What are Stakeholders and how to Manage them Effectively?

A stakeholder is any individual,  a group of people, or an organization that can affect or be affected positively or negatively by the project.

Stakeholders are simply those who have a particular direct or indirect interest in a project or result. Remember, not all stakeholders have the same interest in the project.

The stakeholders can be;

  • individuals within the project like the Project team
  • individuals or departments within the organization &
  • individuals or groups outside the organization like influencers, outside consultants

In this article, we will discuss the Management & Engagement of Stakeholders. Though managing stakeholders is “Disrespectful” to the owners, we will mainly focus on the stakeholders’ Engagement.

Here, You can Download & Install Primavera P6

How to Manage/Engage Stakeholders?

As we know, a stakeholder can favor your project, and we call it a positive stakeholder, and also, it can be a negative stakeholder against your project. Hence, the proper management of stakeholders is essential for a successful project.

We use a different set of techniques that harness the positive effect and minimize negative influences. It comprises below main steps;

  1. Identify Stakeholders
  2. Analyze their Interest and Influence
  3. Develop Communication Management Plans
  4. Engage and Influence stakeholders

Identify Stakeholders

Identifying stakeholders is a critical process that helps to manage and engage them. Ensure this process of identifying stakeholders is throughout the project life cycle, and as their interests, influence, and impact may change during the course of the project. Following are the benefits to identify stakeholders but not limited to;

  • It will improve the quality of the project
  • It will help to avoid delays
  • It will help you to get extra support during the life cycle of a project.

Before going for applying tools and techniques for identification of project stakeholders, first, make sure to get the answer to these questions with you like who;

  • is it indirectly involved with the project?
  • May it be affected by the project?
  • May it be affected by the project’s outcome?
  • Are the competitors?
  • Are the shareholders?
  • Is it affected positively and negatively by the project?
  • Has the power to make it succeed (or fail)?
  • Makes the money decisions?
  • Are the suppliers?
  • Are the end-users?
  • Has influence over other stakeholders?
  • Could you solve potential problems with the project?
  • Is in charge of assigning or procuring resources or facilities?
  • Has specialist skills that are crucial to the project?
  • Gains or losses from the project’s success?
  • Wants to complete the project successfully, and who doesn’t?
  • Is the user the result of the project?
  • Has the authority to influence the project or its outcome?
  • Has the authority to make the project succeed?

Inputs for Identity Stakeholders

The following documents can help you to identify stakeholders on any particular project;
Project Charter: It is a High-level document that authorizes the project to the project manager
Procurement Documents:  Help to Identify procurement contract stakeholders
Enterprise Environmental Factors:  Consideration factors such as culture, systems, procedures, industry standards
Organizational Process Assets:  Consider factors such as templates, lessons learned, stakeholder registers.

Tools & Techniques to Identify Stakeholders

Stakeholder Analysis:  Gathering and assessing information to determine whose interests should be taken into account
Expert Judgment: Expert technical and/or managerial judgment

The output of Identity Stakeholders

We will get the following Outputs;
Stakeholder Register A document identifying all project stakeholder information, requirements, and classification
Stakeholder Management Strategy: Defines the approach to increase stakeholder support and reduce negative impacts represented in a stakeholder analysis matrix.

Now we will see types of stakeholders to further know about these.

Commonly stakeholders are categorized as below:

  1. Internal & External Stakeholders
  2. Primary, Secondary & Tertiary Stakeholders
  3. Voluntary vs. Involuntary Stakeholders

But if you are going for PMI-PMP, then you only need to consider Internal & External stakeholders.

Internal & External Stakeholders

This is one of the most simple classifications of project stakeholders. You can easily understand the following diagram.internal AND external STAKEHOLDERS

Internal Stakeholders

Internal stakeholders are internal to the organization. Let see stakeholders examples with types of stakeholders;

  • A sponsor/owner
  • Employees
  • Board of Directors
  • Investors:
  • A project team
  • A program manager
  • A portfolio manager
  • Management
  • Another group’s manager internal to the organization
  • An internal customer or client

External Stakeholders

These stakeholders are external to the organization. For example:

  • Customers
  • Creditors
  • Society
  • Government
  • Any external  client
  • An end-user
  • Suppliers
  • Subcontractors
  • The government
  • Local communities
  • The media
  • Intermediaries
  • Competitors

Key Differences

To make things easy, make sure to know the key difference between internal and external stakeholders;

  1. Internal Stakeholders are meant to serve the organization,
  2. External Stakeholders always deal with the company from an outside party.
  3. Internal Stakeholders are influenced directly by the activities.
  4. Internal Stakeholders are direct employees of the company.
  5. Internal stakeholders must be aware of the internal matters of the company.

