Stakeholder Analysis

 

Purpose

Stakeholder Analysis identifies important groups of people or individuals that can have an influence on the Project. These Stakeholders can have their own objectives and views, which may differ and conflict with other Stakeholders. A Stakeholder Analysis is required to identify all the parties who are directly or indirectly affected by the enterprise’s operations. It sets out the issues, concerns and information needs of the stakeholders with respect to the Project’s sustainable development activities. This includes not only the traditional shareholders, but also some new groups that the insights of sustainable development tell us must be consulted in decisions that affect them.

Background

Stakeholder Analysis was created as an organizational development tool. The technique is based on the premis that an organization can only be successful if it interacts at a constructive manner with the stakeholders. (Ackoff)

 

Definition of a Stakeholder

Any group within or outside the organisation
that has a stake in the organisation's performance.
(Daft 1991)

 

Main Catagories of Project Stakeholders

q      Government

q      Local Authorities

q      Vulnerable groups

q      Employers

q      Workers

q      NGOs

Importance of Stakeholder Analysis

Stakeholder Analysis is part of the three necessary conditions for effective change within an organisation or society.

  1. Awareness: stakeholders understand and believe in the vision, the strategy and the implementation plan of the project, etc.
  2. Capability: stakeholders involved believe they can develop the necessary skills and can therefore both cope with and take advantage of these changes which projects result in;
  3. Inclusion: stakeholders involved feel that they value and are part of the changes and the new opportunities associated with the project and choose to behave in new ways (new attitudes, skills and ways of working)

Concepts and constructs

The Stakeholder Analysis is a technique that does not make use of special concepts or constructs. Though, it does distinguish several component types and relationships.
The component types are: stakeholder, demand, wish, strategic goal, strength of stakeholder, weakness of stakeholder and organisation.
The
relationships are: stakeholder makes a demand / wish, wish is translated into an organisational goal, organisation communicates with stakeholder, organisation sends / receives goods and stakeholder knows strengths / weaknesses.

Relationships with other techniques

Stakeholder Analysis has strong ties with SWOT-analysis and CSF-analysis, since both of them are completely or partially used in Stakeholder Analysis. In the following we will shortly describe these two techniques. Finally we give an example of the usage of Stakeholder Analysis in a organisational process.

Relationship with SWOT-analysis

Stakeholder Analysis typically includes a search for SWOT - strengths, weaknesses, opportunities, and threats - that affect organisational performance. Strengths are positive internal characteristics that the organisation can exploit to achieve its strategic performance goals. Weaknesses are internal characteristics that may inhibit or restrict the organisation's performance. Opportunities are characteristics of the external environment that have the potential to help the organisation achieve or exceed its strategic goals. Threats are characteristics of the external environment that may prevent the organisation from achieving its strategic goals. External information about opportunities and threats may be obtained from a variety of sources, including customers, government reports, professional journals, suppliers, bankers, friends in other organisations, consultants, or association meetings. Executives acquire information about internal strengths and weaknesses from a variety of reports, including budgets, financial ratio's, profit and loss statements, and surveys of employee attitudes and satisfaction. [Daft93]

Relationship with CSF- analysis

Critical success factors (CSFs) are the limited number of areas in which results, if they are satisfactory, will ensure successful and competitive performance for the organisation. CSFs are obtained through lengthy interviews with individual managers, which define the manager's goals and methods for assessing goal attainment. Then the interviews are used to define which information will keep the managers apprised of key performance areas. CSFs differ from company to company and among managers within a firm. They force managers to consider only important information needs. thus eliminating useless data.

Activities

The following activities have to be taken to complete a Stakeholder Analysis:

Step 1: Acknowledgement of Stakeholders:
Identify the stakeholders mentioned earlier and others like management, liaisons, distribution channels, stockholders, etc. Getting the names of all stakeholders and then divide them amongst the categories mentioned earlier can do this. Or perform a market survey, to get a good idea of your target customers.

Step 2: Create a Probable Character Profile for each Stakeholder:
Seek answers to questions like:

Step 3: Identify the Opportunities and Threats of the stakeholders to the Project (SWOT).

External information about opportunities and threats may be obtained from a variety of sources, including customers, government reports, professional journals, suppliers, bankers, friends in other organisations, consultants, or association meetings.
Executives acquire information about internal strengths and weaknesses from a variety of reports, including budgets, financial ratio's, profit and loss statements, and surveys of employee attitudes and satisfaction.

