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Why is Stakeholder Engagement Crucial for Project Success?

In the realm of project management, stakeholder engagement serves as the linchpin that holds the entire process together.


a meeting of stakeholders

From inception to implementation, stakeholders are crucial in making or breaking a project. Engaging stakeholders, keeping communications open, seeking support, feedback and other eyes open to potential project pitfalls is vital.


This post delves into the intricacies and benefits of developing a stakeholder engagement strategy and its integral role in strategic project planning and leadership.


What is Stakeholder Engagement, and Why is it Important for Strategic Planning?

Stakeholder engagement is the process of interacting with and involving individuals, groups or entities in projects that are interested in or are affected by the project’s outcome.


This interaction is crucial for strategic planning as it helps align and communicate the project’s objectives with stakeholder expectations, ensuring clarity and effectiveness in the long run.


Where ambiguity or a lack of communication exists in a project, stakeholders often fill it with their assumptions and expectations, which can be very dangerous.


32% of Project Failures are Attributed to Poor Stakeholder Management

  • According to a study by the Project Management Institute, 32% of project failures are attributed to poor stakeholder management.


Stakeholder Engagement vs Stakeholder Management


a man and woman looking at a laptop

While often used interchangeably, stakeholder engagement and stakeholder management are two different concepts.


Engagement is about building relationships and fostering open communication. Stakeholder management, on the other hand, focuses on aligning stakeholder interests with project goals, often through more formal processes and techniques to engage them.


Steps Involved in Stakeholder Management

Managing stakeholders effectively is a four-step process, each key part of which has its own importance and relevance in the full project delivery lifecycle. Here's a deeper look into each of these steps:


1) Identifying Internal and External Stakeholders

The first step in stakeholder management is identifying who your stakeholders are. They will fall into one of two main camps, which will either be:

  1. Internal Stakeholders: These include the project sponsor, team members, managers, and executives within your organisation.

  2. External Stakeholders: These range from clients, customers, and suppliers to investors, community stakeholder groups, and regulatory agencies.


Methods for Identification:

Identifying stakeholders can be done in many ways, but typically through the following methods;

  • Brainstorming: Team members can brainstorm to identify potential key stakeholders. This can be a very valuable approach. By throwing everything on the table, different people will have different perspectives, and it is unlikely that any stakeholder groups will be overlooked.

  • Document Review: Analyse project documentation to determine who will be affected by or who can affect the project.

  • Consulting Experts: Sometimes, industry experts or even team members from previous similar projects can provide insights into who the stakeholders might be.

2) Analysis: Assessing Stakeholder Needs and Influence

After identifying the stakeholders, the next step in stakeholder management is to engage them to assess their perspectives, needs, expectations, and influence on the project.


Tools and Techniques:

  • Stakeholder Analysis Matrix: Use this matrix to list down stakeholders' interests, their influence level, and potential impact on the project.

An example of a stakeholder matrix


  • Interviews: Conduct interviews to gather qualitative data on what stakeholders expect from the project. The greater the project's size and complexity, the greater the value of this technique.


3) Prioritisation: Classifying Stakeholders

It’s crucial to realise that not all stakeholders are created equal. Some have much larger sway or interest in a project than others. Prioritising them helps focus your efforts where they are most needed.

Methods for Prioritisation:

  • Power-Interest Grid: This tool helps classify stakeholders based on their level of authority ("power") and their level of concern ("interest") regarding project outcomes.

an example of a power-interest grid for stakeholders

  • Influence-Impact Grid: This is a similar grid but categorises stakeholders based on their influence over the project and the impact they experience from the project.

4) Engagement: Develop and Execute a Plan

The final step is engaging effectively with the key stakeholders based on the analysis and priorities set.


This requires the development of a Stakeholder Engagement Plan. Below is a free template to such a document.



Components of a Stakeholder Engagement Plan:

  • Communication Methods: Specify whether stakeholders prefer email updates, face-to-face meetings, or other communication platforms. There are so many communication ways that carefully selecting communication channels is crucial.

  • Frequency: Some stakeholders may need weekly updates, while others may be fine with a monthly newsletter. Agree, capture and communicate the frequency of comms.

  • Key Messages: What are the key pieces of information that you need to convey to different stakeholders? Each stakeholder or group will have different needs and expectations. For example, the executive team may be very interested in budget, whereas the end users are more interested in features and benefits realisation.

By integrating regular updates, meetings, and other forms of ongoing communication together, the engagement and communications plan serves as the roadmap for how stakeholders will be engaged throughout the project life cycle.


