Why Stakeholder Management is Important

Projects revolve around stakeholders

June 4, 2016

project stakeholdersA stakeholder is someone inside or outside the organization that has an interest in the outcomes of the project. Some are more important to the life of the project, such as the sponsor, steering committee, or project team members. Others are no less important, but are involved only in parts of the project, such as subject matter experts, cross-functional managers, and suppliers. But no matter their role, all of your stakeholders matter, and managing stakeholders effectively can make all the difference to the success of your project.

Good project managers begin their projects by identifying stakeholders, understanding their role in the project, identifying their project-related expectations, and, relative to other stakeholders, confirming common expectations while resolving expectations that are in conflict. Once this is done, the job of managing stakeholders really begins.

So who are your stakeholders?

Project stakeholders include those who care about the project or will be affected by it in some way:

  • Project sponsor: the person who is going to pay the bills and who has ultimate sign-off authority on the project
  • Primary customer: the primary user of the project’s outcomes or products
  • Secondary customers: others, both inside and outside of the organization, who will benefit from the project or who will be interacting with it
  • Project team: people who will be expected to carry out the project, including support personnel and outside consultants

Primary project stakeholders are those who will be a part of the project for the duration. Their information needs, inputs, and decision-making will vary over time, but will be broadly focused on seeing the project to a successful conclusion. Other stakeholders typically have a shorter involvement limited to particular aspects of the project, usually a more specific role in completing activities and tasks either of a functional nature (such as legal, marketing, or human resources) or of a technical nature (such as contractor, supplier, or application-specific roles).

The project’s end product or result should meet all of the important needs of the primary stakeholders. And these needs should be carefully spelled out before the project starts. You certainly don’t want to have a “successful” project that fails in delivering the really important things the users and customers want and need. And there are many customers, some visible and obvious, and others not so easily seen.

One of the most important parts of managing a project is having a clear idea of what results you are producing, for whom, and why those results are important. Many people rely on the results being successful. They need a different product, a different method, or a different way of doing things. They may not be able to move ahead without this different mix of suppliers, new work environments, or emerging group of customers in the marketplace. The digital workplace has placed huge pressures on today’s business leaders, and projects have taken on more importance as the business environment and society as a whole shift from the old methods to the new.

Businesses create projects to do something different, to make a change, because they can’t get the results they need if they keep doing things the same way. More than likely the project is not the first attempt to meet this need. There may have been several unsuccessful attempts to do it the old way before someone with the clout to make it happen finally decides they have to make a project of it. So a project is created, along with certain expectations.

Identifying stakeholder expectations is critically important to the success of a project because:

  • Your stakeholders as a group will usually understand the situation better than you can
  • The situation may look quite different when viewed from different perspectives
  • Different stakeholders might have different expectations
  • You may risk rejection of your finished product if your customer feels his/her expectations and priorities haven’t been considered

Understanding who your stakeholders are, and why their needs are important to the success of the project, is a key responsibility for any project manager, and a responsibility as well for all the people who are involved in project decisions. Sharing this information with the team, and asking the team to help define the answers, is important if the project is to produce a real solution. For the organization, the overall goal is to capture the value of the challenging opportunity or pressing business need. For the end user of the project’s result, the overall goal is to receive the actual product or service and find that it meets their needs.

Effective stakeholder management also means communicating with your stakeholders and understanding that not all stakeholders require the same information at the same time. For example, at the initial stage of the project, the project sponsor may be wondering: is this worth the investment? The primary customer may be asking: is this going to help me do my job more effectively? Secondary customers may want to know: will the needs of other secondary customers take priority over mine? And your project team members might be thinking: is this a project I want to work on?

To communicate more effectively with stakeholders, you should:

  • Identify the intended recipients of the communication, recognizing that different stakeholders might require different information, and in different forms
  • Identify the issues of concern to each stakeholder, particularly concerns related to decisions each stakeholder must make
  • Determine which information should be communicated based on the specific information requirements of each stakeholder
  • Select a communication approach that will work most effectively with each stakeholder

Stakeholder management is the lifeblood of effective project relationships. This means not only knowing your stakeholders, but understanding their unique communication needs at various points in the project. These needs involve establishing a sound relationship, feeling trusted and relevant, and understanding how their work is contributing to successfully meeting project objectives.

By identifying individual stakeholders and their unique needs, a project manager can more effectively communicate with stakeholders, leading to satisfied sponsors and stakeholders, happy and productive team members, and coordinated efforts focused on common targets. In other words, project success.

by Denise Gifford and Steven Lesser

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