Jory MacKay on March 28, 2023 What is Stakeholder Analysis? (With Free Stakeholder Engagement Plan)
🎁 Bonus Material: Free Stakeholder Engagement Plan
If you want your projects to succeed, you need your stakeholders on board early. Unfortunately, too many project managers and development teams are eager to build and skip the stakeholder analysis stage.
But this is a mistake. Stakeholder analysis is the best way to identify, categorize, and plan your engagement strategy with everyone who’s interested and can influence the outcome of your project.
Without a proper stakeholder engagement plan, you’ll be left pushing your project uphill. In fact, ⅓ of all projects fail because of a lack of involvement from senior management.
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In this guide, we dive deep into the art and science of stakeholder analysis — who should be on your list, how to analyze and prioritize stakeholders, and how to keep them happy.
What is a stakeholder in project management?
In project management, a stakeholder is anyone interested in or with influence over your project’s outcome.
You wouldn’t be wrong if you think that’s a broad definition. Your list of stakeholders can vary greatly depending on your industry, company size, and project scope. Stakeholders could include individual employees, senior executives, government officials, or even external agencies.
Understanding project stakeholders and their needs is an essential aspect of project management and one of the key responsibilities of a great project manager.
In a recent survey, over 50% of project leaders ranked stakeholder management as the most critical factor for maximizing project success.
To make understanding stakeholders a little easier, you can divide them into internal and external stakeholders:
What are internal project stakeholders?
Internal stakeholders are people within your organization, most likely in a management position. Often, they’ll be key to the success of the project delivery and have an interest in the project’s decisions, performance, and profitability.
Examples of internal stakeholders include:
- Employees & Managers: Both within the core project team and outside.
- Business Owners: Especially if they are the project sponsor.
- Business Directors: Especially if they are on the project steering committee.
- Project/Business Investors: Even if they’re an external funding provider, they’re an internal stakeholder if they invest in your project.
What are external project stakeholders?
External stakeholders sit outside of your organization. Even though they’re outside, they’re still a vital part of any project, often contributing to its delivery or consuming its outputs.
Examples of external stakeholders include:
- Customers & Clients: Often the primary consumer of a project’s outputs.
- Suppliers: They provide the project with resources, such as raw materials.
- Competitors: Rivals compete for resources, customers, and market share.
- Intermediaries & Partners: The link between the project and its customers.
- External groups: Examples include lawmakers, governing bodies, regulators, and activist groups.
- Society: The invisible stakeholder ensuring the project remains morally and ethically sound.
Remember that these are just examples. Project stakeholders can be anyone that has an interest, or can influence, your project.
So, how do you work out who your stakeholders are? That’s where stakeholder analysis comes in.
What is stakeholder analysis?
Stakeholder analysis involves identifying the people associated with your project, grouping them, assessing their needs, and planning how to manage them.
While you start your stakeholder analysis at the beginning of your project, it isn’t a moment-in-time exercise. Instead, stakeholder analysis is something that you should do regularly throughout your project. This will help you to identify, analyze, and manage stakeholders as they come and go.
Your stakeholder analysis template is a living document, so keep it refreshed and updated as your project progresses.
Pro tip: Keep your stakeholder analysis document in your project management tool where everyone can find it. Planio wikis or custom fields are a great way to organize your stakeholders and create an actionable communication plan.
Why is stakeholder analysis so important?
It only makes sense that you want to understand who’s impacted by (or can influence) your project. But what’s the actual value in stakeholder analysis?
There are five critical reasons why stakeholder analysis is so important:
- It helps you identify and align all the people who can help the outcome of your project. When it comes to stakeholders, many people think of the people who may block their project and make life difficult. But, your project supporters and champions are just as important.
- It gives you a clear picture of who will impact your project. This will also help your schedule planning, risk management, and resource allocation.
- Identifying and analyzing stakeholders helps you develop a communication plan. This is especially important if you’re managing remote teams and want to ensure everyone is fully bought into the project and its objectives.
- It helps you mitigate your project risks. You’ll avoid major conflicts by identifying influential stakeholders and proactively identifying and addressing their concerns.
- It helps you plan your project. Stakeholder analysis helps you nail workload management for your busy project team. The vast majority of project problems will come from stakeholders. So analyzing and engaging them early on helps you predict challenges and prepare for them well in advance.
So, now that you know about stakeholder analysis and why it’s critical to your project’s success, you’re probably wondering how to do it?
The 6-step stakeholder analysis process
The good news is that the stakeholder analysis process is fairly easy. It provides a logical, structured way to identify, assess, and plan your stakeholder engagement.
