What Are Stakeholders?
The international standard providing guidance on social responsibility, called ISO 26000, defines a stakeholder as an "individual or group that has an interest in any decision or activity of an organization."
Stakeholders may include suppliers, internal staff, members, customers (including shareholders, investors, and consumers), regulators, and local and regional communities. Additionally, stakeholders may include purchasers, clients, owners, and non-governmental organizations (NGOs).
- Identifying stakeholders
- Stakeholder analysis
- Stakeholder analysis example
- Stakeholder management 101
- Stakeholder resources
In order to identify who a stakeholder might be, ISO 26000 clause 5.3.2 suggests that an organization should ask the following questions:
- To whom does the organization have legal obligations?
- Who might be positively or negatively affected by the organization’s decisions or activities?
- Who is likely to express concerns about the decisions and activities of the organization?
- Who has been involved in the past when similar concerns needed to be addressed?
- Who can help the organization address specific impacts?
- Who can affect the organization’s ability to meet its responsibilities?
- Who would be disadvantaged if excluded from the engagement?
- Who in the value chain is affected?
The answer to any one of these questions may determine if an individual or group is a stakeholder.
Stakeholder impact is the primary consideration of social responsibility. All stakeholder interests should be considered and balanced for an organization to be socially responsible.
The concept of the stakeholder may be very easy for the quality professional to understand. The same considerations that are made with customers and suppliers for quality assurance are expanded to employees, the local community, and other potential stakeholders when approaching social responsibility.
Stakeholder analysis is defined as a tool organizations can use to clearly identify key stakeholders for a project or other activity, understand where stakeholders stand, and develop cooperation between the stakeholders and the project team. The main objective is to ensure successful outcomes for the project or the changes to come.
Types of stakeholders include:
- Primary: Those who are directly affected, either positively or negatively, by an organization’s actions.
- Secondary: Those who are indirectly affected by an organization’s actions.
Stakeholder analysis is frequently used during the preparation phase of a project and is an excellent way to assess the attitudes of stakeholders towards changes or critical actions. It can be done once or on a regular basis to track changes in stakeholder attitudes over time.
The stakeholder analysis is generally considered a highly confidential document because it often contains sensitive information.
Benefits of Creating a Stakeholder Analysis
- Provides clear understanding of stakeholders’ interests
- Offers mechanisms to influence other stakeholders
- Enables full understanding of potential risks
- Identifies key people to be informed about the project during the execution phase
- Provides awareness of negative stakeholders as well as their adverse effects on the project
How to Make a Stakeholder Analysis Matrix
- Stakeholder identification: Create a stakeholder matrix (Table 1) that will be used to identify key stakeholders and their positions. List the level of "influence" on the X axis (top row) and the level of "importance" on the Y axis (first column).
- List all key stakeholders in the appropriate cells (Table 1).
- Stakeholder analysis: Create a second matrix (Table 2). List all key stakeholders in the first column. List relevant information regarding them in the top row, using as many columns as needed.
- Complete the information in the table by conducting interviews or through discussions with the project sponsor or another high-level resource.
- Prepare an action plan to engage the stakeholders who could have a negative impact on the project or could be severely impacted by the actions.
Table 1 shows a matrix identifying key stakeholders and their levels of importance or influence. Table 2 shows an example of detailed stakeholder analysis that includes confidential information.
Table 1. Stakeholder Identification
Table 2. Stakeholder Analysis Matrix
Consider those most affected to create lasting change
Stakeholder buy-in is essential in any successful project, including lean and Six Sigma efforts. A leading cause of project failure, however, is not focusing on the stakeholders who have the greatest influence over implementation and sustainability. Effective management requires three things throughout the project life cycle:
- Communication and risk planning
- Active collaboration
Stakeholder management begins by identifying individuals and groups the project affects. To identify a comprehensive list of stakeholders, evaluate individuals or groups who contribute to, or receive value from, the project. Be sure to assess stakeholders for their influence, the extent to which they are affected, and their attitudes toward the project.
Tip: Because stakeholders’ perspectives, involvement, and ability to influence the project may change, the team should identify stakeholders in the project design phase, and also periodically throughout the project. At each new phase, revisit the original stakeholder analysis, which will help guide tactical decisions for engaging key stakeholders.
To assess each stakeholder group, apply numerical ratings or simply rate each as high, medium, or low for stakeholder influence and involvement. Use these ratings to plot each stakeholder on a 2×2 matrix for analysis. For attitudes, identify whether the stakeholders are supporters (+), neutral (0) or detractors (–), or use a green, yellow, and red coding. This will allow for stakeholder segmentation for communication and risk planning.
Stakeholder ratings will help form an effective communication plan, which identifies different information needs for each group. For example, the stakeholders in the upper right-hand quadrant of each step in Figure 1 will have the most at stake in the project and possess the most power to influence the project’s outcome. Therefore, the project team should seek to create buy-in through targeted communication.
Stakeholder analysis will help those responsible for project success to identify project advocates—supporters (positive attitude score) with high influence and stake in the project. Enlist the help of advocates to influence groups that may be neutral or negative toward the project. Influential and interested advocates will provide important allies to drive project success.
Stakeholder Management 101 (Quality Progress) A leading cause of project failure is inattention to those stakeholders who have the greatest influence over implementation and sustainability. Effective management requires proactive and on-going stakeholder engagement—including identification, communication and risk planning, and active collaboration—throughout the project life-cycle.
Making Stakeholders a Strategic Asset (Quality Progress) Quality models indicate that managing stakeholders to enhance their value generation capability can be a winning strategy. The first step toward this aim is to limit the stakeholder role to those who cooperate to achieve organizational goals.
Adapted from "Stakeholder Management 101," (Quality Progress).