Identify The Needs And Expectation Of Individual Stakeholder Management Essay

Organizations change constantly, a projects stakeholder set will change as stakeholder change roles within the organization, move into different roles or leave the organization to take up roles in other organizations. For whatever reason, the ability of individual stakeholder to influence the project may increase or decrease. Most project management methodologies define ways to identify project stakeholder, and then base their entire communications strategies on this initial, and only, identification. Many projects fail because stakeholders do not continue to support the vision or objectives of the project. In many cases this is because the team does not recognize changes in the relative power or position of key stakeholder and fails to make appropriate adjustments in their stakeholder management activities.

This study reported upon in this paper is focused on support for project managers in building and maintaining relationships with project stakeholder. This is accomplished through using a practical methodology that allows the project team to identify and priorities the project’s stakeholder and then stakeholders’ needs of the project – to develop an appropriate relationship management strategy.

The underlying assumption for this research is the stakeholder management is extremely difficult, the project manager and his/her project team members must identify, engage and sustain relationships with a diverse set of groups and individuals (including themselves) who can impact the project in many ways.

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STAKEHOLDER

According to Freeman’s (1984: pg.25 and pg 26) ‘stakeholder view of the firm’ instrumentally defines a stakeholder as ‘Any group or individual who can affect or is affected by the achievement of the firms objectives’ and he suggested that there is a need for ‘integrated approaches for dealing with multiple stakeholder on multiple issues’ While Freeman framed and demarcated stakeholder as elements of corporate strategic planning. Stakeholders are persons or group who are directly or indirectly affected by a project, as well as those who may have interest in a project and/or the ability to influence its outcome, either positively, or negatively.

Stakeholders may include locally affected communities or individuals and their formal and informal representatives, national or local government authorities, politicians, religious leaders, civil society organizations and groups with special interests, the academic community, or other business. The “stake” that each of these different individuals or groups has in project or investment will vary, for example, there may be people directly affected by the potential environmental or social impacts of a project. Others may be resident in another country altogether, but wish to communicate their concerns or suggestions to the project company. Then there are those who might have great influence over the project, such as government regulators, political or religious leaders, and others active in the local community. There are also stakeholders who, because of their knowledge or stature, can contribute positively, for example, by acting as an honest broker in mediation relationships.

TYPES OF STAKEHOLDER

Stakeholder is classified as being either internal or external to the firm. They are either part of the business itself, or are influenced by it. There are many groups who are stakeholders inside and outside of a firm who have an interest in its operation, and obviously its survival. The diagram below shows the different stakeholders.

Internal stakeholders: are (ones from within an organization) individual, group or business with a vested interest (a stake) in the success of an organization is considered to be a stakeholder. A stakeholder will generally be someone who is concerned with an organization delivering intended results and meeting its financial objectives

External stakeholders: are (outside organization) individuals, group or business with a vested interest (a stake) in the success of an organization is considered to be a stakeholder. A stakeholder will generally be someone who is concerned with an organization delivering intended results and meeting its financial objectives.

From the table below, Internal stakeholders may have different objectives and level of risk.

Stakeholder

Objective

Risk

Shareholders (may be companies not people)

Dividend income

Small, if investment is part of the portfolio of shares owned.

Directors – executive

Income and power

Higher, but may have many directorships, and savings.

Directors – non-executive

Many, depending why they are there. Gives some income.

May well be small, smaller than that of executive directors.

Managers

Income

Higher than Directors but lower than that of workers.

Workers

Continuation of job. Earnings to pay the cost of living

High. No job = no income. Jobs may be hard to get.

THE IMPORTANCE OF STAKEHOLDERS

Stakeholders are those groups, individuals, and parties that are directly affected by the practices of an organization and therefore have a stake in the organization’s performance. Some of the common stakeholders in an organization are customers, employees, investors, suppliers, local communities, etc. one of the importance of stakeholders is that a stakeholder can provide feedback to a company’s performance.

The critical importance of stakeholder engagement and alignment of their goals and vision has been well established (Cooke-Davies 2000, Christensen and Walker 2003). By providing more project manager with a methodology and a tool to better visualize stakeholder potential impact, it is possible to ensure a greater set of potential responses of project manager to the environment they need to operate in (Cooke-Davies 2000, p 211)

Stakeholder engagement is a formal process of relationship management through which companies, industries or project engage with a set of stakeholder in an effort to align their mutual interest, to reduce risk and to advance the organization’s economic advantage.

