Stakeholder Analysis and Stakeholder Management Guide

Understanding the Importance of Stakeholder Management

A stakeholder management system (SMS) is very helpful in a way that it helps investors and managers control their stakes in a company. 

Here, we have tried explaining the importance of stakeholder management for your easy understanding. 

• Increased transparency and accountability: SMSs are truly helpful when it comes to increasing transparency and accountability by providing detailed information about the company's financial performance. This also includes major metrics such as earnings and cash flow, as well as debt levels. So, remember that this information can be quite helpful for investors who try to make informed decisions about whether or not to invest in the company.
• Risk reduction: An SMS can also help to identify potential conflicts of interest and make sure that all stakeholders follow the same rules by tracking the activity of the stakeholder. Along with this, it can also reduce or lessen the risks of shareholder lawsuits or other legal disputes. 
• Better Decision-making: One important thing that you must know is that an SMS is also quite beneficial to the managers who try to better allocate resources and manage risks by having access to all the necessary and relevant data. Along with this, it can also lead to improved profitability and growth for the company.

There are many benefits of stakeholder management; we have discussed some of them here. 

• You can get started quickly by investing in projects that interest you.
• No need to be an expert in finance or business to participate.
• Draw out your money at any time without loss.
• Monitor your investments online anytime, anywhere.
• It helps you determine which groups need special attention or care when planning and executing a project.
• You must remember that it allows you to prioritize your resources and allocate them in an efficient way.
• It is also quite helpful when it comes to identifying potential conflicts and resolving them before they become problems.
  

Stakeholder analysis definition

Stakeholder analysis is basically a process that can be helpful to determine the various groups of people who have an influence on your project or organization. 

So there are mainly three types of stakeholders that you must know about. These are basically internal, external, and shared.

• Internal stakeholders: You must know that these are the ones who work within your organization or company. Another important thing that you must remember is that these mainly include the employees and suppliers, along with the ones who are directly connected to your business. 
• External stakeholders: When it comes to external stakeholders, you must remember that these people or organizations indirectly connect to your business but may still impact it. These include investors and government agencies, along with the media.
• Shared Stakeholders: Now, when we are talking about shared stakeholders, you must try and understand that these are the ones who have stakes in both your company and the success of a project or business. 

These people may include community members who use your product or service and members of the general public who could be affected by what you do. So, when you get to know and understand who these stakeholders actually are, then it will become truly essential for you to design and develop a very effective strategy for addressing them.

Another important thing that you must keep in mind is that this might also include creating marketing plans that target specific stakeholders or implementing policies that benefit all parties involved. Along with this, you must understand that stakeholder analysis and stakeholder management are two concepts that will become even more important in the future. They help organizations understand, identify, as well as manage their stakeholders.

Stakeholder Analysis Process: What Is It? Why is it essential?

When it comes to the analysis process, it's mostly about identifying as well as understanding the values of your stakeholders in your respective businesses. 

Along with this, another crucial fact that you must keep in mind is that "stakeholders" in this context refers to all the parties who have an interest in the success of the company's future. Through this article, we have tried to explain why it is so important to identify stakeholders along with the different types of information that these stakeholders want. 

There are actually a few steps that you can take to complete an analysis. Continue reading to know about this further. 

• Defining your stakeholders: The first important step that you try to understand who the people or groups are who will be affected by your project.
• Identifying the needs of your stakeholders: You must try to question the specific benefits and features that these stakeholders want from your project. 
• Assessing the impact of your project: You must also keep in mind how it describes how your project will affect their ability to meet their needs. 

Developing a plan to address any identified concern—You will need to develop a plan and find out about what measures you must take to make sure that everyone is happy and contented with the final product.  

There are actually various reasons why it is considered so important to identify stakeholders early in the project.

• You must remember that stakeholders can provide a lot of valuable input and feedback during the planning stages. 
• Another important thing that you must remember is that you can target your marketing efforts better if you are able to understand your stakeholders properly.
•  Along with this, you can also try and build relationships with important stakeholders that can help you find more future opportunities. 

 After this, when you are done identifying your stakeholders, you must definitely try and build a relationship with them to know what you do and why. 

Along with this, it would also help in keeping them updated on the progress. This will help them to judge if the project is going according to plan or not.

Stakeholder Analysis in Project Management

You must know that stakeholders are basically those individuals who are interested in a project and may even be affected by its success or failure.

Now, some familiar stakeholders for projects are

• The client or customer: This person or organization pays for the project and usually benefits the most.

• The Project team: So this group involves those people who will be carrying out the work, such as architects, engineers, and even designers.

• Other parties with whom the project has relationships: So, when it comes to these other parties, they could be suppliers, subcontractors, or others whom the project indirectly tries to connect.

• The public: This group includes all those who might be affected by the project's outcome. This can be residents near a construction site or people living near a plant that produces hazardous waste.

