A short article on how to identify and manage stakeholders

1. White Paper #28
Stakeholder Management
May 2014
By: Garth Holloway
Managing Director
Sixfootfour
Tel: +61 (0)2 9451 0707
garthh@sixfoot4.com
www.sixfoot4.com.au

2. I am frequently asked to comment on the mechanics of change management, a level of detail I have
tried hard to avoid until now. Most texts on the subject define the four building blocks of change
management as: stakeholder management, communications, training, and the management of
change. This article covers stakeholder management with future articles to address training and
communications. The management of change has been addressed in my previous articles.
It is common to hear that, on less successful projects, the change management program failed or
that “we would have delivered a better project if we had started the change management earlier” or
words similar in nature.
These statements assume that the project had any change management at all. Frequently, this is not
the case. Sure, those involved did training and some communications. They may even have
completed a stakeholder analysis. But stakeholder analysis, training, and communications are
seldom delivered in a cohesive, integrated broadside to the organisation. I use the word broadside
as I do not want to call them activities. Treating them as activities is why change management
programs frequently fail to deliver the desired changes in behaviour. Activities tend to get
completed sequentially and then signed off as complete when delivered. In this case the project, at
best, has a change coordinator. “We have done the stakeholder analysis” – tick.
When it comes to change, the most fundamental question to ask is: so what?
What was learnt from the change activity? And what is the business going to do with the new
information? Note that I do not ask what the project team is going to do with the information. That
is of lesser importance than what the business is going to do with it. The distinction is vital, as the
project team cannot change the business. Only the business (line management) can change the
business. The project team will do all the heavy lifting and will meet all the agreed deliverables. It
just won’t change the business. There is an old consulting joke: how many consultants does it take to
change a light bulb? The answer is just one, but the light bulb has to want to change. If the business
does not want to change, then the project will, despite its best efforts, deliver a sub-optimal result.
This preamble sets the scene for the fact that when a change manager leads a change initiative, the
emphasis must be on the result, not on the initiative itself. The sponsor owns the project and is
accountable for realising the benefits. Project ownership has to include the change program.
Therefore, by extension, the change manager does not own the change program. Rather they are
the designated subject matter expert on guiding companies through the difficulties associated with
change and, primarily, their role should be to mentor the stakeholders through the change journey.
Being a subject matter expert does not exempt them from preparing traditional deliverables such as
training packs and communications.
It is common to kick off a project with a change management plan similar to the following table.

3. Change Activity Month
1
Month
2
Month
3
Month
4
Month
5
Month
6
1. Develop Change Management
Strategy and Plan
•
2. Develop Change Impact
Assessment
•
3. Develop Stakeholder
Management Plan
•
4. Develop Communications Plan •
5. Develop Communications •
6. Develop Training Plan •
7. Develop Training Material •
8. Develop Change Readiness
Assessment
•
9. Develop Change Management
Schedule (integral with project)
•
10. Deliver Stakeholder
Management Plan
• • • • •
11. Deliver Communications • • • • •
12. Deliver Training •
13. Deliver Change Readiness
Assessment
• •
14. Manage Change Management
RAID Log
• • • • •
I agree with all these activities, just not the order in which they are shown.
The primary variable in change management is people’s behaviour, as individuals and as groups, and
a key objective of any change program is to establish predictability. For the wider stakeholder
community, predictability is knowledge of the future changes and their impact on the individual or
group, and for management, predictability is knowledge of how the community will respond to the
change.
Stakeholder management is the means by which the change manager provides this predictability
and it needs to be done in a format appropriate to the stakeholder. This makes stakeholder
management the most important step in change management and it moves from being a discrete
task to being the backbone of all the change management activities.
To actively manage the stakeholders requires that there is agreement on who the stakeholders are.
Stakeholders can be individuals or groups. For example, the CFO and the executive team are two
stakeholders. The CFO is also part of the executive team, but the CFO position is important enough
for it to be identified as a specific stakeholder in the project.
My recommendation is to work with managers who are easily identified as stakeholders to identify
the extended set of stakeholders. This is most readily achieved through an impact analysis
workshop. The methodology table shown above indicates that the impact analysis is completed prior

