.

6. Feedback and Recommendations

Seeking feedback and recommendations from project team members, subject matter experts, and other stakeholders can help identify additional stakeholders. These individuals may have insights into specific groups or individuals who could influence or be impacted by the project.

Stakeholders Engagement Strategies

Effective stakeholder engagement strategies are part of the overall project management strategies and are essential for building positive relationships, aligning interests, and fostering collaboration.

1. Identify and Prioritize Stakeholders

Start by identifying all relevant stakeholders and prioritizing them based on their level of influence, interest, and potential impact on the project. This will help you allocate resources and tailor engagement strategies accordingly.

2. Establish Clear Communication Channels

Create clear and accessible communication channels to facilitate regular and transparent information sharing. This can include email updates, newsletters, project websites, social media platforms, or dedicated stakeholder portals. Ensure that stakeholders have easy access to project-related information and updates.

3. Tailor Communication to Stakeholder Preferences

Understand the communication preferences of your stakeholders and tailor your messages accordingly. Some stakeholders may prefer face-to-face meetings, while others may prefer email or online discussions. Adapt your communication style, frequency, and language to suit each stakeholder's preferences.

4. Involve Stakeholders in Decision-Making

Engage stakeholders in decision-making processes whenever possible. Seek their input, gather feedback, and consider their perspectives. This involvement can be through workshops, focus groups, surveys, or advisory committees. By involving stakeholders in decision-making, you increase their ownership and commitment to the project outcomes.

5. Provide Opportunities for Collaboration

Create platforms or forums where stakeholders can actively participate and collaborate. This may include workshops, working groups, or online collaboration tools. Encourage stakeholders to share their expertise, contribute ideas, and work together to address project challenges or find innovative solutions.

6. Regularly Seek Feedback

Actively seek feedback from stakeholders to understand their concerns, suggestions, and overall satisfaction. This can be done through surveys, interviews, or feedback forms. Demonstrate that you value their input and use the feedback received to improve project outcomes and address stakeholder concerns.

7. Address Concerns and Provide Support

Promptly address any concerns or issues raised by stakeholders. Actively listen, empathize, and take appropriate actions to mitigate their concerns. Provide support and assistance when needed. Timely resolution of issues helps build trust and confidence in the project.

8. Recognize and Acknowledge Contributions

Recognize and acknowledge the contributions of stakeholders to the project. Publicly acknowledge their efforts, expertise, and achievements. This recognition can be in the form of appreciation emails, certificates of participation, or testimonials. Celebrate milestones and successes together with stakeholders.

9. Build Long-Term Relationships

Stakeholder engagement is an ongoing task in your project management practices. Invest time and effort in building long-term relationships with stakeholders beyond the project duration. Maintain regular communication, seek their involvement in future initiatives, and keep them informed about the project's long-term impacts.

10. Monitor and Evaluate Engagement

Continuously monitor stakeholder engagement and evaluate the effectiveness of your strategies. Collect feedback, conduct surveys, and assess the level of stakeholder satisfaction. Use this information to make adjustments and improvements to your engagement efforts.

Project Stakeholder Management Examples

There are some examples that demonstrate how Project Stakeholder Management is essential for understanding stakeholder needs, managing expectations, resolving conflicts, and ultimately achieving project success by ensuring the alignment of project goals with stakeholder interests. Here are a few examples of project stakeholder management:

1. Project Sponsor

The project sponsor is the individual or group that provides the financial resources, support, and overall vision for the project. They have a high level of influence and are usually responsible for approving project plans, providing guidance, and ensuring the project aligns with organizational goals.

2. Project Team

The project team consists of individuals directly involved in executing the project. This includes project managers, team members, subject matter experts, and other resources assigned to specific project tasks. They have a high level of involvement and are responsible for delivering project outcomes.

3. Clients/Customers

Clients or customers are the individuals or organizations for whom the project is being undertaken. They have a direct interest in the project's outcome and are the primary beneficiaries of the project's deliverables. Their satisfaction is crucial for project success.