Follow each of the steps below to get started, complete a view of your project stakeholders and maximize your chances of project success.
Step 1: Identify and list all stakeholders
As a project team, the first step of the stakeholder analysis process is to pull together a list of all your stakeholders. Here are several ways you can uncover all relevant stakeholders for your project:
- Brainstorm/workshop. Get around a whiteboard and brainstorm who will be impacted or influenced by the project.
- Interviews. Interview other stakeholders and ask them, ‘who else should be involved in this project?’
- Lessons learned review. Speak to other project managers about previous projects and which stakeholders were involved.
- Org chart review. If your business has an organizational chart, review that to identify stakeholders from different departments.
Don’t rush this step — especially at the beginning of your project. Even small projects often have 15–20 stakeholders in total. Take your time to identify your stakeholders.
Why it’s important: The initial identification phase sets the foundation for your stakeholder analysis — if you haven’t identified a stakeholder, you can’t manage them!
Case study example: John is the project manager for a new app build project. He gets his core project team together to workshop their stakeholders.
They put their company org chart on the wall, discussing possible stakeholders from different departments. They then identify several individuals from the IT, sales, marketing, customer insights, and operations teams as important for their project’s success.
Over 50% of project leaders rank stakeholder management as the most critical factor for maximizing project success.
Step 2: Define each stakeholder’s profile and involvement
As you identify your stakeholders, you need to put some flesh on the bones. Build out a small profile for each stakeholder that includes:
- Their role in the project.
- How the project affects their world.
- Why they’re interested in the project.
- Their level of influence.
- Their ideal contact method and frequency.
Don’t go overboard. The goal is to put yourself in your stakeholder’s shoes and understand their motivations and needs.
Why it’s important: As a project manager, you must see things from other people’s perspectives. There’s no point simply listing the names of your stakeholders. You need to understand their motivations to ensure you can make the project successful together.
Case study example: After listing out stakeholders, John walks through each of his stakeholders and defines their profile and involvement.
He picks the Marketing Manager first, knowing they will be interested in how customers might use the app and how the marketing team can promote it. Because of this, John knows the Marketing Manager will likely have some good input when building the product roadmap and will also be pivotal to making the launch of the app a success.
Pro tip: Create a Planio “issue” for each stakeholder to collect feedback and keep notes on their engagement.
Step 3: Group and prioritize stakeholders
Now that you have your list of defined stakeholders, it’s time to group and prioritize them. There are several ways to do this, but one of the most popular is Mendelow’s Matrix that’s based on stakeholder power and interest.
In turn, understand whether each stakeholder ranks high or low in their interest and influence over your project.
Where each stakeholder ends up on the grid determines how you should treat them:
- High power and interest: These are the key stakeholders that you’ll need to engage with regularly. Their interests must be met, and as such, these are the stakeholders you should put the most effort into managing. Examples include the project sponsor and the project team.
- High power and low interest: These stakeholders still have the potential to block your project but aren’t actively invested. Take time to satisfy them, but don’t go overboard, as you’ll risk annoying them with too much engagement. Examples include senior directors and external regulators.
- Low power and high interest: Despite their low power, you’ll want to keep these stakeholders informed to win them over as allies. Examples include customers, competitors, or consultants.
- Low power and interest: These stakeholders need light monitoring. They may only receive semi-regular updates on project progress. Don’t invest too much time here, as it isn’t worth the effort these stakeholders can absorb. These could be secondary stakeholders or other people at your company.
Why it’s important: Especially in large projects, you can’t spend all of your time managing stakeholders, so you need to prioritize. Power/interest grids like Mendelow’s Matrix help you focus your energy on the right stakeholders to maximize your chances of success.
Case study example: John knows that the Marketing Manager has a high amount of power when it comes to his project, but right now, his interest is pretty low. To maximize his time, John decides to only include the Marketing Manager in company-wide communications — such as during critical milestones.
Step 4: Plan your initial stakeholder engagement
Once you’ve grouped and prioritized your stakeholders, it’s time for the initial engagement. This is your chance to make a first impression and get each stakeholder on board with your project.
Always start with key stakeholders, engaging with them on a 1:1 basis to get the relationship off to a good start. Butter these stakeholders up a little, letting them know that you recognize their importance to your project. Often, these stakeholders will be busy people, so ask them how they like to be engaged and plan accordingly.
As you move down your priority list of stakeholders, be sensible with your time. Use other strategies such as a project kick-off meeting, emails, or broadcast calls to engage each one at the right level.