4. to the stakeholder management workshop. In practice the two activities are iterative in nature and
one informs the other.
An impact analysis is a determination of how widely the “ripple effect” of the project will be felt, as
well as the strength of the ripples. Ripples are typically operational, financial, or reputational in
nature and I use these terms with the broadest possible definition. The implication of the word
“strength” is to indicate that there are stakeholders that are not directly impacted by the project,
but will be aware of and interested in the project. There are also stakeholders that will only become
relevant if the project goes poorly.
Completing the impact analysis as part of the stakeholder management workshop is valuable, as it
encourages the existing stakeholders to consider who else will be impacted by the project. It is also
an early step in enlisting the stakeholders on the change journey and allowing them the time to
become invested in the project.
The next step is to determine how to engage with, or manage, each stakeholder.
There are some very sophisticated methodologies designed to rank stakeholders. The following 2x2
matrix, by comparison, is a simplistic but frequently used approach.
The matrix is a simple comparison of Power (the capability to influence the direction or outcome of
the project) and Interest (the desire to influence the direction or outcome of the project).
This raises the question, how are Power and Interest defined?
Power
Interest
Low
High
Low High
Manage
Monitor
Involve
Inform /
Engage

5. In her article posted on the American Express Open forum
(https://www.americanexpress.com/us/small-business/openforum/s/?query=Nicole%20Lipkin%20)
Psychologist Nicole Lipkin discusses seven types of power, namely:
Legitimate Power is where a person in a higher position has control over people in a lower position in
an organisation.
“If you have this power, it’s essential that you understand that this power was given to you (and can
be taken away), so don’t abuse it.” Lipkin says. ”If Diane rises to the position of CEO and her
employees believe she deserves this position, they will respond favourably when she exercises her
legitimate power. On the other hand, if Diane rises to the position of CEO, but people don’t believe
that she deserves this power, it will be a bad move for the company as a whole.”
Coercive Power is where a person leads threats and force. It is unlikely to win respect and loyalty
from employees for long.
“There is not a time of day when you should use it,” Lipkin tells us. “Ultimately, you can’t build
credibility with coercive influence — you can think of it like bullying in the workplace.”
Expert Power is the perception that one possesses superior skills or knowledge.
“If Diane holds an MBA and a PhD in statistical analysis, her colleagues, and reports are more
inclined to accede to her expertise,” Lipkin says.
In order to keep their status and influence, however, experts need to continue learning and
improving.
Informational Power is where a person possesses needed or wanted information. This is a short-term
power that doesn’t necessarily influence or build credibility.
For example, a project manager may have all the information for a specific project, and that will give
her “informational power.” But it’s hard for a person to keep this power for long, and eventually this
information will be released. This should not be a long-term strategy.
Reward Power is where a person motivates others by offering raises, promotions, and awards.
“When you start talking financial livelihood, power takes on a whole new meaning,” Lipkin says. For
example, “both Diane and Bob hold a certain amount of reward power if they administer
performance reviews that determine raises and bonuses for their people.”
Connection Power is where a person attains influence by gaining favour or simply acquaintance with
a powerful person. This power is all about networking.
“If I have a connection with someone that you want to get to, that’s going to give me power. That’s
politics in a way,” Lipkin says. “People employing this power build important coalitions with others

6. … Diane’s natural ability to forge such connections with individuals and assemble them into coalitions
gives her strong connection power.”
Referent Power is the ability to convey a sense of personal acceptance or approval. It is held by
people with charisma, integrity, and other positive qualities. It is the most valuable type of power.
The important point, here, is that the application of these power types needs to be thought through
carefully. The most frequently used definition of power is legitimate power and using this definition
alone is short-sighted. Staff who have relatively low legitimate power can have very high power
when it comes to influencing the success of the project. This is especially true for subject matter
experts.
Equally, interest can have multiple variables. For completeness I recommend using the same
categories as those used to determine the “ripples” in the impact analysis, namely:
Operational – a primary focus on structure, strategy, environment, and implementation; a desire to
improve the operational effectiveness and efficiency of the business.
Financial – a primary focus on the ROI and the impact on the balance sheet.
Reputational – a primary focus on the company’s reputation in the market, or the individual
stakeholder’s own brand value.
Typically all three variables will apply, but each stakeholder will have a leaning to one or another of
them. For example, a middle manager will have a high interest in the operational benefits of the
project and a lower interest in the financial aspects. They get their salary no matter what, so
financially the project may not change their situation much, but operationally, the project could
make their life much easier.
To fully consider the relationship between each of the variables, it makes more sense to use a table
rather than the simple 2x2 grid.