Stakeholders Model

Some schools of thought classify by this. Primary, secondary, and tertiary classified definitions are the most common. We do this to identify and to understand better the stakeholders on our project. Whatever classification you do, always keep in mind that the internal Stakeholders are the primary stakeholders, whereas External stakeholders are secondary or tertiary stakeholders.

Let see briefly about these by one;

  1. Primary
  2. Secondary
  3. Tertiary Stakeholders

Primary Stakeholders Model

There are five different primary stakeholders.

    1. Stockholders
    2. Customers
    3. Employees
    4. Government
    5. Communities

Secondary Stakeholders Model

There are five different secondary stakeholders, as well.

  1. The Media
  2. Activists
  3. Competitors
  4. Management
  5. The Board of Directors

Tertiary Stakeholders Model

There are six tertiary stakeholders.

  1. The Unions
  2. Political Groups
  3. Business Community
  4. Universities
  5. The Courts
  6. Suppliers

You can see below the pyramid to understand their authority on any project.

Stakeholders group power wise distribution

How to Analyse stakeholders?

This classification will make things easy when managing and engaging the stakeholders, as we know their stakes well after careful analysis.

Stakeholder analysis is a  process that involves identifying all potential stakeholders, finding their needs and level of interest or influence.

There are five techniques used for Stakeholder Analysis.

Power vs. Interest Grid

This is the most important grid as we use the power of a stakeholder to manage and engage. Let’s go through this stakeholder analysis technique with the help of the following figure.

High Power | High Interest 
You need to engage that guy in all respects regularly. These are actually the key players in your project. Always make sure to keep this group satisfied with level-up to date information…

High Power | Low Interest

They need not be overloaded with the information on your project. They need specific and concise reporting, not a detailed analysis.

Low Power | High Interest
This group should be kept adequately informed. You can consult with them regarding their area of interest.

Low Power | Low Interest
This group includes stakeholders that only require general information. Don’t overload them and just put in under your radar/umbrella all the time.

Influence Impact Grid

This stakeholder analysis technique uses the Influence & Impact grid, similar to Power & interest.

  • An influence versus impact grid we plot
  • It helps to prioritize stakeholders.

 Power Influence Grid

In this stakeholder analysis technique, we use the power influence grid.

  • It is also similar to the Power vs. Interest grid.
  • It helps to puta stakeholders as per activeness and authority.

Importance Influence Grid

In this stakeholder analysis technique, we use the importance vs. influence grid.

  • It is also similar to the Power vs. Interest grid.
  • Here we categorize the importance and level of “Authority.”

 Salience Model

This is a bit different from the others we just discussed. Here we use;

  • Power
  • Legitimacy
  • Urgency

of stakeholders on our project.

We draw a three-dimensional model called the Venn diagram and see the intersections, as you see in the below figure.
Salience Model for stakeholders management
Here, Urgency indicates how quickly a stakeholder’s needs are to be informed or addressed to the Project Manager.

TheUrgencyy tells the PM the importance of the stakeholder need is to the project goals. Salience is prominent in simple words. The bigger the value of factors the stakeholder has, the higher is the salience or prominence.

Let us see what these are:

  1. Dormant: High power but no legitimacy or Urgency.
  2. Discretionary: Rightful stakeholders but do not have urgency or power.
  3. Demanding: Neither power nor the legitimacy
  4. Dominant: Both power and legitimacy, but not the urgency.
  5. Dangerous: Have both power and urgency.
  6. Dependent: HasUrgencyy and is part of the project but does not have the power.
  7. Definitive: Have all three factors and hence the highest salience.
  8. Non – Stakeholder: No concern with the project.

A careful stakeholder analysis will help a project to identify:

  • Interests of overall stakeholders
  • Potential issues that could disturb the project
  • Key people to engage with information during the executing phase
  • Communication planning & stakeholder management strategy during the project life cycle.
  • Helps to manage negative stakeholders on your project

Develop Communication Management Plans

Once you’ve prioritized your stakeholders, you can then start to develop a communication plan to make sure how you are going to give information to the right person at the right time. A communication plan is going to play a vital role in the success & failure of any project.

There are lots of ways you can communicate channels you can communicate with stakeholders. These include:

  • Meetings
  • Presentations
  • Project Status Reports
  • Letters – Mails
  • E-mails
  • Website
  • Newsletters

How and when to use the above method will decide as per your categorization as per stakeholder analysis.

