The Definitive Guide to Stakeholder Management

For optimal results in any project, it’s essential to determine who are your most important and extended stakeholders. Once you have identified your most important stakeholders in a stakeholder matrix and weighed their respective needs and influence, you can begin to assess how best to manage them. In larger projects, you may also want to list your “extended” stakeholders, who, according to stakeholder theory, can include company employees, customers, vendors, and more.

Once you have identified all your stakeholders—internal, external, and “extended”—and have mapped them according to their influence and interest, you can begin to create your stakeholder management plan. It can be a simple grid listing all the stakeholders and their roles and interests. When this information is captured in this at-a-glance, sharable way, you and your team members can easily see how each stakeholder should be managed.

Stakeholder communication is also a component of stakeholder management, though not the only one. Keeping the right stakeholders in the loop (at the right stages of your project, with the right amount of detail) is critical to making them feel valued, involved, heard, and appreciated. The stakeholder communications plan should reflect and align to the stakeholder management plan.

For more on stakeholders, read our stakeholder analysis and mapping article and our stakeholder theory article. Briefly, here is a list to help you identify who is a stakeholder:

• External: The client, including the main client team, their managers, and their division director. In an agency environment, typically there are one or two stakeholders identified as a liaison from the client project team. On a company project, there will be a small number of critical leaders who are considered the key stakeholders.
• Internal: The project team, including contractors and vendors, as well as top management, resourcing directors, accounting department members, and others who want to see the project run efficiently and profitably.
• ‘Extended’ Stakeholders: These may include the industry evangelists, customers, employees, manufacturers, vendors, environmental and other community activists, and more. Ensuring strong, consistent communication with all types of stakeholders fosters a smooth project with much more buy-in and better public relations.

Here is a simple matrix/map that can help you get started. As you and your team brainstorm your stakeholders, jot their names into the appropriate area of the map. Over the course of a project, you may find that a stakeholder’s interest and influence change during different phases, or that some are more involved and critical at the beginning of a project, and while others will be more engaged toward the end or even after the project is completed.

Once you have identified your stakeholders, you can begin to plan how to manage them over the lifecycle of your project. This is where it’s important to ask key questions, and to be as honest as you can in assessing your stakeholders and their needs. 

Important Factors to Consider 

1. Who are the stakeholders who have the most influence on your project? These will include mostly client-side people - typically their project team, the project sponsor, and the executive sponsor. 
2. Which stakeholders will be most affected by your project? This can include people from the first group, but may also include outside people. With a construction project, for example, those in the neighborhood, environmental activists, and potential residents of the final building could be members of this group.
3. How should you handle important people who actually won’t be considered stakeholders? For instance, in a software project, there may be executives elsewhere on the software team who are key leaders in their department, and who may need to be kept in the loop on certain details. Keep these people minimally involved since they could have the power to raise concerns or create roadblocks.
4. Who controls the resources? These will be stakeholders on the client side as well as on your company’s side, in case you need to request a scope or budget change or require more allocated resources from a certain discipline.
5. What are the top motivations and interests of your stakeholders? When deciding the driving force of stakeholders consider:

• Who has a financial stake/interest?
• Who has an emotional interest (don’t underestimate this; if this project was someone’s “baby,” keeping them happy and in the loop is critical)?
• What are the top motivations for each stakeholder?
• Who are the project’s biggest supporters?
• Who are the project’s biggest non-supporters or naysayers?

Stakeholder theory was first described by Dr. F. Edward Freeman, a professor at the University of Virginia, in his book, Strategic Management: A Stakeholder Approach. He suggests that shareholders are merely one of many stakeholders in a company. According to this theory, the stakeholder ecosystem involves anyone invested and involved in, or affected by the company: employees, environmentalists near the company’s plants, vendors, governmental agencies, and others. Dr. Freeman’s theory states that a company’s real success lies in satisfying all its stakeholders, not just those who might profit from its stock.

In a 2016 interview with Smartsheet, Dr. Freeman said that a company’s stakeholders are "those groups without whose support the organization would cease to exist." These groups include customers, employees, suppliers, political action groups, environmental groups, local communities, the media, financial institutions, governmental groups, and more. This view paints the corporate environment as an ecosystem of related groups, all of whom need to be considered and satisfied to keep the company healthy and successful in the long-term.

Dr. Freeman’s books describe how a healthy company never loses sight of everyone involved in its success. Stakeholder theory says that if an organization treats its employees badly, a company will eventually fail. Similarly, if a company forces its projects on communities to detrimental effects, the same would likely happen. “A company can’t ignore any of its stakeholders and truly succeed,” Dr. Freeman said.