Also, they can be classified into 5 major categories

1. Customers: The people or businesses who buy or utilize the product or service that a project has created are considered its customers.
2. Employees: When it comes to employees, keep in mind that they typically gain something from a project; that can be either in the form of money (such as pay) or some sort of special treatment.
3. Suppliers: Suppliers are the ones who provide the resources along with the products and services that are truly essential for the project. 
4. Partners: You must remember that partners might be friends, colleagues, or even business associates who are part of the project in some way (for example, providing some kind of advice or support).
5. Regulators: So, keep in mind that government agencies and other regulatory bodies have the power to influence projects in a variety of ways, such as by mandating particular protocols or specifically approving particular project types.

Stakeholder Analysis Techniques in Project Management

Many stakeholder analysis techniques can be used to identify and understand the needs and wants of different groups of people affected by a proposed project or policy.

Some standard analysis techniques include

• Needs assessment: This is basically when you ask people what they need or want from a project or policy.
• Stakeholder Impact Assessment: When it comes to this tool, it is actually quite helpful when it comes to determining the possible negative and positive consequences of implementing a project or policy.  This helps in stakeholder assessment.
• Feasibility study: It evaluates whether implementing a project or policy is possible and affordable.

To gain a deeper understanding and insights into how these techniques fit within an organized project management approach, read the Project Management Framework Guide.

Stakeholder Analysis Tools & Methods

Many different stakeholder analysis tools can be used to identify and understand the needs and wants of other groups of people. These tools aid the stakeholder analysis methods. It is vital to utilize these tools at your disposal while charting the project stakeholder analysis. The use of a stakeholder diagram coupled with these tools would be extremely beneficial.

A stakeholder analysis matrix is a tool that helps you identify the key stakeholders, their interests, and the benefits they may obtain from a proposed change. It can also help you identify any potential conflicts of interest. The stakeholder engagement assessment matrix is a very useful tool to possess.

1. SWOT analysis What you must know about this tool is that it's a straightforward tool that helps you analyze your strengths and weaknesses, along with various opportunities and threats.
2. PEST analysis PEST stands for political, economic, social, technological, and environmental factors.  An important thing you must remember is that this kind of analysis can help you to understand the ways in which these aspects impact your firm. Along with this, it can also guide you on how you can address them in the best possible way.
3. SWOT+PEST analysis SWOT+PEST is a complete SWOT analysis that considers all five factors.
4. Value chain This tool can be quite useful to you for identifying all the steps in your business from production to sale. This will also help you in determining who is responsible for each of the steps. Along with this, you can even identify areas where improvements can be made or new products or services developed with the help of this information. 
5. Myers-Briggs Type Indicator (MBTI) This is actually a psychometric assessment tool that can help you identify your personality type. It also helps you to figure out how it influences your way of interacting with other people.
6. The Five Forces Analysis tool can help you identify the various competitive forces that have an impact on a market or sector.
7. An important thing you must know about value chain analysis is that it helps you to understand the production process of goods and services from raw materials to the final customer.
8. Corporate Social Responsibility (CSR) plans can be very beneficial when it comes to helping businesses assess their social impact and develop plans to enrich their reputation and public image.

Stakeholder Analysis Document

A stakeholder analysis document is basically a document that can be very helpful for you to identify and understand the different groups of people who your proposed project or change may influence.

You must also remember certain things when creating a stakeholder analysis document— 

• It is truly essential that you identify all the stakeholders and their interests.
• You must also list the benefits your project or change will provide to each group of stakeholders.
• You must also remember to explain how your project or change will meet the needs of each group of stakeholders.
• It is quite essential that you describe any risks that are associated with your project or change to each group of stakeholders.
• It is again very important that you discuss any solutions to mitigate those risks you propose for each group of stakeholders.

Techniques Used to Analyze Stakeholders

• Stakeholders’ Past Performance: The first technique is to look at the past performance of the stakeholder. It can help you determine whether or not the stakeholder has been successful in holding onto their investments.
• Company's Financial Statements: One more technique that you can have a look at is the company's financial statements. It can help you understand how profitable the company is and whether or not there are any signs of financial trouble.
• Stock price history: Finally, you can also look at the stock price history to see if there have been any changes in sentiment over time. It can help you regulate whether or not it is an excellent time to buy or sell shares of the company.

Stakeholder Analysis Model

The stakeholder analysis model we have discussed here can help you with stakeholder analysis:

What you have to do is create a list of all the stakeholders who are a part of your project. You must remember that this can be customers, employees, as well as suppliers, among many others. 

It's again quite essential that you try to understand their needs and wants once you are done creating your list. You also need to remember that it can help you understand how your project can affect each of the stakeholders. 

Now you will need to create a stakeholder matrix for this next step. So each row will represent one stakeholder, and each column will represent a particular need or want.

Here we have also provided a few examples of stakeholder analysis for your reference. 

• If you are designing a new product, the stakeholders might be customers (row 1), engineers (row 2), marketing (row 3), and manufacturing (row 4). The needs or wants for this product might include features such as low weight and easy assembly
• If your business involves selling products to external customers, you need to identify who those customers are and their needs. You would also need to consider things like pricing policies and delivery times.

