How to Build Stakeholder Analysis
By Terrence Metz
Stakeholders are identified by examining the way that they interact with the organization in providing or receiving services or benefits. Stakeholders may include external or internal persons, groups, systems, and other organizations that interact with the organizational group or a specific process.
Process stakeholders are identified by examining contributions to the process (inputs) and their benefits or what they receive from the process (outputs). The three-step approach below helps identify process stakeholders.
- Step One – Identify inputs
- What are the inputs to the process or, what goes into the process? Consider using the FAST Creativity Exercise to help prevent omissions.
- Who provides each input identified in Activity 1 (immediately above). Associate the source(s) of each input.
- How is the input used? Describe the activities and how each is performed.
Step Two – Identify outputs
- What are the outputs of the process? These are usually “things” or nouns such as a form, report, or event (eg, deposit).
- Who uses or benefits from the output of the process—associate the client(s) or customer(s) of each output.
- How is the output created? Describe activities that are dependent on the outputs and how each is further transformed into something of value.
Step Three – Identify stakeholders
- Each input/output can be linked to one/more stakeholder by one/more activity within a process. A stakeholder relationship shown in the table below clarifies the relationship between stakeholder, input, output, and activity within the process.
Stakeholders can be grouped together according to how they use or interact with the inputs and outputs. From the table above members and employers can be grouped together as one stakeholder group called “Payers” as they interact with the collection process in the same manner.
Acknowledge Stakeholder Interests
The motives and needs of the stakeholders determine their interest in the process and indicate how they can contribute/derail the success of the project.
Define Stakeholder Strategy Plan
The stakeholder strategy plan is a blueprint for the BPI team’s interaction with stakeholders. The focus on the stakeholder’s contribution shows how the team can use the stakeholder’s interests to support the project and make it successful.
The plan identifies
- What the project wants to achieve with each stakeholder
- Stakeholder issues and interests
- How stakeholders will be managed
- The frequency of communication
- The changing content of communication over the life of the project
The plan is dynamic meaning that it must be constantly updated to reflect changes in stakeholder opinions over the life of the project. The template below supports development of the stakeholder strategy plan.
- The objectives of the strategy plan are . . .
- It is important for the project to have a stakeholder plan because . . .
- The purpose of the process is to . . . So that . . .
- Give a short description of the stakeholder group:
- The members of this stakeholder group are . . .
- Describe this group’s role in the process.
- Identify inputs the group provides:
- Identify outputs the group uses:
- The stakeholder thinks that the current process . . .
- The stakeholder thinks this because . . .
- The stakeholders interest in the current process . . .
- The stakeholder’s power in the current process . . .
- The stakeholder thinks that the BPI project . . .
- The stakeholder’s likely reaction:
- The stakeholder wants . . . from an improved process.
- It is important for the stakeholder to support the project because:
- Without the stakeholders support . . .
- The stakeholders support . . .
- The stakeholder can contribute to the success of the project by . . .
- The stakeholder can hamper the project by . . .
- The BPI team wants the stakeholder to . . .
- The three things that are important to the stakeholder are:
- The team can guarantee . . .
- We need to tell the stakeholder . . .
- We need to tell them because . . .
- The best way to communicate with this group is to . . .
- This will cost (prepare a budget):
- We need to meet with this group because/ when:
- At what points in the project is it critical to meet with each stakeholder?
- How do we deal with confidentiality issues?
- Can each team member be privy to all information?
- Can each stakeholder be privy to all information?
- What is the strategy to ensure that confidential information stays that way?
Develop a Communications Action Plan
The communications action plan identifies exactly how and when a project team will communicate with each target audience (or stakeholder) over the life of the project. The plan is flexible, as it is updated over the life of the project and recognizes the need for intervention and ad hoc meetings. Match the communications plan with your project milestone and plan outreach to the stakeholders and staff at critical points of your project.
Consider the need for different types of meetings. One-way communications may be appropriate when the team needs to reveal the decisions made and share information. Facilitated workshops can be used for decision-making and to encourage participation ad ownership. Ad hoc meetings may be held to deal with negative situations and to negotiate among stakeholders. The communications action plan provides significant input for the change management plan.
Determine Stakeholder Risks
The amount of power each stakeholder/stakeholder group enjoys now and the extent to which this power will change is a good indicator of the level of resistance the stakeholder will have to the project. The more pain that the stakeholder is asked to absorb and the more power/status (s)he loses, the greater the resistance. The figure below can be used to predict the amount of resistance from the stakeholder group.
From our analysis, we can develop an action plan to encourage the positive behaviours and limit the negative behaviors. A stakeholder analysis recognizes the fragility of the human condition and sensitivity to its environment. Your team must constantly monitor and evaluate stakeholders’ reactions by revisiting the stakeholder analysis at each milestone in your project.
Stakeholders (internal and external) have invested interests in your project and can provide positive support. It is the project team’s responsibility to identify stakeholder contributions and extract it from them. The project team needs to be aware of the impact a project may have on each stakeholder and their power base, and develop strategies that are appropriate for advancing their project.
Terrence Metz has been a founding principal partner and vice president at Morgan Madison & Company since 1999, he is also the lead instructor and primary curriculum developer for MG Rush Performance Learning, a PMI Registered Education Provider. For over twenty years, through professional and academic endeavors, Terrence has focused on improving group decision-making processes. You can read more from Terrence on his blog.