What is a stakeholder?

Image of someone selecting a block representng a perosn
Choosing a stakeholder

The Scrum Framework is widely adopted in agile methodology, and the Version One 2016 survey confirms this: nearly 60% of teams are using pure Scrum, while 75% are using a hybrid approach like Scrumban. This shows that the Scrum Framework is becoming increasingly prevalent and important for project success.

As the adoption of the scrum framework and agile methodologies become more widespread, stakeholders are becoming a frequent subject of discussion among project professionals. It is important to understand who the stakeholders are and the role they play in any given project.

What exactly is a stakeholder?

A stakeholder is an individual, group, or entity that stands to benefit or lose from the outcomes of something. This could be the success of a company, the success of a project, the success of a sports team, or even the outcome of a bet. Generally speaking, stakeholders are people who stand to gain or lose from the success or failure of a project or organization.

There are many different types of stakeholders, and each one has different needs and interests. For example, shareholders are interested in the profitability of a company, while employees are interested in job security and good working conditions.

What are the stakeholders in Project Management?

Stakeholders encompass everyone who on some level has influence over a project, from the project team members, project manager, executives, and sponsors to customers and users.

Successful collaboration between all these individuals involved in a project is necessary for achieving success. The ability to exchange and discuss ideas and collaborate effectively is critical to the success of any project.

Organizational stakeholders can be both internal and external to the company.

Internal Stakeholders

An organization’s internal stakeholders are its employees, managers, and shareholders. These are the people who are directly involved in the day-to-day operations of the company and who have a direct financial interest in its success or failure. As such, they are extremely important to the company and its ability to achieve its goals.

Creating a good relationship with internal stakeholders is essential for any organization. By doing so, you can ensure that they are motivated to help the company succeed. Below are some tips on how to build strong relationships with your internal stakeholders:

External Stakeholders

External stakeholders are individuals or organizations that are not directly involved in a project, but who may be affected by its outcomes. They can be affected positively or negatively by the project, depending on its outcomes.

External stakeholders can have a significant impact on a project, particularly if they are opposed to it. For example, if a project is likely to have a negative impact on the environment, then environmental groups may be opposed to it. If a project is likely to result in the displacement of people, then community groups may be opposed to it.

Identifying a stakeholder

As we have mentioned there numerous individuals who can be stakeholders of a project, either by being affected by the outcome or being involved in the outcome. In project management there is usually one person or group of persons, that can determine if a project is a success or not. Determining this key stakeholder is done through Stakeholder Analysis.

Stakeholder analysis offers techniques and tools to identify and comprehend the demands and expectations of this key stakeholder within and external to a project. With these techniques, we can set up an organized plan for our project by being aware of the attributes, associations, and connections between proponents and antagonists of the project. The analysis is vital in understanding the risks involved with the project and consequently obtaining the necessary support required for its success.

List of Stakeholders you might come accross

  • Communities: They want assurance that the project won’t have a negative effect on their health, safety, or economic development.
  • Employees: They rely on their employment with the organization for sustenance and job security.
  • Customers: These stakeholders value quality products and services with demonstrable value from the project.
  • Suppliers and Vendors: Their revenue is tied to the success of the project, as they are supplying goods and services to its management.
  • Government: Government agencies are major players in any project, collecting taxes at both a corporate and individual level. They benefit from taxes generated by the company, along with an increase in gross domestic product (GDP).
  • Investors: These stakeholders have invested capital in the business, and are expecting a return on that investment.

Building Positive Relationships with Stakeholders

The success of any project depends on the support of the project stakeholders. Therefore, it is important to build good relationships with all the stakeholders to ensure the success of the project.

There are a number of ways to build good relationships with stakeholders. The first step is to identify all the stakeholders and their interests in the project. Once you have identified the stakeholders, you need to engage with them and understand their concerns. It is also important to keep the stakeholders updated on the progress of the project.

Building good relationships with stakeholders requires patience and effort. However, it is worth it in the long run as it will help ensure the success of the project. Dr. Lynette Reeds discuss more in detail in her article “How to Build Positive Relationships with Stakeholders”.

A case study highlighting the importance of identifying a Stakeholder

A two-year project in the banking industry. This analysis was conducted at the beginning of its second year in order to assess the key risks associated with it. Two primary roadblocks were identified: (1) functional managers continually adding extraneous tasks to project team members’ workloads and (2) insufficient clarity regarding the project’s requirements. Furthermore, no key customers were involved in project planning discussions nor were team members encouraged to engage with them, and there was also inadequate ownership assigned to secondary project needs.

Notably, the primary customer hasn’t deemed an integral player and the secondary customer was a non-existent entity during the project implementation phase. At the same time, the functional managers exerted too much control in a matrix environment. In order to drive success and help functional managers comprehend their negative impact on the progress of the initiative, it was up to the project manager to persuade both sponsors and convince them to support his objectives. (story adapted from PMI – Stakeholder analysis)

Related Articles

Stakeholder Concepts to learn

Stakeholder Training Resources

Avatar photo
Written by Community

Where Project Managers and Microsoft® Meet.