4. End Users

End users are the individuals or groups who will ultimately use or be impacted by the project's final product, service, or solution. Understanding their needs and expectations is essential to ensure the project meets their requirements and provides value.

5. Suppliers and Vendors

Suppliers and vendors are external entities that provide goods, services, or resources to support the project. They have a vested interest in the project's success and may have specific requirements or expectations that need to be managed.

6. Regulators and Government Authorities

Regulators and government authorities may have a stake in the project, particularly if there are legal or regulatory requirements that need to be met. They can impact the project through compliance regulations, permits, or approvals.

7. Community and Public

The community and public are stakeholders who may be indirectly affected by the project or have an interest in its outcomes. This includes residents, community organizations, environmental groups, and other entities that the project's activities could impact.

8. Shareholders and Investors

Shareholders and investors have a financial interest in the project and its outcomes. They may include individuals or organizations that have invested capital or hold shares in the project or the organization undertaking the project.

9. Competitors

Competitors can be considered stakeholders, particularly in industries where projects may impact market dynamics or the competitive landscape. Understanding the potential impact of the project on competitors and managing any conflicts or risks associated with them is important.

10. Employees and Employee Representatives

Employees and their representatives have a stake in the project, particularly if it involves organizational changes, restructuring, or impacts on their work environment. It is crucial to address their concerns, provide clear communication, and involve them appropriately.

Why is Project Stakeholder Management Important?

Effective Project Stakeholder Management is essential for aligning project objectives, managing risks, optimizing resource allocation, enhancing communication, and maintaining stakeholder satisfaction.

1. Stakeholder Satisfaction

Effective stakeholder management ensures that the needs, expectations, and concerns of stakeholders are identified and addressed. By involving stakeholders throughout the project, their satisfaction can be maintained, leading to positive relationships, support, and a higher likelihood of achieving project objectives.

2. Project Success

Stakeholders play a significant role in the success of a project. Engaged stakeholders can provide valuable input, resources, and support, contributing to effective decision-making, problem-solving, and ultimately the achievement of project goals. By managing stakeholders effectively, project managers can maximize the chances of project success.

3. Risk Management

Stakeholders can have a significant impact on project risks. By understanding their perspectives, interests, and potential sources of opposition, project managers can proactively identify and address risks associated with stakeholder expectations, conflicts, or resistance. Effective stakeholder management helps mitigate risks and minimize project disruptions.

4. Resource Allocation

Stakeholders can provide resources, both in terms of funding and expertise. Engaging stakeholders early in the project allows for better resource allocation and planning. By involving stakeholders in decision-making processes, project managers can leverage their knowledge and support to optimize the allocation of resources, leading to more efficient project execution.

5. Change Management

Projects often introduce changes within an organization or community. Stakeholder management helps in anticipating and managing the impact of these changes. By involving and communicating with stakeholders, project managers can address concerns, manage expectations, and facilitate a smoother transition, minimizing resistance and promoting acceptance of the project's outcomes.

6. Reputation and Trust Building

Effective stakeholder management contributes to building a positive reputation and trust for the project team and the organization. By demonstrating transparency, responsiveness, and inclusiveness, stakeholders develop confidence in the project's management and its ability to deliver value. This can lead to increased support, collaboration, and future opportunities.

7. Legal and Regulatory Compliance

Stakeholders can include regulatory bodies, government agencies, and other entities with legal authority. By actively engaging and managing these stakeholders, organizations can ensure compliance with relevant laws, regulations, and standards. Failure to consider and manage these stakeholders can lead to legal issues, delays, and potential project failures.

Stakeholder Management Software and Tools

There are several stakeholder management software and tools available that can help streamline and enhance the stakeholder management process.

1. Stakeholder Engagement Software

Stakeholder Circle: A comprehensive stakeholder engagement platform that allows you to identify stakeholders, assess their interests, manage relationships, and track engagement activities.
EngagementHQ: A cloud-based platform that enables organizations to engage stakeholders through surveys, online forums, feedback forms, and other interactive tools.
Meltwater Stakeholder Management: A tool that helps you identify stakeholders, monitor their sentiments, and track media coverage related to your project.

