Key Learning Outcomes
- Learn that a stakeholder can be impacted by, or impact on, a company and may be an individual or an organisation.
- Understand the benefits of stakeholder analysis for your business particularly when you are planning to implement changes.
- Apply the power-interest matrix to determine the level of power and interest a stakeholder has in a given situation.
- Explain how shareholder analysis ensures you communicate and manage expectations effectively.
A “stakeholder” is defined as an individual or organisation that can be positively or negatively impacted by, or could impact on, a company. Large companies will use a stakeholder analysis to help assess and analyse risks when looking to make any significant changes, and to assist in the implementation process. This tool can be adapted and used in many other situations such us when managing projects, negotiating, or in your day-to-day working life.
Benefits of using a stakeholder analysis
By understanding who your stakeholders are you are able to identify those that are likely to have the greatest influence on your project or those that will be impacted by decisions or changes that you are planning to implement. In negotiations it allows you to identify the people who may help or hinder you in coming to an agreement.
Identifying who the stakeholders are
Stakeholders can be both internal and external to your business and all should be considered in the analysis. Think about all the people or organisations that could influence or be impacted by your project, negotiation or change initiative. Don’t forget if you identify an organisation you will also need to identify who within the organisation you will be able to communicate with. Stakeholders include the following types of people or organisations:[wlm_ismember]
- Internal: business owners, partners, directors, co-workers, employees and shareholders.
- External: government bodies, customers, the public, suppliers, prospective customers and employees, the community, interest groups and family members.
Determine which stakeholders are the most important
Once you have made a list of all of your stakeholders you need to go through them to determine which are the most important. We find the best way to do this is to plot them on a simple grid known as the “power-interest matrix” as shown below.
Depending on how high the level of power they will hold in the particular situation is and how much interest they will have will determine where they fit on the matrix. You need to look at the list and assess for each stakeholder where they should be placed.
Where a stakeholder sits on the grid will help you determine what actions you might need to take and also the communication strategy you will adopt.
- High power/high interest – These are the stakeholders that you must keep informed during the duration of your project. They will have the highest level of influence and will be impacted by the end result. If you are not sure about their expectations, ask questions early to ensure that you are clear on what they are, and you are able to deliver on them.
- High power/low interest – These stakeholders may hold significant power such as an investor but they may also have other interests. You want to keep them satisfied and again it would be wise to determine in the early stages what level of communication they require.
- Low power/high interest – These people will often be able to give you valuable feedback and ideas and it is important to keep them informed. They also may have some influence over some of the more powerful stakeholders.
- Low power/low interest – These stakeholders should be monitored but will not have a high impact on the result of your project.
It is important to remember that a stakeholder’s interest and power may vary depending on the project, decision or change initiative. For example, your customers may be key players if you are thinking of moving your business to a new location and your business relies on them coming to you, such as a restaurant. It would not be wise to jump in and make a move without ensuring that they were willing to follow you. However, in the same example, if you were looking to open a second restaurant in another location, the current customers may certainly be interested but their level of power would be much less.
Putting it into practice
A stakeholder analysis is a quick and easy tool that you should use as part of your decision- making process. It forces you to think about all the different people that will be impacted, and will allow you to ensure that you communicate and manage expectations effectively. It will also help you to understand why in the past someone might have reacted badly to a change or a decision, and will allow you to be better prepared in the future.[/wlm_ismember]
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