Step 4: Select the main Area of Attention:

Combine the SWOT-analysis with the Critical Success Factors of the Project. In CSF-analysis you will define what are the most important factors that will ensure successful and competitive performance for the organisation. [Boyt84] In combination with SWOT-analysis you can see what the strengths, weaknesses, opportunities and threats are, and scale them in importance with CSF-analysis. The main areas of attention should follow from the opportunities and threats that are the most critical.

These four steps result to a written report and can be put into a Stakeholder Analysis Table.

Develop a Stakeholder Analysis Table like the one below:

 

Stakeholder

Stakeholder Interest(s) in the Project

Assessment of Impact

Potential Strategies for Obtaining Support or Reducing Obstacles

 

 

 

 

 

 

 

 

 

 

 

 

Second Stakeholder Analysis Technique

Here is a step-by-step description of a method which can be used for stakeholder analysis.  For any decision or action, a stakeholder is anyone who is affected by, or can influence, that decision or action.

The process can be used by a single person.  It works better, however, if a diverse small group does it.

1.  Draw up a chart

Prepare a chart on electronic whiteboard, or perhaps paper, like this:


Att=attitude    Inf=influence   E=estimate   C=confidence

 

You will notice that the chart has 6 columns.  The four columns in the middle need only be wide enough to contain a three or four letter symbol.  You need a little more width in the right-hand column than in the left-hand one.

  2.  List stakeholders

Identify and list the stakeholders.  These may be individuals, or stakeholder groups, or some combination.  If stakeholders can be treated as a group, use groups.  The most effective way of doing this is to list as many stakeholders as you can on a working sheet of paper.  Then transfer them to the left hand column of the chart.  It may help to list them in rough order of importance.  (You may change your mind about their importance after this analysis.)

  3.  Estimate attitude and confidence

For columns 2 to 5, work across the page.  Record your estimates of the following in the columns.  In order, they are:

Column 2: Your best estimate of the stakeholder's attitude, fromsupportive to opposed.  I usually find it is adequateto use a 5-category code --
 

++ strongly in favour

+ weakly in favour

o indifferent or undecided

- weakly opposed

-- strongly opposed

 

Column 3: How confident you are about your estimate in column 2.  Here you can use

/ (a tick) for fully confident

?  for reasonably confident (some missing information, perhaps,

or some doubts about interpretation)

??  for an informed guess

???  for wild guess or sheer fantasy
 

Unless the group achieves immediate agreement, then at least one question mark is warranted.

Column 4: Your best estimate of the influence of the stakeholder.  A three-category code is usually enough --

H high; this person or group has power of veto, formally or

informally

M medium; you could probably achieve your goals against this

person's or group's opposition, but not easily

L this person can do little to influence the outcomes of your

intended actions
 

Column 5: How confident you are about your estimate in column 4.  You can use the same codes as in column 2.

 4.  Plan strategies

Plan your strategies for approaching and involving each person or group.  Your estimates in columns 2 to 5 help you to do this.  Your strategy is written in column 6.  It usually takes the form of obtaining more information, or of involving the stakeholder in the planning for the change.

In general, question marks indicate a need for more information.  The more question marks, and the more influence the person has, the greater the need.  On some occasions you will choose to approach the person concerned.  On other occasions you may instead approach someone else who can be assumed to know about the person's attitude or influence.

(On occasion, you may want to obtain some of this information before completing the analysis.)

In general, high influence indicates a need to involve the person in some way.  (Or, if you choose not to do this, and they are opposed, you may choose to find some way to neutralise their influence.) The people or groups who require most attention are those who are influential and opposed.

For involvement, decide the extent.  For example:

Š       involved only as informants
 

Š       consulted
 

Š       directly involved in decision-making
 

Š       involved as co-researchers and co-actors
 

or some similar categories.

Where the stakeholder is a group rather than an individual, you will probably want to include in your decision the style of participation appropriate: for example, direct participation of everyone, or representation.

Stakeholder Analysis Example

(from the WB Source Book)

 

Creating a Forum for Stakeholder Communication and Innovation

The Task Manager for an Industrial Efficiency and Pollution Control project for the Philippines took the initiative to create communication linkages among government, the Bank, industry, and nongovernmental organizations (NGOs) to establish a common Bank-borrower team approach to the project preparation process.

Through the local counterpart agency, the Task Manager organized a series of stakeholder meetings to further refine problem formulations and define the objectives for a project that had yet to be identified.

A ZOPP-based approach was used to bring together stakeholders who initially felt that their conflicting priorities would prevent them from reaching consensus on project objectives.

Not only did stakeholders achieve consensus on objectives and prioritization, but the communication linkages begun in the two-day workshop began a dialogue on systematically focusing on community-level demands to encourage participation and ownership at the local level.