Stakeholder Analysis and Management

1. Stakeholder Analysis and Management

Let’s start by looking at a paper published in 1981 by A. L. Mendelow titled Environmental Scanning–The Impact of the Stakeholder Concept.

In this study, Mendelow proposes a model for managing stakeholder needs, but before going any further, let’s look at what a stakeholder is.

The definition of the term stakeholder was put forward by Ian Mitroff and Richard Mason in their publication A Logic for Strategic Management in 1980:

A list of an organization’s stakeholders can look like this:

• Shareholders
• Regulatory bodies
• Customers
• Suppliers
• Lenders
• Employees
• Society
• Competitors

The relationship between stakeholders and the organization (aside from the competitors) is mutual benefit. For example, suppliers can provide raw materials in return for money. On the other hand, competitors compete with the organization for market share and stakeholder contribution.

Stakeholders usually possess resources that the organization needs, and their ability to refrain from supplying those resources gives them power over the organization. Power can also stem from the ability to dictate alternatives or indirect influence.

This non-trivial distribution of power in a group makes the problem of complex social groups and their interactions interesting.

Stakeholder management becomes vital because of its power over the organization and subsequent ability to cause unwanted damage. Their requirements must be considered in the decision-making processes or whenever a new project that might impact them is scheduled for implementation.

Project implementations satisfy the stakeholder’s requirements, but what if these requirements conflict? Conflicts can arise due to restricted budgets, confined schedules, and scarce resources.

When gathering business requirements, it is essential to consider all relevant stakeholders, weigh their needs, and balance the risks.

The need to incorporate stakeholder requirements does not necessarily mean all stakeholders for efficiency reasons. To assist in screening the key stakeholders, Mendelow proposes the following model.

2. Mendelow’s Power-Interest Matrix

The model proposed by Aubrey Mendelow consists of four steps:

• Step 1: Identify the organization’s stakeholders by asking, “who are the people or groups that can influence the organization’s progress and success”?

• Step 2: Rate their power over the organization. Mendelow recognizes four sources of power: “possession of resources, ability to dictate alternatives, authority, and influence”. These four sources indicate how much power an individual or group has.

• Step 3: Rate each stakeholder’s interest in the project outcome. The sources of this interest can be emotional, financial, or value-centric. Interest can also arise if the project’s development redistributes power or creates/destroys opportunities.

• Step 4: Create an action plan as follows:
  • People wielding power compounded with high interest need close monitoring and engagement. Their specific requirements should be prioritized. 
  • Keep the powerful individuals with low interest in the project satisfied.
  • Individuals interested but not powerful enough to obstruct your progress can be kept in the loop and duly informed.
  • Finally, those with no interest or power can be passively monitored but would not need to be involved.

3. Requirements Gathering and Stakeholders Management

Based on the above, the following can be recommended:

1. When preparing the requirements of a new project, ensure that the correct stakeholders have been identified and their needs or concerns duly noted.
2. Requirement conflicts must be addressed. Mendelow’s power/interest matrix can be used as well as other tools.
3. Stakeholder management can be an ongoing process for the duration of the project. For example, project managers regularly communicate progress to management, clients, and other departments within the organization.

4. References

• Environmental Scanning–The Impact of the Stakeholder Concept — Aubrey Mendelow
• Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts — Ronald K. Mitchell, Bradley R. Agle, and Donna J. Wood