Manila Water Company

Organizational Point of view: (e.g.) From its inception in 1997, Manila Water Company in the Philippians has sought to have a proactive and open relationship with its stakeholders, including customers, local NGOs and government. Good stakeholder relationship are viewed as being fundamental to the core business of the company, which is to provide clean, safe water and sewage services to approximately half of manila’s population. When Manila Water acquired the east concession from the government operator, it launched a “walk the line” program in which all company staff – from managers to district level representatives visit their customers, including residents of informal settlements, to consult with them on the delivery of these essential services to their community. As a result of this engagement and other initiatives, Manila Water has significantly improved its service delivery. Between 2004 and 2006, the percentage of household having a 24-hour water supply jumped from 26% to 95%. At the same time, water losses from the system were reduced from 63% to 35.5%. From 325,000 households served at start of 2004, there were more than 1,000,000 in 2006, including over 848,000 urban poor. The company’s proactive stakeholder engagement strategy has also led to a number of partnerships that have benefited local communities, including housing reconstruction for habitat for humanity and micro-financing to start small business through the bank of Philippine islands. Manila Water has established engagement plans for key NGO stakeholders, the media, and investors that include quarterly dialogues and visits to the company’s sustainable development and community projects.

HOW TO ENGAGE AND MANAGE STAKEHOLDER STRATEGY

“Stakeholder engagement can improve… long-term viability and benefits significantly by improving decision-making, understanding and accountability” (Hughes and Demetrius, 2006, p.95)

Due to the size and scale of our company, as well as the nature of our business, ConocoPhillips stakeholders have unique and evolving expectations. We proactively engage with them to learn their expectations of us, and then incorporate what we learn into our business plans and actions. This process fosters an environment of trust and mutual respect. Through work with industry associations, participation in multi-sector forums, and dialogue with socially responsible investors, we’re gaining diverse and valuable perspectives as we continuously improve our sustainable development programs and initiatives.

ConocoPhillips’ stakeholder engagement activities are an integral part of the sustainable development commitments. The major businesses have engagement strategies which vary according to the nature of the local community. In dispersed communities, it identifies key stakeholders and engages with them face-to-face to ensure that the activities are understood and that could consider the feedback. In regions where there are opportunities to bring local stakeholders together, they work with multi-stakeholder groups in a similar way.

Proactively identify and seek out key stakeholders early in the business endeavour.　

Include these key stakeholders in the design and implementation of the engagement process.

Listen in order to understand stakeholders’ interests, concerns and culture.

Communicate openly.

Seek solutions that create mutually beneficial business and engagement approaches that also build long-term value for both the company and our stakeholders.

Follow through on our commitments and stand accountable for the results, both internally and externally.

We engage with stakeholders in variety of ways, for example:

Customers: by carrying out a regular customer satisfaction surveys and review feedback from a range of third party surveys. Also to give customers the opportunity to provide feedback directly to stores and via customer service helps line.

Employees: by having an open and honest corporate culture, and carrying out regular employee satisfaction surveys.

Suppliers: by having a regular communication with its suppliers

Communities and NGOs: by engaging with a wide range of local, national and international associations, organizations and NGOs, and local and national government, the municipalities of the communities they serve.

Shareholder: by participating in various road shows for socially responsible investment (RSI), at which multinational investors are present.

Stakeholders have important and sometimes different priorities. As an organization, there is a need to identify the key stakeholder that is relevant to the business organization activities. And these are the customers, employees, suppliers, communities, NGOs, and shareholders. Many stakeholder engagement activities currently occur at operating level; there is always a plan to aim at an increase activities at group level and also to discuss the progress of the business and implement a future strategy.

Benefits of stakeholder engagement

Stakeholder benefits

Company benefits

Reputation

Reputation

Innovation

employee motivation and competence

project outputs

competitive advantage/innovation

access to resources

risk management

social capital (networks, local knowledge)

social capital (networks, local knowledge)

Competitive advantage/innovation

Several companies supported the view that stakeholder engagement can help create a competitive advantage (Porter and Kramer, 2002; Harting et al, 2006). One respondent noted that “we’ve gone 100% Fair-trade on our bananas and have committed to do the same with tea – big strategic changes like that take a lot of planning and create real points of difference that are difficult to copy” (Sainsbury’s). Engaging stakeholders has also been seen as a way of inspiring business innovation: “we’re a big business but we don’t have all the answers – it’s good to listen to other people and develop new solutions” Marks & Spencer

DESCRIBE THE ROLES 0F THE DIFFERENT STAKEHOLDERS BY ANALYSISNG DIFFERENT TECHNIQUES

Commonly cited techniques for informing deliberation through stakeholder involvement

Public hearings: Regulated, formal arrangements for times and places at which members of the general public and other types of stakeholders can give evidence or question public authorities about decisions under consideration.

Deliberative polling: Like opinion polling, but collects views after persons have been introduced to the issue and have thought about it. Meant to give an indication of what people would think if they had the time and information to consider the issue (instead of reacting “cold”). Includes a feedback session, sometimes with a high media profile (e.g. broadcast by television along with documentary inserts)

Focus groups: Small groups of invited or recruited persons discuss a theme or proposal; provides insight on their reactions, values, concerns and perspectives, and an indication of how group dynamics influence opinions.