During the initial engagement, you’ll get a sense of each stakeholder’s interest in your project. Take that, and adjust your power/interest grid accordingly.
Why it’s important: When it comes to stakeholder engagement, getting off on the right foot is essential. Many project managers forget to simply ask how a stakeholder wants to be involved in the project. But this is the easiest way to ensure you’re doing the right thing!
Case study example: John decides to give the Marketing Manager a call and introduce himself and the project.
He explains the project objectives and how he sees the Marketing Manager contributing to the project’s success. The Marketing Manager likes the sound of the app and is excited to be involved, so they ask to be part of the monthly project meeting.
Step 5: Create a full stakeholder engagement plan
As you work through your initial engagements, you’ll begin to form a full stakeholder engagement plan.
Here you’ll want to create a consistent structure of tasks and communications that keep stakeholders up to date. To do this, use a variety of engagement methods, such as:
- 1:1 meetings
- Daily standups
- Weekly project meetings
- Bi-weekly email updates
- Monthly broadcast calls
- Company newsletters
You can partner with your organization’s Corporate Communications team to create a project communications plan. (This is perfect for your low-power/high-interest stakeholders).
Why it’s important: Once your project gets into full flow, you will have a lot on your plate. A consistent, structured stakeholder engagement plan will ensure your stakeholders are supported while making the best use of your time.
Case study example: John builds his stakeholder management plan following his initial engagements. He’ll schedule four 1:1 meetings a week, invite ten people to his bi-weekly project meetings, and provide an update to the entire IT department via the monthly newsletter.
Step 6: Execute, learn, and adapt
Stakeholder analysis is not a moment-in-time exercise. As you progress through your project, take the opportunity to reflect on your stakeholder engagement plan regularly, and tweak it if necessary.
Remember that stakeholders will also move around your power/interest grid, and you’ll have to change how you manage and engage with them. Learn and adapt throughout the project to ensure your stakeholders remain satisfied, and your project progresses smoothly.
Why it’s important: Stakeholder management is a living discipline where stakeholders constantly change. If you rely only on your initial stakeholder analysis, you’ll be in trouble as your project environment changes around you, leaving you open to risks and issues.
Case study example: As John’s app build project reaches the testing phase, the Marketing Manager wants to increase his involvement in the project. Alongside the bi-weekly project meeting, John schedules a weekly 1:1 with the Marketing Manager to provide regular updates and opportunities for them to align on the launch strategy.
Stakeholder analysis is the best way to identify, categorize, and plan your project engagement strategy.
Free Template: Planio’s stakeholder engagement plan template
Templates are a project manager’s best friend. To get you started on your stakeholder analysis, use our Stakeholder Engagement Plan to track, define, and prioritize your project’s stakeholders.
Stakeholder analysis FAQ: Everything else you need to know
Stakeholder analysis is a relatively straightforward process. But there are still some elements that can be tricky to understand.
Here are a few of the frequently asked questions that will take your stakeholder analysis to the next level:
What are the advantages of a stakeholder analysis?
Stakeholder analysis helps you to:
- Identify and promote people who’ll support your project.
- Identify and win over people who will block your project.
- Build trust in your project.
- Reduce risk from your project.
- Predict challenges and eliminate them from your project.
- Better plan resources and tasks for your project.
What are some common stakeholder pitfalls to avoid?
When managing stakeholders, try and avoid:
- Missing stakeholder analysis out at the start of your project. Bringing everyone to the table early is key to success.
- Rushing stakeholder identification. If you do, you’re bound to miss someone important.
- Assuming how your stakeholders want to be engaged. If you’re unsure, ask.
- Treating all stakeholders the same. They each need different engagement, so tailor your approach for each one.
When should you perform a stakeholder analysis?
To begin, perform stakeholder analysis at the start of your project.
From there, you should re-analyze your stakeholders regularly (we suggest monthly.) This will help you identify any changes in their needs and adapt your engagement style accordingly.
Who are the most important stakeholders for a project?
While all stakeholders are important, the project sponsor, the project team members, and the project customers are the three key groups you should focus on!
Happy stakeholders are the key to project success
So many projects fail to deliver because they don’t effectively manage their stakeholders. Whether it’s your colleagues, customer, suppliers, or even your competitors, the people in and around your project make all the difference.
But the good news is that stakeholder analysis isn’t that hard. Simply take the time to identify, define, and engage your stakeholders in a way that works for them. If you do, you’ll make allies, build trust, boost engagement, and set yourself up for project success!
