Stakeholder management: Your guide to influencing project outcomes

Stakeholder management can make or break a project — and be more complex than project managers think. Here’s how to mentor, influence, and communicate with everyone impacted by your project.

Stakeholder management is vital to project success. When key individuals are informed and on task, projects run smoothly. But when those impacted by or have an impact on a project are left out, the project can fall apart.

Many project managers struggle to implement effective stakeholder management, despite its importance. Often, this is a top-down issue, starting with the CIO.

“IT can’t be successful without good stakeholder coordination and management,” says Barry Brunsman, a principal in advisory at KPMG, a professional services firm. Because of this, Brunsman and others advise CIOs to be intentional about stakeholder management, building the skills required to be good at this task and creating processes to ensure the work is an integral part of all IT projects and digital initiatives.

“It’s a key issue that needs attention, and a CIO can and should set the tone and practices for effective stakeholder management,” says Brett Tucker, an adjunct professor of cyber risk management at Carnegie Mellon University’s Heinz College.

The payoff is significant, as having and executing a sound stakeholder management strategy can drastically improve individual, team, project, and company performance.

“This is a task that should not be ignored, because if it is ignored, it’s a risk to the success of the project,” Tucker adds.

The following is a high-level guide to effective stakeholder management.

Stakeholder management definition

Stakeholder management is a process for identifying, engaging, organizing, and improving relationships with any individuals, functional groups, or internal and external parties who may be impacted by or have an impact on the outcome of a project. It is an ongoing, intentional process that must be directed according to an established plan the organization must execute on.

Long important to project success, stakeholder management has become more critical and more challenging in the modern era. That’s because the number of stakeholders in a typical enterprise initiative has grown, and those stakeholders often are geographically dispersed today, thereby making communication, coordination, and collaboration more complex to organize.

“We see the increasing need for stronger relationships, yet they’re often harder to build now,” says Mike Shaklik, partner and global head of CIO Advisory for Infosys Consulting. “You have to build the discipline of stakeholder management into project delivery, so you’re able to ask better questions, have better conversations, and ultimately drive better outcomes.”

It’s important to note, too, that stakeholder management involves much more than the term “managing” suggests. Stakeholder management has more to do with mentoring, influencing, directing, communicating, and coordinating with stakeholders than it does with actually managing them.

As Samir Datt, global technology strategy and architecture lead with the consultancy Protiviti, explains: “Stakeholder management to me, in its most basic form, is having the structure, processes, and relationships to make sure we’re getting from stakeholders the important priorities, risks, and metrics needed to successfully complete a project. It’s about being able to define project value, inform on progress, and demonstrate whether a project delivered on stakeholder expectations.”

Benefits of stakeholder management

Well-executed stakeholder management offers numerous benefits. These include:

1. Identification and inclusion of all stakeholders: Stakeholders vary by project, and not all stakeholders have the same level of importance to a project’s execution and success. Additionally, the need for stakeholder involvement can vary as a project progresses. A good stakeholder management plan helps project leaders identify all stakeholders and ascertain which stakeholders need to be involved at which stages of the project’s execution. “Those are pivotal questions that need to be accurately answered, because if you identify the wrong people as stakeholders, you’re either going to get the wrong information, too much information, or conflicting information — and you will set off on the completely wrong path,” says Te Wu, CEO and chief project officer of PMO Advisory, an associate professor at Montclair State University, and a Project Management Professional (PMP).

2. Increased role clarity and focus: A stakeholder plan helps project managers set realistic expectations for each type of stakeholder in any given project, thereby improving clarity around their roles.

3. Higher productivity: Stakeholders who understand their roles and the roles of others are more likely to stay on task, thereby boosting productivity and increasing the chance that the project will remain within scope from the start.

4. Increased engagement: A well-thought-out stakeholder management plan explains how a project will impact each stakeholder, allowing them to understand how the completed initiative could benefit them in their day-to-day roles. This insight helps get stakeholders engaged, even if they’re already bogged down with daily tasks.

5. Improved insights for project leaders: That increased engagement means stakeholders are more willing to share their perspectives on projects — information that could better shape the project’s direction and the plans for successfully completing it. “It helps you at the very minimum infuse the stakeholders’ knowledge, goals, objectives, and views into what you ought to do,” Wu says.

6. Reduced risk: A clearly developed and executed stakeholder management plan reduces conflict by providing increased role clarity and engagement. It also helps reduce other types of risks to the project’s successful execution, as engaged stakeholders are better able to surface challenges and issues that could present obstacles. “Good stakeholder management is a mechanism to help you identify potential problems earlier rather than later and take the necessary corrective actions to help prevent them from occurring,” Datt notes.