Here, I have some tips for better communication with your project stakeholders;

  • Messages should be clear, concise, and at the right time to the right person.
  • Open and honest reports are always welcome to build trust among each other.
  • Don’t hide any news in addressing key concerns.
  • Respect the norms and make sure to follow the multicultural environment.
  • Don’t flood with unnecessary information to others to show how much you are doing on the project.

Engage and Influence stakeholders.

As already said, as the stakeholders are your peers and the owners, a proper Engagement rather than management of them is highly appreciable as a project manager. They are not all your followers and hence should be treated respectfully.

Being a project manager, it is your utmost duty to engage them throughout the project life cycle and remember that only a single stakeholder can ruin the whole project.

The active involvement of stakeholders is very much essential to the project:

  • It creates a sense of responsibility and accountability.
  • It allows others to express their ideas, issues, concerns.
  • It enables practical risk assessment and response planning.
  • It creates learning opportunities among stakeholders.

Once everything is done, then make sure to prepare a RACI Chart that will help to further engage among stakeholders.

Stakeholder vs. Stockholder or Shareholders?

Shareholder –  who owns an equity stock in the company
Stakeholder – who is an interested party in company performance other than capital
A shareholder is the owner of a part through shares of stock. At the same time, any stakeholder will be interested in a company’s performance for reasons other than stock performance or appreciation.

A shareholder is also known as a stockholder.
Shareholders vs Stakeholders
 In 1988, Edward Freeman introduced Stakeholder theory. This theory maximizes shareholders’ interests in a way that is still permitted by law or social values. The reason why shareholders are important stakeholders is that as they own the company through capital investment.

Differences in shareholders, stockholders, and stakeholders:

  • Shareholders/stockholders must have financial shares in the organization, but the stakeholders must have an interest in the organization’s financial matters or not at all.
  • Shareholders are stakeholders, but all stakeholders are not part of the shareholders.
  • Shareholders will be directly affected by what happens to the company, while stakeholders can be affected indirectly or directly.
  • Stakeholders shares responsibilities and influence what happens to the company, while shareholders are only affected.
  • Shareholders own part of the company, while all stakeholders do not all have a part.

Wrap up

A proper stakeholder management plan with a complete list of stakeholders will definitely be a must-have document for engaging all project stakeholders.  Stakeholders actually share business and values. Even if you are dealing with employees as stakeholders or shareholders, you must go for a win-win strategy. Stakeholder engagement strategy should be simple as everyone involved must have buy-in. Always make sure to understand the types of stakeholders you are dealing with as soon as possible.


Download Primavera P6
To download and install Primavera P6  was never that easy as nowadays. By following these steps…

Download Primavera P6

What is PMP?
What does PMP stand for? You are here as you just have heard about PMP, or you know a little already but have some …

What is PMP?

What is PERT?
PERT – Program (Project) evaluation Review Technique is a project management tool & is a graphical representation…

What is PERT?

Work Breakdown Structure
Work Breakdown Structure is simply a tool that breaks the work down into a structure…

Work Breakdown Structure

Project Management
Project management is how you apply the knowledge, skills, tools, and techniques to get the project management …

Project Management

Gantt Chart
A Gantt chart is also known as bar chart represents a project plan by making each task into a bar and …

Gantt Chart

Planning Engineer
Planning Engineer is considered the right-hand of a Project Manager as he floats the information about project…

Planning Engineer

Team Development
Dr. Bruce W. Tuckman, a psychologist published a theory in 1965 called ‘Tuckman’s Stages of…

Team Development

16 thoughts on “What are Stakeholders and how to Manage them Effectively?”

  1. fantastic points altogether, a shareholder and shareholder difference is OK. But I thing stockholders may have very much interest in the project initially but not in later part as they have their research already before putting on stock! What do you say?

    1. Yes, you are absolutely right. But we cannot say that their interest is not much as they have put the bet on it. It may depends that how much they give weight to this particular project.

  2. I was a bit confused that why there is a term Stakeholders Engagement? Now quite clear to me. Thank you very much for sharing it with us.

  3. I do believe this is the best write-up on Stakeholder on the entire internet. Kudos to your effort. Of course, a comment is due for your effort.

  4. Quite clear and easy to follow along with the article. A concise effort on Stakeholders. Surely, I will try to engage them rather manage in future.

  5. That’s the best on the internet. Helped in my assignment. Thanks, mate. I can’t get stakeholders insight better than that.

  6. I really like your effort in categorizing as Internal External as well as primary-secondary school og thought. Engam=gment of the team, as well as stockholders, is something we need to work on always.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top