What is a stakeholder?
A stakeholder is someone who has/holds an interest – in this context, a business.
We can break these into 2 categories to begin with :
Internal Stakeholders : These include Employees, Employers, The Board, Managers, Business Owners and shareholders, basically anyone within the business.
External Stakeholders: These could be Suppliers, customers, service users, Banks, even local residents – anyone outside the business that holds an interest in its activities.
What do we mean by holding an interest?
Taking first Internal stakeholders we can use examples of Employees relying on an income and interest in how well the business performs may effect them and their own progression. The board, Business Owners and shareholders interest lies in financial profit and/or sustainability. This is in general terms of course – if we think about interest in a project or a change in the organisation then the type of interest and level will change depending on what is important to the stakeholder, this is important to remember when you are thinking of undertaking an exercise on stakeholders, you need to know why you are doing this and so therefore what context the exercise will take consideration of.
External Stakeholders are a little more complex in their interests. For example, Customers will hold an interest and expectation for the products and services they purchase. Suppliers interest will be around repeat business and good relations and local residents may hold an environmental interest around the activities of a business such as environmental concerns or more positively, contribution to the local economy.
Being able to identify who your stakeholders are is the first step towards being able to understand what their differing interests are and how to work with them effectively.
The identification process will depend largely on the reason for the exercise. If you are running a project then the analysis is likely going to be in relation to that. If you however are a Manager needing to work with a variety of stakeholders as part of your operations you will probably need a much broader view depending on your level of Management.
The easiest way to identify Internal stakeholders is to get hold of the organisational chart that relates to you. This will give you a clear indication of individuals and also allow for grouping stakeholders eg (finance dept, marketing, sales etc) Depending on the structure you may also need to consider Boards of Directors or Trustees
External Stakeholders will take more thought and you may decide you need to identify suppliers individually for instance but group customers. Grouping customers is more likely for Business to Consumer (B2C) as you wont want to list out every individual customer that buys from you!
You can probably imagine how Business to Business (B2B) would benefit from listing the major clients.
Aside from the obvious ones you should also consider those whose interest may be low but who could have quite an impact on you, in other words they hold power. Think about Government influences and regulations. Its also important to realise that these can change so again if you are for example considering a project in the local community then local councils and external authorities such as the HSE may suddenly become medium to high interest.
List your Internal Stakeholders using your organisational chart and remember others that may not appear on it such as higher up the board. You can either list individuals or group them into categories or both depending on what is important to you.
Now List your external stakeholders, similarly you can either single out or group them or both.
Now you have identified your stakeholders we can move on to mapping them and for this you need to understand the nature of mapping and the different techniques you can use to do this.
In this section we will analyse stakeholder mapping techniques
One of the most popular and widely known models is Johnson, Scholes and Whittinghams mapping theory which derives from the Mendelow model (1991)
Johnson et al Power – Interest Matrix
There are differing visual representations but which ever you choose it is about the power and interest of the stakeholders that counts.
My preference is shown here:
The idea is you can place your stakeholders onto a grid in terms of how much interest they hold and how much power. So for instance, your project may require funds which is authorised by the Finance Director. They may not have much of an interest in what your project is but they do have the power to allocate you a budget and so keeping them happy is important but you don’t need to worry about keeping them updated on all the detail and progress of the project. Where would you place the Finance Director in this case?
You’ll probably place them as a Rook Bare in mind this is a scale so you may have some stakeholders that sit higher or lower than others, think of an example of another Rook and you may find they have power but less than the Finance Director. It wont always be accurate but the exercise does at least start to categorise the stakeholders into groups that will eventually help you create a live engagement plan.
Using a blank template start to populate the matrix with your list of both Internal and External stakeholders placing them where you feel they belong in terms of their interest and level of power.
There are other stakeholder analysis techniques that can you help you understand the stakeholders in much more detail and an ideal model to use alongside this is Egans shadow-size theory.
Egans shadow-size theory
Egan’s shadow-size theory breaks down stakeholders into more categories so its more detailed than the Johnson’s power interest grid. Whats more, if you also undertake this exercise you’ll find it adds a better understanding of how to place these groups into the grid. Egan’s theory separates stakeholders into 9 groups:
Loose Cannons: Next down from fence sitters except the potential to vote for or against the change / project or in fact you is not clear – they could go either way.
Bedfellows: Similar to fellow travellers in that they want the same thing but they may feel a lack of trust in you.
Looking at the above descriptors imagine you can now fit your stakeholders into the categories before putting them into the power interest grid!
This gives you a much clearer indication of
1) how many potential stakeholders you have on side vs how many may be against the project
2) How many want the project but may not particularly support you personally
3) How many could lean either way and potentially support or gang up on you.
4) what power/influence/impact they have
The importance of the 4th will map out exactly who you should focus your time and energy on. This doesn’t mean to say you should forget and ignore the rest of course. Follow the advice in the power interest grid and be aware that new game changers can come into play as the project rolls out and at different stages different stakeholders influence may change also so those that at first held little interest may become high on the list as a change project enters a different phase in it lifecycle.
In other blogs I will examine other stakeholder techniques but for the purpose of creating an engagement plan the above is sufficient. You can download a template for this here….