7. Power Dominant
Interest
Nature of Interest
Stakeholder
X Y Z
Legitimate Power M H
O
Coercive Power H H
F
Expert Power L H
R
Informational Power
Reward Power
Connection Power
Referent Power
H = High, M = Medium, L = Low.
F = Financial, O = Operational, R = Reputational
Stakeholder X has high (legitimate) power and a high interest in the operational results of the
project. Stakeholder Z, by comparison, is an expert and potentially will never rise to the senior levels
of management. Consequently they have little political power, but a very high interest in the project
as it showcases their expertise and it can substantially enhance their reputation.
In many respects a stakeholder matrix is a political map and, when completed at the start of the
project, it reflects an ideal position that is subject to change. It is therefore important to conduct a
sensitivity analysis against the project variables of time, cost, and quality to gauge changes in each
that will affect the status of each stakeholder. It is not hard to believe that the executive team would
move quickly from having a low interest in a project to a very high interest once the project started
to substantially exceed its budget (time or money) or if the deliverables started to fall short of
expectation.
A key activity in any change program is risk management. I consider the change management plan to
be inextricably linked with risk management and I cannot reconcile why so many projects maintain a
steadfast separation between them. The stakeholder management plan and associated sensitivity
analysis should be a key input into the risk management plan and conversely, the risk register can
inform the sensitivity analysis.
How a stakeholder is scored defines how they should be engaged with through the course of the
project. In essence, this then becomes the change management plan. This includes the sensitivity
analysis.

8. The 2x2 matrix shows a simple response for each cell. This response is only a guide and the true
complexity is revealed when attempting to determine what manage means for each stakeholder.
Consider: the manifestation of “manage” is very different when it comes to an internal stakeholder
as compared to an external stakeholder, or to manage an individual is very easy as opposed to
managing a group. Equally, a stakeholder with high expert power requires very different
management to a stakeholder with legitimate power. It is fairly easy to replace a manager
(legitimate power) and relatively difficult to replace an expert.
The appropriate action is also defined by the nature and degree of change required by the
stakeholder. Some stakeholders will require management that enables them to see the world
differently. This is management of their attitude. Other stakeholders will be required to learn new
skills. This is management of their technical profile.
Equally, process performers will require detailed training to give them the skills they will require at
the end of the project. This means that training is not a completely separate activity to stakeholder
management. Rather it is a type of stakeholder management.
Appropriate actions to manage stakeholders should include a combination of the following
techniques.
Technique Type Description/Purpose
Training Awareness training High-level summary information on the
technical aspects of the project to provide
context and understanding.
Technical training Detailed training to create or improve skills.
Communications Face-to-face meetings/forums
Many-to-many
Small groups and committees that meet on a
reoccurring basis to discuss the project.
Characterised as being highly interactive.
Face-to-face private meetings
One-to-one/few
Private meeting with one or two people. The
conversation is expected to cover topics not
readily addressed in bigger meetings or
forums.

9. Email Electronic communication. Ensures that all
recipients receive the same message at the
same time. Impersonal in nature.
Town-hall meetings An address to a large audience, typically by a
senior manager. Has a personal element to it.
Marketing collateral Brochures, posters, T-shirts etc. Good for
branding and low impact messaging.
Theatre The use of professional actors to role-play
specific scenarios to reinforce the messaging
used elsewhere in the project. Very effective
when used to illustrate the need for change.
Website updates Acts as an electronic brochure and message
board. Provides consistent messaging.
Intranet forums (chat rooms) Interactive online sessions to allow
anonymous or open conversation on the
project. Great for question and answer
sessions over an extended period of time.
Suggestion/comment boxes A physical box where staff can submit written
questions, suggestions, or concerns to
management. The comments can be
anonymous or not.
Participation Active management of project Active and continuous engagement with
selected stakeholders that have recognised
responsibility and/or accountability for
outcomes.
Occasional input as a subject
matter expert
Active engagement with subject matter
experts who have responsibility for the
suitability and quality of a specific outcome.
Decision-making Managers responsible for making decisions
that bind the company. Typically this will be
senior management.
Decision endorsement Managers that are asked to provide support
for a decision that will be tabled for approval.
The manager’s endorsement is desirable, but
not mandatory, as it ensures the manager’s
support when the decision is implemented.
Knowing which technique to use when is related to the “power” associated with the stakeholder.
The following table illustrates the dominate intervention type for each type of power. It should be
noted that most of the remaining types of intervention should also be relevant. For instance, you will
never stop using email.

10. Technique Type Legitimate
Power
Coercive
Power
Expert
Power
Informa
tional
Power
Reward
Power
Connection
Power
Referent
Power
Training Awareness training Y Y Y Y Y Y Y
Technical training Y
Communications Face-to-face public
meetings/forums
One-to-many
Y Y Y Y Y Y Y
Face-to-face private
meetings
One-to-one/few
Y Y Y Y Y
Email Y
Town-hall
Marketing collateral
Theatre
Website updates
Intranet forums (chat
rooms)
Y
Participation Active management
of project
Y
Occasional input as a
subject matter expert
Y
Decision approval Y
Decision
endorsement
Y Y Y Y Y
I close with a reinforcement of the message that only the business can change itself and the change
manager must ensure that they do not absolve the stakeholders from their accountability if they
wish to ensure change is successful.