What Is Stakeholder Management?

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Apr 15, 2024

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Every teamwork will require effective handling. Even a self-organizing team must manage themselves and go with the other members to accomplish a task completely. Each individual who is part of a group working towards accomplishing a common goal is called a stakeholder. Let us understand how in agile projects these people are managed. Who owns the management job and all other details pertaining to the organization? 

Stakeholder Management

What is it?

It is the process through which one can observe, organize and improve relations with the stakeholder.

It consists of analysis based on the needs and expectations of stakeholders; planning and implementation of a task to get linked with them. The best process to manage stakeholders is by interacting and assessing the quality of the link between you and stakeholders.

The focus is mainly on creating a map which allows us to observe the interest of the stakeholder for different groups. But these kinds of plans are mostly left to be engaged in the dust. Let us understand the effective principles of and steps involved in stakeholder management.

Types of stakeholders

1. High power

  • High interest - They are the project sponsors, they can assign you a high budget as well as team members.
  • Low interest: They initially have low interest but change accordingly with the project. They must be kept satisfied but not busy. 

2. Low power 

  • High interest: they are the cheerleaders and must be kept updated and invited with project details.
  • Low interest: one must not spend a lot of time with these but one must monitor the behavior.

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Importance of stakeholder management 

  • If you want to assess a successful project you must develop a relationship with the client or other stakeholders.
  • Time investment in the identification of perfect stakeholders is a good option to make the base strong by observing their interests. To avoid delay, try to use an engagement plan that is sound, clear and prioritized, this will help to access business and avoid risks.
  • Stakeholder management is important because they are the ones who are involved in taking product development towards success. End-user is a stakeholder who must be well managed to understand their need and provide them with the required end product. 

Thus, whether the stakeholder works for the project or the client it is necessary to manage all to align the entire work towards the business goal. 

Benefits of Stakeholder Management

Managing stakeholders does not only provide the right outcome but also reduces the risk and brings all stakeholders in one platform.

Best stakeholder management means enhancing business intelligence. Knowing the stakeholder’s needs and issues will help them to align its goal in such a way that maximizes value and reduces cost. 

List of good things offered by managing stakeholders rightly includes 

  • Business earns reputation
  • Thus gives an edge over the competition
  • Helps to manage risk 
  • Improving corporate governance
  • Hence fetches social license for better operation

Developing Your Stakeholder Management Strategy

For any activity to be performed professionally, there needs to be proper planning. You need to identify the right strategy and manage stakeholders. There are several steps involved in making a stakeholder management strategy. It is because many people are involved in any project and hence your strategy must be broad keeping all individuals, their needs and performances in mind. Know their level, influence, and power in the organization to make the right planning. Proper planning will produce the best results. Document the plan and refer that as handling human is the challenging task because of the complex brain each individual has. 

How to Create a Stakeholder Management Plan

You can follow the steps given below to make a fool-proof stakeholder management plan. However, you can always add or remove steps based on your organization's goal and nature of business. 

1. Understand

Knowing is the key to any successful work. Children must understand why they study and what they study. Memorizing won’t help in the long run. Likewise, understand your stakeholders. 

In general, you will deal people within the organization and outside who contribute and influence your decision respectively. 

To categorize them as people within and people outside. The former stakeholders can be easily identified and controlled as they are all working in the same organization you work with. It is therefore easy to connect with them and understand them. 

On the other hand, the latter stakeholders do not exist in your company. They are from outside and they are independent. Understanding them is challenging. Thus identify each one of them and make a list every time you want to make a plan. Carry out a SWOT analysis for each stakeholder for a successful outcome.  

2. Ranking

Soon after identifying them, start ranking them based on their power, interest, influence, etc. Then rank their individual goal and expectation from the organization. Just ranking them based on your business need will not allow you to manage them effectively. You need to rank them giving importance to their needs. Match their needs and business goals to finally rank them to start connecting with them.

3. Interview

You have ranked them based on your understanding and assumption. But as I mentioned already the human brain is complex and hence you need to talk to them to know what they want from the organization. Make use of the following questions and ask them for their response which will give a larger picture of them. This will also help you fine-tune your people understanding skills. 

Ask them,

  • The reason for the interest in that particular project
  • What do they expect from the business and project? 
  • Do they have any concerns? 
  • What do they want to contribute? 
  • If they have any suggestions? 

Generate as many questions possible to give them confidence that you are giving importance to their opinion. Making them feeling empowered will lead to success for sure. 

4. Matrix Development 

It is time to make a matrix with four quadrants aligning the stakeholders based on their types. The types are classified based on their power and interest. You can find the matrix given in the image below. In each cell list down the stakeholders. This will provide an idea about how to handle them effectively. You must remember that managing people with high power will not be the same as handling individuals with low power. Therefore making a matrix will give you a clear picture. 

Stakeholder Management

5. Expectation management 

You know your stakeholders, ranked them and interviewed them to fit them in quadrants. Now, you need to set and manage expectations. 

Create a plan and tell them what is expected from them. Without setting expectation you cannot manage and it is like shooting on your foot. 

Remember to set realistic expectations, time-bound. Do not keep it vague and that will destroy the entire purpose of planning. 

Principles of stakeholder management

The PO or the manager must follow the seven principles for effective management. Do not be biased on or in a hurry to make decisions as it will always backfire. 

  1. Acknowledge the concerns and provide support.
  2. Keep communication open and listen to the stakeholder’s views and suggestions. 
  3. Use the right approach and make sure that that does not hurt any individual. 
  4. Recognizing the efforts is important and just not focus on the results.
  5. Join hands and work with the stakeholders. Do not dictate terms which will only increase the risk of non-cooperation from them. 
  6. Avoid any decision that will affect even a single individual, Treat all equally as the whole team is working towards the same goal.  
  7. Acknowledge conflicts that are healthy as they will provide innovative solutions to problems. 

Who are your stakeholders in Scrum?

As far as a scrum team is concerned the stakeholders are people who are not part of the team but have an interest in the product.

We all know that a PO, SM, and the team are the key people in the scrum team. So the people other than this, all help in discovering, developing, releasing, supporting and promoting the product. 

Scrum stakeholders include

  • Client and end-user 
  • Business leaders 
  • Project sponsors
  • Legal professionals
  • Regulators 

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Finally, we would want to let you know that managing stakeholders cannot happen overnight. You need the managing skills and require proper training to know the steps. If you are a PO and want to learn stakeholder management then register for CSPO Certification Online with us. Alternatively, if you are a project manager then enrol with our PMP or Prince2 certification to learn the art of managing stakeholders. 

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