2. Project Management Software with Stakeholder Management Features

Asana: A widely used project management tool that offers features for tracking stakeholders, assigning tasks, and managing project communications.
Trello: A visual collaboration tool that allows you to create boards, assign tasks, and keep stakeholders informed about project progress.
Monday.com: A flexible project management platform that includes features for stakeholder tracking, communication, and collaboration.

3. CRM (Customer Relationship Management) Software

Salesforce: A popular CRM platform that can be customized to manage stakeholder relationships, track interactions, and analyze stakeholder data.
HubSpot CRM: A free CRM tool that helps you organize and manage stakeholder contacts, track communications, and monitor engagement.

4. Social Media Listening Tools

Hootsuite: A social media management platform that enables you to monitor social media channels for mentions, sentiments, and conversations related to your project stakeholders.
Brandwatch: A social listening and analytics tool that allows you to track and analyze social media conversations and sentiments about your stakeholders.

5. Survey and Feedback Tools

SurveyMonkey: A popular online survey tool that enables you to gather feedback and opinions from stakeholders through customizable surveys.
Qualtrics: A comprehensive experience management platform that includes survey capabilities for collecting stakeholder feedback and insights.

What is the Difference Between CRMs and SRMs

CRMs (Customer Relationship Management) and SRMs (Stakeholder Relationship Management) are both software systems designed to manage relationships with stakeholders, but they differ in their focus and scope. Here are the key differences between CRM and SRM:

Difference	CRMs	SRMs
1. Focus	CRM systems primarily focus on managing relationships with customers and clients. They are commonly used in sales and marketing departments to track customer interactions, manage leads, and improve customer service.	SRM systems, on the other hand, have a broader focus and encompass all types of stakeholders involved in a project or organization. This includes customers, clients, employees, suppliers, partners, regulators, community members, and more. SRM systems aim to manage relationships with all relevant stakeholders, not just customers.
2. Stakeholder Types	CRM systems primarily deal with external stakeholders, specifically customers and clients. They focus on managing interactions, sales pipelines, and customer service processes.	SRM systems encompass both internal and external stakeholders. They include employees, suppliers, partners, regulators, communities, and any other parties that have an interest or influence in the project or organization.
3. Relationship Management Approach	CRM systems typically focus on transactional relationships with customers. They are geared towards managing sales opportunities, customer support inquiries, and marketing campaigns.	SRM systems take a more holistic approach to relationship management. They aim to build and manage long-term, collaborative relationships with stakeholders, beyond transactional interactions. SRM systems often include features for stakeholder engagement, communication, and collaboration.
4. Data and Insights	CRM systems capture and analyze customer-specific data, such as purchase history, preferences, and demographics. They provide insights to enhance marketing, sales, and customer service strategies.	SRM systems capture and analyze a broader range of stakeholder data, including not only customer data but also data related to other stakeholders. This can include feedback, preferences, communication history, and stakeholder engagement metrics. SRM systems offer insights to support stakeholder engagement, relationship building, and decision-making.
5. Organizational Scope	CRM systems are typically used within specific departments, such as sales, marketing, and customer service. They focus on managing customer interactions within the context of the organization's business processes.	SRM systems have a wider organizational scope and are used across various departments and projects. They aim to align stakeholder relationships with the organization's strategic goals and manage stakeholder engagement throughout the project or organizational lifecycle.

While CRM systems are primarily customer-focused and transactional, SRM systems take a broader perspective and encompass all stakeholders involved in a project or organization. SRM systems provide a more comprehensive approach to managing stakeholder relationships, engagement, and collaboration.

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Conclusion:

In summary, project stakeholder management is essential for achieving stakeholder satisfaction, project success, risk mitigation, efficient resource allocation, effective change management, reputation building, and legal compliance. By understanding and engaging stakeholders throughout the project, organizations can navigate complex stakeholder dynamics, increase project value, and enhance overall project outcomes.