Stakeholder management process and plan

Stakeholder management involves several components, ranging from identifying stakeholders to determining which stakeholder requires what information and when that information is needed. Each component is vital, with one flowing into the next as essential building blocks for developing a strong stakeholder management plan.

1. Identify stakeholders

Project managers should start by conducting a stakeholder analysis to create a list of stakeholders that should be involved in the project. Findings from this analysis should be documented in a stakeholder register and should include the name of the stakeholder, the stakeholder’s current role, the stakeholder’s role in the project, contact information, and their impact on the project’s outcome. Here, stakeholder analysis tools can be used to help identify stakeholders and evaluate their importance to the project’s success.

The stakeholder register is a baseline that sets the tone for all stakeholder communications throughout the project lifecycle. This vital document explains why each stakeholder was selected and what that stakeholder’s purpose is within the scope of the project.

Here’s an example of what a stakeholder register might look like:

Stakeholder register

IDG / Moira Alexander

2. Identify and document each stakeholder’s role and impact

The stakeholders’ register should identify the role and impact of each stakeholder. To complete this information, you need to not only use the information compiled during the stakeholder analysis but also — ideally — meet with stakeholders to determine what interest they have in the project as well as their influence on its execution and outcome.

3. Prioritize stakeholders

After conducting a thorough stakeholder analysis and documenting each person and their role in the stakeholder register, it’s necessary to prioritize stakeholders based on their required involvement in and expected influence on the project.

Levels of prioritization are as follows:

High-influence, high-interest stakeholders are stakeholders who play a key role and have a high impact on the success of a project, such as project sponsors or business leaders.

High-influence, low-interest stakeholders may be secondary leaders who may not currently have a direct interest but can influence the outcome of a project.

Low-influence, high-interest stakeholders may play more of a mentoring and support role whereby they aren’t directly involved but are capable of either rallying the troops or playing a disruptive role.

Low-influence, low-interest stakeholders may not have an impact on a project and only have a casual interest in how the project is progressing. These stakeholders could work in other departments not directly impacted by the project.

4. Develop a communications plan for stakeholders

Effective stakeholder management requires comprehensive communication with stakeholders. That communication must involve the appropriate individuals at the right time and it must convey the right information using the appropriate communication channels.

“This should include how to report milestones to make sure all stakeholders are informed, so that if there’s a decision to be made, they have the information they need to make it in a timely manner,” says IT project manager Krista Phillips, a certified Project Management Professional and a regional chapter leader with the Project Management Institute (PMI).

The project communications plan should include:

A description of the type of communication

The frequency of communications

The format (e.g., email, person-to-person, telephone)

The participants for each type/mode of communication

Distribution for the communications

The final deliverables

The owner of each communication

5. Cultivate mechanisms to gather information from stakeholders

Stakeholder management requires more than communicating project information to stakeholders, Brunsman says. It should also include opportunities for stakeholders to share their perspectives and insights to project managers and their supervisors. “Make sure communication is not a one-way street,” Brunsman advises.

6. Establish a governance structure

The strongest stakeholder management plans include governance to ensure requirements are being met and all participants are contributing as required, Tucker says.

As such, CIOs, their direct reports, project managers, and other leaders should identify mechanisms for verifying and tracking progress against the plan.

Tucker advises the use of the RASCI Matrix, a project management tool for identifying, assigning and overseeing who performs what work. More specifically, it addresses who is Responsible, Accountable, Supporting, Consulted, and Informed.

Stakeholder management best practices

In addition to developing a stakeholder management plan, there are some best practices that can help smooth stakeholder management. Those best practices center around the need for transparency, inclusiveness, clarity, and timeliness.

Transparency: Transparency is critical when managing stakeholders because it helps establish trust. Transparency creates a direct link to a leader’s intentions and helps stakeholders decide whether they want to buy into a project.

Clarity: Strong project leaders develop clear communication and make the complex seem simple. Providing clarity can also keep stakeholders at various levels focused and on task, making it easier for the project to stay on track.

Inclusiveness: Teams are becoming more distributed, making inclusiveness vital. Whether it’s differing opinions, experiences, backgrounds, genders, beliefs, or other factors, inclusiveness means practicing fairness across the board without making concessions for only some stakeholders.

Timeliness: Managing stakeholder management timelines and ensuring timely communication are vital to ensuring effective relationships with all stakeholders involved in a project’s success.