Optimize Project Performance using Risk-Based Stakeholder Analysis

Are your stakeholders advocates, hindrances, or something in-between?

October 19, 2017 | Dr. David Hillson

stakeholder analysisMost project managers understand that stakeholders possess and exercise various forms of power in the context of a project. The position adopted by stakeholders is likely to have a significant effect on whether or not a project succeeds, and stakeholders are an important source of risk who should be identified, analyzed, and managed proactively by the project manager and team. As with all risks, there are both positive and negative stakeholders, and project managers need to identify which stakeholders offer opportunities, and where potential threats might lie – and to then act appropriately.

Risk-based stakeholder analysis can help us find risky stakeholders. Most people use two-dimensional stakeholder analysis models that consider power/interest or power/influence. Risk-based stakeholder analysis uses three dimensions, which reveal important risk characteristics:

  • Attitude – Assessed as Positive/Negative, or Backer/Blocker. Does the stakeholder support the business or project, or are they opposed? Attitude indicates whether a stakeholder is a threat or an opportunity.
  • Interest – Assessed as High/Low, or Active/Passive. How much does the stakeholder care about the outcome? Will they take an active interest in how things are progressing, or will they just observe passively? Interest indicates the probability that a stakeholder might affect the project.
  • Power – Assessed as High/Low, or Strong/Weak. Can the stakeholder affect the outcome significantly, or are they unable to exercise any influence? Power reflects the potential degree of impact that a stakeholder might have on the outcome.

These three dimensions help us to divide stakeholders into eight categories that are divided into two groups based on Attitude:

Advocates, Friends, Sleeping Giants, and Acquaintances are the four stakeholder types with a positive attitude toward the project. They are potential sources of opportunity.

Saboteurs, Challengers, Opponents, and Hindrances are the four stakeholder types with a negative attitude. They are potential sources of threat.

As with any other risk, the level of risk posed by stakeholders can be assessed in two dimensions: the probability that a particular stakeholder might affect the project, and the potential size of impact. Probability is indicated by the strength of their Interest, and impact is driven by their level of Power. These variables are shown in the graphic at the bottom of the article, along with the third variable, Attitude.

Risk-based stakeholder analysis also suggests appropriate risk response strategies for each of the eight categories:

  • Advocates offer the greatest opportunity. They have a positive attitude, an active interest toward the project, and high levels of power. There is a high probability that they will be able to assist the project significantly. This position should be exploited by pursuing such stakeholders proactively and intentionally and seeking their support wherever possible.
  • Friends also have a positive attitude towards the project and are actively interested in it, but their power to influence the outcome is less. They should be engaged as far as possible to maximize their potential support.
  • Sleeping Giants can be very useful to a project since they have a positive attitude and high power, but their level of interest is currently low. The aim should be to raise their interest in the project in order to enhance their potential contribution to its success.
  • Acquaintances feel positively towards the project, but have no power to influence it and are only passively interested. The probability and impact of any potential opportunity are both low. Their position should be monitored for possible changes, but they are not a priority for involvement.
  • Saboteurs are potentially very dangerous for a project. They have a negative attitude but are actively interested in the project, and they have the power to exert a significant negative influence. Their involvement should be avoided where possible.
  • Challengers could prove dangerous, with a negative attitude and the power to influence the project. Fortunately, their level of interest is low. It is wise to engage with them in order to counter and contain their potential negative impact.
  • Opponents have a negative attitude towards the project and the power to have a high negative impact, but their interest level is currently low. The potential threat can be reduced by aiming to improve their attitude through careful, targeted communication.
  • Hindrances feel negatively towards the project, but they are unlikely to cause a problem since their interest and power is low. They should be monitored in case either their power or interest level changes.

Before project managers can undertake a risk-based stakeholder analysis, they must first know their stakeholders. It’s important for project managers to invest time and effort in identifying and understanding the stakeholders.

Once we understand which stakeholders pose a threat and which offer opportunities, it is important for us to seek to influence them to minimize threats and maximize opportunities. Project managers don’t usually have formal authority over their stakeholders, so we need to influence them in other ways.  Two particular aspects are helpful here:

  • Project managers can influence others by exercising various forms of power. Power does not only come from our formal position in the organization. There are other sources that project managers can use to influence stakeholders, including technical expertise, role-modelling, the ability to offer positive reward, or to generate negative sanctions. Project managers should understand their sources of power and learn how to leverage them effectively when engaging with stakeholders.
  • Project managers should also develop emotional literacy skills. These allow us to influence others by understanding their drivers and motivations, and helping them to achieve their goals while also meeting ours. The ability to harness emotional literacy skills will enhance the project manager’s effectiveness when dealing with risky stakeholders.

Project managers should remember that stakeholders change over time, so it’s important to review the stakeholder analysis regularly. And finally, project managers must pair analysis with action. Understanding the risks posed by stakeholders must lead to appropriate response action, otherwise it’s a waste of time.

This process of risk-based stakeholder analysis should be a fundamental part of a project manager’s strategy. We can seek to avoid harmful effects arising from the most negative stakeholders, or protect our business or project from their involvement. We can also take advantage of the support available from positive stakeholders, engaging their help wherever possible to assist us in achieving our goals. Many stakeholders are risky, but if we identify them and act appropriately, we can maximize our chances of success.

Adapted from Hillson, D. A., & Simon, P. W. (2012). Practical project risk management: The ATOM Methodology (second edition)

For further details on how to implement risk-based stakeholder analysis, see the paper “My stakeholders are my biggest risk” by David Hillson, available online for free download from  http://risk-doctor.com/docs/NA16EXC16%20My%20stakeholders%20are%20my%20biggest%20risk%20-%20paper.pdf.

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  • About The Author
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  • Dr David Hillson HonFAPM PMI-Fellow FIRM CMgr FCMI

    Known globally as The Risk Doctor, David Hillson leads The Risk Doctor Partnership (www.risk-doctor.com), a global consultancy offering specialist risk services across the world.

    David has a reputation as an excellent speaker and presenter on risk. His talks blend thought-leadership with practical application, presented in an accessible style that combines clarity with humor, guided by the Risk Doctor motto: “Understand profoundly so you can explain simply”.

    He also writes widely on risk, with twelve major books, and over 100 professional papers. He publishes a regular Risk Doctor Briefing blog in seven languages to 10,000 followers, and has over 7,000 subscribers to the RiskDoctorVideo YouTube channel (www.youtube.com/RiskDoctorVideo).

    David has advised leaders and organizations in over fifty countries around the world on how to create value from risk based on a mature approach to risk management, and his wisdom and insights are in high demand. He has also received many awards for his ground-breaking work in risk management over several decades.