Stakeholder management is a critical aspect of PM that has a significant impact on successful project completion. Who exactly are investment? Why do you need to manage them? And what steps will help you ensure effective interaction with them and their engagement? Read the article to find the answers.
What is project stakeholder management, and why is it important?
Let’s start from figuring out who investment are. A project stakeholder is an individual or group of people affected by, or are likely to affect the outcome of a project. Stakeholders can be divided into two categories; internal stakeholders and the external ones. Here’s their brief description.
- Internal stakeholders include PMs, team members, and executives. They can have a significant impact on the outcome of because they are accountable for its success and empowered to allocate resources, make decisions, and set goals.
- External stakeholders are those who are affected by the project outcomes outside an organization; e.g., customers, suppliers, regulators, and community groups. They can provide valuable resources, expertise, and support to projects.
As we see, stakeholders can play different roles and have diverse responsibilities.
Stakeholder management is the process of identifying stakeholders, their expectations and needs as well as maintaining communication and interaction with them during the project management process.
Resource management tools like Epicflow increase the effectiveness of interaction with stakeholders. In addition to assisting with management of all project- and resource-related processes, it provides every participant with a single source of truth regarding the project progress and resource performance.
Let’s review the reasons to manage investment.
Why is project stakeholder management important?
- It reduces uncertainty and risks related to project delivery.
- It facilitates stakeholder engagement;
- It increases the fruitfulness of project work and contributes to better project outcomes.
- It helps ensure that the project deliverable will meet stakeholders’ expectations.
- It helps clarify the project goals and objectives and ensure that all the project participants are on the same page.
To sum up, managing stakeholders helps ensure that achieve their goals, are delivered on time and budget as well as meet needs and expectations.
5 steps of stakeholder management
Now let’s examine what exactly is included in the stakeholder management process.
Step 1. Identifying project stakeholders
You won’t be able to manage effectively without knowing them. So, identifying investment is the primary step of stakeholder management. You can do this by conducting brainstorming sessions with the team or analyzing project documents. Here’s a suggested list of people or groups that you should take into consideration:
- Those who invest in the project,
- Those who are interested in its completion,
- Those who can benefit from the project,
- Those who have power over it,
- Those who can be interested in project failure.
Step 2. Categorizing the stakeholders
As soon as you’ve determined all possible interested parties, you can analyze them and categorize. You can do this with the help of Power-Interest Grid that will create the following categories:
- High-power and high-interest: those who require most attention, e.g., investors, business executives, etc.;
- High-power and low-interest: those who have a significant impact on project outcomes;
- Low-power and high-interest stakeholders: those who are interested in the project completion, but don’t have any impact on it and aren’t involved in it.
- Low-power and low-interest stakeholders: this category will refer to those who have neither interest in the project, nor any impact on it.
Categorizing the will help you improve communication and interaction with those whose engagement will be essential for your project success.
Step 3. Get to know your stakeholders
After you’ve identified and categorized, it’s time to learn more about them; what is their attitude towards your project and organization in general? Do they have a positive or negative impact on the organization? What are they interested in? What communication channels do they prefer? This will become the basis for building relationships with them.
Optionally, you can conduct the SWOT analysis to identify their strengths, weaknesses, opportunities and threats you can expect from them.
Step 4. Communicate and engage with the stakeholders
To ensure effective interaction with stakeholders as well as their engagement, you should use the above-mentioned information to create and implement a communication plan. The plan will outline how often you’re going to communicate, what communication channels you will use, who else will participate in the communication, how you’ll keep updated regarding progress, etc. It’s important to clarify these issues beforehand; for example, when you need to contact the high-power and high-interest stakeholders, you will know that you need to use more engaging ways of communication, e.g., one-on-one meetings, phone calls, etc.
Step 5. Review your interaction with investment regularly
It’s important to keep track of any changes occurring in the interaction with stakeholders. Haven’t they changed their requirements? Has their involvement in changed? Are there any issues in your interaction with them? Such an analysis will help you not only manage their expectations and ensure the efficiency of project work, but also assess the effectiveness of your interaction with them.
- Managing stakeholders is an important aspect of project management. Understanding who they are, their roles and responsibilities as well as their interests and expectations can help project managers interact with them effectively and increase the efficiency of project work.
- There can be two types of stakeholders. Internal stakeholders are those who have a direct impact on outcomes and are responsible for them: e.g., PM, team members, etc. External stakeholders don’t participate directly in can be affected by its outcomes; suppliers, customers, etc.
- The stakeholder management process includes the following steps:
- Identifying all potential stakeholders;
- Categorizing and prioritizing them depending on their interest an impact;
- Gathering essential information about them;
- Communicating and engaging with them;
- Reviewing the results of your interaction with stakeholders.