So it’s important to remember to identify and include all of these “extended” stakeholders as you proceed with your stakeholder management plan.

After you identify your stakeholders, you’ll need to capture how best to manage them. A stakeholder management plan can be a simple grid or spreadsheet that lists the stakeholders along one axis and their points of interest and influence along the other. In the individual boxes, note key milestones or deliverables that a stakeholder might have special interest in, as well as financial and emotional needs tied to the project.

The project manager or account director may create the stakeholder management plan, and maintains it, but the plan would likely be shared among the project team (especially those who meet regularly with stakeholders). In some cases, the plan is also shared with top managers. However, a stakeholder management plan is not typically shared with the actual stakeholders listed.

A stakeholder communication plan often grows out of the information and findings in the management plan. It should list the key stakeholders who need to receive communications, including type, frequency, and detail. It may make sense to do the communications plan immediately after the management plan, or as two parts of one plan. Again, typically the stakeholders themselves would not have access to the communication plan itself, though over time may become accustomed to receiving the output of your plan. For example, stakeholders might come to rely on receiving a bi-weekly email update on the project.

Now you should have enough information to begin identifying the management needs of each of your stakeholders and stakeholder groups. List all your stakeholders along one side of the grid, typically the far-left column; and the factors and needs and interests along the top. 

Stakeholder Management Plan Example – A building project for a wind farm for hydroelectric power for a regional electrical utility
 

When you use the opinions and influence of your most powerful stakeholders to help shape the project, you and the project will be better equipped for success. What’s more, you won’t waste precious time and resources overly communicating to those who simply don’t require it.

In addition, your key stakeholders with the most weight and influence can help you gain resources, prioritize competing demands for resources or timelines, and clear potential roadblocks. Therefore, keeping them happy and feeling positive about the project and its progress is critical.

As you identify your stakeholders, and how they need to be managed most efficiently, you will also start to notice you have the beginnings of your communications plan. Begin with a simple grid and list the stakeholders you’ve ranked, and add what type of communications they would expect and need.

When creating this plan, be mindful that while high-level executives want to be kept in the loop on high-profile projects, their time is valuable. A good project manager knows how to balance communications that keep someone important feeling in the know, but not overwhelmed with granular details. Likewise, “extended” stakeholders don’t need to have access to everything about the project, as long as they feel they are being heard and have input. Here is a sample plan:

‌ Download Stakeholder Communication Plan Template - WORD

The stakeholder communication plan can include rounds of copy and design review as well as daily, weekly, or monthly updates on progress, budget, and next tasks on the horizon. 

You can share the plan with your clients by saving the grid to a shared drive, and use an automated tool to email stakeholders updates at the right frequency. You might do a weekly high-level report for the clients via a personal email from the project manager. Internal stakeholders likely will also want to see a burn report - hours forecasted vs. hours spent, and information on work hours to be spent in the near future.

Some stakeholders (like the executive leads) may need a more formal type of communication, but less frequent. Perhaps those stakeholders would prefer a monthly report on status, the features and updates that have published, the input and feedback that’s been received to date, and so on. 

When developing a communications plan, consider how you will handle risk and feedback from stakeholders. If there is a timeline change in the wind-farm project, for instance, who among all your stakeholders needs to know that, and in what fashion? If a big storm causes damage, again, who needs to be apprised, and how? Communication isn’t all bad news. So think about how you want to handle sharing information about positive events, too - for example, a local environmental group releasing a statement saying it’s pleased with the wildlife protection guidelines the utility has put in place.

Keeping strong, succinct lines of communication going throughout a project is critical.  Good communication helps a project run smoothly, and reaffirms a stakeholders’ confidence in that project. There are other key benefits to creating (and continuing) a stakeholder communication plan:

1. No more winging it. You can always be prepared and two steps ahead in planning on how, when, and what to communicate to stakeholders. A project manager that is buttoned up and has a strategic plan in place is one who inspires confidence.
2. You can anticipate the needs of stakeholders and respond before they become issues. If you have a regular cadence for communications, you already have a vehicle for sharing news and updates, and for reducing risks or confronting roadblocks.
3. The plan can be shared so the whole project team knows who is learning what and when. Granting access to the whole team - perhaps even creating a section for notes and suggestions - gives everyone a feeling of ownership and accountability.
4. The plan can be adapted to account for new stakeholders, shifting goals, new phases of the project, etc. The communication plan exists to help you and your project team inspire the utmost confidence from your stakeholders, so it should be an organic document.

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