Citizen advisory groups: Small groups of persons who represent various interests or expertise (e.g. community leaders) meet on a regular or ad hoc basis to discuss concerns and provide informed input.

Consultative groups: Forums that call together key representatives of civil society (NGOs and CSOs), economic and political spheres, to make policy recommendations and to improve the ongoing dialogue between these actors

Nominal group process: A structured group interaction technique designed to generate a prioritized list of high-quality ideas within two hours or less. It is particularly helpful for setting goals, defining obstacles, and gathering creative responses to a particular question.

Multi-actor policy workshops: Small groups mixing key stakeholders and technical experts, aimed at collecting a range of viewpoints on what are the important question raised by the dialogue issue. These may allow an innovative view of the problem to emerge, along with new approaches to its solution.

It is not necessary or practical to engage with all stakeholder groups with the same level of intensity all of the time. Being clear on whom you are engaging with and why will save both time and money. This requires prioritizing your stakeholders and, depending on who they are and what their interests are, figuring out the most appropriate ways to engage. Stakeholder analysis will assist in this prioritization by assessing the significance of the project to each stakeholder group from their perspective, and vice versa. It is important to keep in mind that the project is dynamic and that both stakeholders and their interests might change over time. For example, some stakeholders will be more affected by a particular stage of a project.

You may now have a long list of people and organizations that are affected by your project. Some of these may have the power either to block or advance it. Some may be interested in what you are doing, others may not care. You can map out your stakeholders on a Power/Interest Grid as shown in Figure 1, and classify them by their power over and interest in project.

Power/Interest Grid for Stakeholder Prioritisation

For example, your boss is likely to have high power and influence over your projects and high interest. Your family may have high interest, but are unlikely to have power over it. The position on the grid shows you the actions you have to take with the stakeholder:

High power, high interest: these are the stakeholders you must fully engage with, and make the greatest efforts to satisfy.

High power, less interest: put enough work in with these stakeholders to keep them satisfied, but not so much that they become bored with your message.

Low power, high interest: keep these stakeholders adequately informed, and talk to them to ensure that no major issues are arising. These stakeholders can often be very helpful with the detail of your project.

Low power, less interest: monitor these stakeholders but do not bore them with excessive communication.

Internal stakeholders:

Directors: may be executive or non-executive ones. They are appointed by the shareholders to look after their interest.

Shareholders: are the owners of plc’s (public limited companies) or private limited companies.

Managers: will include the executive directors. When they are running the company they are managers. Essentially managers are the [people within a firm responsible for planning and directing the work of a group of individuals and monitoring their work.

Worker: These are all the non-managerial/supervisory people that work in a firm.

External stakeholder

Central government: firms supply the central government with a large part of its income. They can influence their decisions, though, especially if they are large and powerful.

Locality: firms create employment and income for the community. Employees spend in shops etc. creating more jobs. There is a multiplying effect from this income. They may cause pollution and other problems causing potential conflict of interest.

Pressure groups: this may b e stakeholders if they are affected directly or indirectly by the actions of a firm. Local communities, for instance, may form a pressure group to prevent a firm from expanding its premises or even setting up in the first place.

Customers: customers have an obvious interest in the survival and efficiency of the firm. They want the product at the best price and quality possible.

Suppliers: suppliers have an obvious interest in the survival and efficiency of the firm. They want the product to sell so they get the orders from materials etc.

Competitors: competitors have an interest in the survival of the firm. Its failure may help them (more market share available), but so may their survival. (Monopoly markets are not as good as they seem. New technology firm need competitors to help with the marketing and market development.)

Local government: films are part of the locality so interface with the government. They supply income (business tax) and need services. (Planning, health, fire, police)

Also, Secondary stakeholders may play key roles in managing conflict by:

Information gathering and analysis – providing technical support, obtaining or advising on information, participating in the search for views on possible solutions, or increasing the acceptability of various outcomes;

Advocacy – working alongside weaker parties to build a transparent process, or helping the wider political arena to work towards greater equity;

Intermediating – acting as mediators between other conflicting groups;

Monitoring and enforcement – ensuring compliance with agreements by helping to enforce any that are broken.

Secondary stakeholders can be effectively involved without including them directly in formal negotiations. For example, they can take part in focus group meetings, advisory or working groups, surveys or interviews, and community meetings.

