Stakeholder Management in Project Management

Stakeholder management involves identifying, analyzing, and engaging with individuals or groups that are interested in or can impact a project. Effective stakeholder management helps ensure project success by aligning expectations, mitigating risks, and fostering collaboration.

Types of Stakeholders

  1. Primary Stakeholders – Directly affected by the project, such as customers, sponsors, and team members.
  2. Secondary Stakeholders – Indirectly impacted, such as regulatory bodies and suppliers.

Steps In Stakeholder Management

There are three key steps in stakeholder management.

  1. Identification
  2. Analysis
  3. Management

Stakeholder identification can be done by:

  1. Reviewing Project Documents: The project charter, contracts and agreements, or business case and requirements
  2. Conducting Brainstorming Sessions: Engaging project team members, executives, and subject matter experts.
  3. Using Organizational Charts
  4. Analyzing Industry Environment: Identifying government agencies or compliance bodies,
  5. Using Past Projects: Reviewing lessons learned documents from similar projects to identify frequently involved stakeholders.

Stakeholder Analysis

Stakeholders can be analyzed using various techniques, and the choice of method depends on the specific project context.

Power-Interest Grid

This technique categorizes stakeholders based on their level of power (ability to influence project decisions) and level of interest (concern about project outcomes).

  1. High Power and High Interest stakeholders – Actively engage
  2. High power but low-interest stakeholders – Keep satisfied.
  3. Low power and high-interest stakeholders – keep informed.
  4. Low power and low-interest stakeholders – monitor with minimal effort

For instance, a project sponsor who has both high power and high interest needs active engagement. In contrast, a regulatory agency with high power but low interest should simply be satisfied. But how can an individual’s level of power and interest be determined? By having discussions with subject matter experts and learning from previous projects.

Salience Model

This is a more detailed stakeholder analysis technique. The salience model classifies stakeholders based on three key attributes:

  • Power – Their ability to influence the project
  • Legitimacy – Their level of involvement and legitimacy in the project
  • Urgency – The urgency of their concerns or expectations

Thus, stakeholders are grouped into seven categories:

  1. Definitive Stakeholders (High power, legitimacy, and urgency) – Need immediate attention
  2. Dominant Stakeholders (High power, high legitimacy) – Important decision-makers
  3. Dangerous Stakeholders (High power, high urgency) – Can be disruptive if not engaged
  4. Dependent Stakeholders (High urgency, high legitimacy) – Need project support to influence outcomes
  5. Dormant Stakeholders (High power, low urgency and legitimacy) – Have potential influence but remain inactive
  6. Discretionary Stakeholders (High legitimacy, low power and urgency) – May provide support but do not influence decisions
  7. Non-Stakeholders (Low in all three attributes) – Not relevant to the project

Direction of Influence

The direction of influence model categorizes stakeholders based on how their influence flows in relation to the project. This approach helps project managers understand the nature of stakeholder power and their impact on project outcomes.

Upward Influence (Senior Management & Sponsors)

These stakeholders have authority over project decisions and provide funding, strategic direction, and governance. Examples: Executives, Project sponsors, Steering committees and Investors

Management Strategy:

  1. Keep them informed with high-level reports
  2. Align project goals with their strategic priorities
  3. Seek approvals proactively

Downward Influence (Project Team & Contractors)

These are stakeholders who execute project tasks and are responsible for day-to-day activities. Examples: Project team members, Contractors and suppliers and Junior employees

Management Strategy:

  1. Provide clear instructions and expectations
  2. Ensure strong communication and motivation
  3. Address concerns related to workload, resources, and timelines

Outward Influence (External Entities & Regulators)

These external stakeholders affect the project but are not directly involved in its execution. They may impose constraints, offer support, or require compliance. Examples: Customers and end-users, Government agencies and regulators, Media and advocacy groups

Management Strategy:

  1. Ensure compliance with regulations and industry standards
  2. Maintain open and transparent communication
  3. Address external stakeholder concerns to minimize resistance

Sideward Influence (Peers & Other Departments)

These stakeholders are at the same organizational level as the project team but may have dependencies, collaborations, or competing interests. Examples: Other project teams within the organization and functional departments (HR, Finance, IT)

Management Strategy:

  1. Foster cross-functional collaboration
  2. Align project goals with their department needs
  3. Manage interdepartmental conflicts effectively

Best Practices for Managing Stakeholders

  1. Identify Stakeholders early.
  2. Schedule one-on-one meetings or group sessions with stakeholders to gather their requirements. 
  3. Document their expectations.
  4. Develop a communication Plan
  5. Tailor communication to different stakeholders or stakeholder groups
  6. Keep stakeholders informed of the project’s progress
  7. Manage conflicting interests: Seek win-win solutions where possible.
  8. Involve key stakeholders in major decisions, especially those directly affecting their interests or responsibilities.
  9. Be transparent about how decisions are made and how stakeholders’ input is considered.
  10. Set clear roles and responsibilities for stakeholders to improve accountability. 
  11. Address any concerns early before they escalate.
  12. Always seek feedback to improve your level of engagement.

The RACI Matrix

The RACI matrix defines stakeholder roles in project activities:

  • R – Responsible (owns task execution)
  • A – Accountable (final decision-maker)
  • C – Consulted (provides input before decisions)
  • I – Informed (needs updates but no direct involvement)

The Stakeholder Register

A stakeholder register is a project management document that lists all stakeholders and their roles, interests, influence, and engagement strategies. It helps project managers track and manage stakeholder expectations throughout the project lifecycle.

A well-structured stakeholder register typically includes:

  1. Stakeholder name
  2. Role/organization
  3. Category. direct or indirect
  4. power/interest
  5. Engagement strategy
  6. Communication preferences