Read our blog,  Project Management Tips—Best of 2022, to gain innovative ideas and design efficient strategies for handling different types of projects in an organization.

Importance of Stakeholder Analysis Framework

The stakeholder analysis framework can actually be very helpful to you when it comes to— 

1. When you have to define your target market.
2. It will also help you identify your important stakeholders. 
3. It is again beneficial in a way that it can help you determine what their needs and wants are.
4. Another important thing you must remember is that it can help you to create a proper plan of action to meet their needs and wants.

When conducting a stakeholder analysis, it is very essential that you consider the following when conducting a stakeholder analysis - 

1. Who are the key policymakers?
2. What are their precedents?
3. What are their goals?
4. What are their restraints?
5. What is their way of interacting with each other?
6. How might they react to changes?
7. What do you think are their perceptions regarding your project or business?
8. How can you serve them better?

Stakeholder Analysis Engagement

Stakeholder analysis engagement is a process that helps you identify the key stakeholders in your business and their needs. This information can then be used to establish and implement a strategy that meets those needs. 

There are actually four main steps in stakeholder engagement analysis

1. Identify the stakeholders—You must know that it's essential that you identify your customers and their needs. You can be able to do this by managing surveys or interviews with key people in your business. Now this could include the customers, employees, or even suppliers.
2. Analysis of the stakeholders' needs—Now, once you have identified your customers, you need to find out what are the best possible ways of meeting them. This basically includes analyzing the current situation and finding even better solutions to meet the demands of all stakeholders.
3. Implementation of the solution—After you are done determining how you can better meet the stakeholders' needs, it is essential to implement a clear and more efficient solution. It also includes making sure that everything is set up correctly so that everyone who is a part of it becomes happy with the results.
4. Monitoring and evaluation—It is again very important to periodically monitor as well as check how well your solution is working to make necessary adjustments as needed.

How Does Stakeholder Analysis Help in Product Management?

Stakeholder analysis is actually very important in product management since it helps product managers find out and comprehend who has an interest in the project. 

Along with that, it also helps them to identify their expectations and develop good relationships with them.  

Another important thing that you have to keep in mind is that this makes way for better and more informed decision-making, which in turn increases the possibilities of your project's success.  

Here, we have also mentioned certain major benefits of stakeholder analysis for product management. 

1. Better decision-making—Project managers can actually make better and more informed decisions by understanding the various needs and perspectives of the stakeholders. This can be very beneficial in a way that will help them make decisions that align with the broader company’s goals and objectives. 
2. Efficient communication approaches—Another essential benefit is that this process is truly very important when it comes to tailoring communication methods and frequency to various stakeholder groups. You must remember that this is helpful to make sure everyone is able to stay well-informed in a more relevant way. 
3. Better product development— An essential fact that you must definitely remember is that diverse stakeholder perspectives enrich the product development process. It brings about unique expertise and goals, which can lead to a more well-rounded product.
4. Efficient management of resources—Product managers can focus properly on the people who are most important by identifying important stakeholders who have a high level of interest or influence. 
5. Active risk assessment—Now, keep in mind that product managers can create plans to reduce risks before they become major issues by anticipating possible conflicts or objections.

Conclusion

Stakeholder analysis is indeed a very critical step in the development of any organization. It can provide you with a very clear picture of the project's stakeholders along with their roles. Since many people have differing opinions on what should be done and who should do it, it is absolutely necessary to identify all stakeholders properly.

Keep in mind that you can identify the stakeholders who are most important to your project, along with their degree of involvement, by using a stakeholder matrix or a list of stakeholder qualities (their responsibilities). 

The skill to perform such analysis can prove to be extremely useful for organizations and has even led to an increase in demand for qualified professionals with this skill set. Getting certified by a governing body like PMI, by getting the help of a reputed training body like Sprintzeal would help you advance your career in this respect.

You can check out our courses, like the PRINCE2® 6th Edition Foundation Certification Training Course and the PRINCE2® 6th Edition Certification - Foundation Practitioner Training, so that you can achieve success and shape your career goals.

FAQs

1. What is stakeholder analysis in project management? 

Stakeholder analysis is a project management process used to identify the capacity of a team involved in the project. This process benefits the project manager while detailing the project to the stakeholder and to match their needs and expectations.

2. What do you mean by stakeholder analysis matrix?

A stakeholder analysis matrix is a visual representation of interest and influence. This is usually used in designs by project managers to make stakeholders understand the project progress. 

3. What does "stakeholder analysis" mean? 

Stakeholder analysis is basically a process that is used for identifying individuals, or even organizations, that have an interest in some particular project or firm. This also helps in designing strategies to communicate and engage with. 

4. Why do you think stakeholder analysis is important?

To help identify and understand the interests and progress of the team, stakeholder analysis comes into the picture. This gives a clear idea for decision-making and improving team collaboration for a higher success rate for the project.