USE RACI ANALYSIS TO CLEARIFY STAKEHOLDER MAPPING AND TECHNIQUE: by Value Based Management.net – Last updated Apr 17th, 2012

RACI Analysis:

The RACI model is a relatively straightforward tool that can be used for identifying roles and responsibilities during an organizational change process. After all, transformation processes do not process themselves; people have to do something to make the process happen. Therefore it is useful to describe what should be done by whom to make a transformation process happen. Instead of the term RACI, sometimes also the terms RASCI or RASIC are used. RASCI is an abbreviation for:

R= Responsible – owns the problem or project

A= to whom R is Accountable – who must sign off (approve) on work before it is effective

S = can be Supportive – can provide resources or can play a supporting role in implementation

C= to be consulted – has information and/or capability necessary to complete the work

I= to be Informed – must be notified of results, but need not to be consulted

The techniques is typically supported by an RACI chart (see figure) which helps to dearly discuss, agree and communicate the roles and responsibilities.

Typical steps in a RACL process:

Identify all the processes / activities involved.

Identify all of the roles.

Identify who has the RASCI for each process.

Every process should preferably have one and only one “R” as a general principle.

Resolve overlaps.

Resolve gaps.

Responsibility matrix that helps to clarify the “who-does-what” on the virtual team.  While working with a team recently I realized that RACI is often confused with a similar tool called a stakeholder analysis.  What’s a stakeholder?  In the case of telework, a stakeholder is any individual, group or organization that can have a significant impact on or can be significantly impacted by the telework initiative.  A stakeholder analysis is a process to align the political aspects of the organization to the needs and goals of telework. 

The success of a telework program can be influenced by many factors.  As many studies have pointed out, some of the biggest hurdles in telework are management resistance, organizational culture, and communication.  A stakeholder analysis can help overcome these barriers by forcing the implementation team to identify all the potential parties and individuals that can positively or negatively influence the initiative and then develop strategies to align those stakeholders.

Creating a stakeholder analysis is simple.  Here’s how to do it step by step:

First, identify the individuals or groups that qualify as stakeholders (you can list them in the first column).

 Next, identify whether they are resistant, supportive, or neutral in regards to the telework implementation.  I have colored coded mine (red, green, yellow) to make it stand out more.  Some teams like to use a scale of 1 – 5 to add in categories of “very resistant” to “very supportive.”

In this step you will identify the issues or reasons that explain the stakeholder’s position.  If they are resistant, why are they resistant?

Once the team labels the stakeholder’s position, they can use the same scale described in Step 2 to list where they need the stakeholder to be.  This step will help you prioritize where to focus some of your communication and change management efforts.  For example, you may have stakeholders that are neutral to the initiative but they are not vital stakeholders and as long as they are not resistant, then there is no need to focus on them. 

Lastly, for the stakeholders the team needs to align, the team can identify the specific strategies to employ to get them onboard.  Additional columns can be added to assign specific team members to the strategies and due dates.

So what’s the difference between the stakeholder analysis and a RACI?  Both are living documents and can be used to help increase intra-organization communication.  However, the RACI is typically used to determine who-does-what while the stakeholder analysis helps get various people or organizations onboard with the initiative.

 Like the RACI, there are may variations to the stakeholder analysis.  Some practitioners like to add an additional column to help prioritize stakeholders, such as level of impact the stakeholder might have.  Other matrices can be get more elaborate by adding additional columns for identifying root causes to certain issues or specifics of the communication plan (i.e. frequency, medium, etc.).  My advice is to keep it simple.  The intent, not the table, is what is important.  Successful telework implementations depend on managing a number of stakeholders.  Getting them aligned at the onset and keeping them onboard is key and can be done with a little forethought.

Analysis for each stakeholder:

Are there too many R’s: Does one stakeholder have too much of the project assigned to them?

No empty cells: Does the stakeholder need to be involved in so many of the activities? Can Responsible be changed to Consulted, or Consulted changed to Informed? I.e., are there too many “cooks in this kitchen” to keep things moving? (And if so, what does that say about the culture within which this project is being managed?)

Buy-in: Does each stakeholder totally agree with the role that they are specified to play in this version of the model? When such agreement is achieved, that should be included in the project’s charter and documentation.

Analysis for each PLC step or deliverable:

No R’s: Who is doing the work in this step and getting things done? Whose role is it to take the initiative?

Too many R’s: Is this another sign of too many “cooks in this kitchen” to keep things moving?

No A’s: Who is Accountable? There must be one ‘A’ for every step of the PLC. One stakeholder must be Accountable for the thing happening – “the buck stops” with this person.

More than one A: Is there confusion on decision rights? Stakeholders with accountability have the final say on how the work should be done and how conflicts are resolved. Multiple A’s invite slow and contentious decision-making.

Every box filled in: Do all the stakeholders really need to be involved? Are there justifiable benefits in involving all the stakeholders, or is this just covering all the bases?

A lot of C’s: Do all the stakeholders need to be routinely Consulted, or can they be kept Informed and raise exceptional circumstances if they feel they need to be Consulted? Too many C’s in the loop really slows down the project.

Are all true stakeholders included in this model: Sometimes this is more of a challenge to ensure, as it’s an error of omission. This is often best addressed by a steering committee or management team.