Tools for Effective Engagement:


4 Tools for Stakeholder Engagement

Project Management Software


A JIRA screeshot

Use software to keep stakeholders updated in real-time. Having a centralised view of project progress can be incredibly valuable. It can minimise the huge overhead of creating status reports constantly, chasing information and ensuring consistency.


Tools like Asana or Jira offer dashboard views and real-time updates on projects, for example, allowing business stakeholders to track project progress and even participate when necessary.


Why It's Important:

  • Transparency: Stakeholders can see what’s happening, fostering trust. If done well, they can even answer their questions.

  • Accessibility: These platforms are usually easy to access, even for those who are not tech-savvy.

Feedback Platforms

Online platforms can collect, collate, and analyse stakeholder feedback efficiently.


Benefits:

  • Quantitative Data: Analyse measurable feedback to inform decision-making.

  • Trend Analysis: Over time, identify patterns in stakeholder opinions that may require action.

Communication Tools


A Slack screenshot

Digital platforms have made it much easier to include stakeholders who are based remotely or across different time zones.


From Slack channels for informal updates to Zoom meetings for more structured discussions, effective communication tools and resources are vital.


Recommended Tools:

Advantages:

  • Inclusivity: Remote stakeholder groups have an equal opportunity to participate.

  • Cost-Effective: Reduces the need for travel and other logistics. Hosting meetings on-site for stakeholders can be time-consuming.

Importance of Stakeholder Engagement Strategy in Leadership

Good leadership recognises the need for effective stakeholder management. Engaging stakeholders not only provides valuable insights but also helps in mitigating potential risks and overcoming challenges. It can turn potential adversaries into allies and facilitate a more participatory leadership style.


There will always be people who don't want a project to succeed, so identifying them early and engaging them positively can make all the difference in the project’s success.


Stakeholder Management for Strategic Planning

Creating an effective stakeholder engagement programme and management is not only essential for the project execution phase but also crucial during strategic planning and decision-making. This ensures the project starts on the right foot, with everyone on board from day one.


DURING the Strategic Planning Process

Understand What the Stakeholders Want

During the planning phase, it’s paramount to understand the stakeholders' needs and expectations.


This deeper understanding helps in shaping the project objectives and delivery methodologies. Making assumptions can be disastrous for the benefits realisation and the project outcomes.


Methods for Understanding Needs:

  • Interviews: One-on-one discussions can reveal nuanced insights about stakeholder expectations.

  • Surveys: These can be anonymous and allow stakeholders to share their views without any pressure.

  • Focus Groups: Assembled groups can provide a collective viewpoint on what is expected from the project.

What Do You Want to Achieve?

Clarity in objectives is essential. Whether you want to gain project approval, collect feedback, get support or secure resources, having a specific aim will guide your stakeholder engagement process.


Setting Objectives:

  • SMART Goals: Objectives should be Specific, Measurable, Achievable, Relevant, and Time-bound.

  • Align with Project Goals: Ensure that the objectives for stakeholder engagement are in line with the overall project objectives.

  • Objectives & Key Results: I’ve written elsewhere about these, but highly recommend them as a tool for capturing, agreeing and cascading objectives. https://www.iseoblue.com/post/okrs-a-great-tool-to-measure-what-matters


ONGOING - While the Plan is Being Implemented

Stakeholder management isn't a "set it and forget it" process; it's an ongoing commitment throughout the project life cycle. Below are some key aspects that need continual attention.


Putting Together an Engagement Plan

Once the strategic plan is set, it's essential to have a robust engagement and communication plan that guides interactions with stakeholders.

This plan acts as the operational manual for how, when, and what you communicate with each stakeholder or stakeholder group.


Components of the Engagement Plan

  • Communication Channels: Identify whether stakeholders prefer emails, newsletters, or face-to-face meetings.

  • Frequency of Communication: Some stakeholders may need weekly updates, whereas others might be satisfied with quarterly reports.

  • Key Messages: Identify the critical information each stakeholder needs, like project milestones or financial updates.

Tools to Facilitate Engagement:

  • Email: To keep stakeholders updated at scale.

  • Feedback Mechanism: Regular surveys or a suggestion box can be included in the plan.

The Importance of Identification

Stakeholders aren't a static group; they can and often do change as the project evolves. New players may come into the picture, while others may exit. Consequently, it's vital to update your stakeholder list regularly.


Identification Techniques

  • Stakeholder Audits: Regular audits can be performed to assess who is still relevant.

  • Change Logs: Maintain a log that tracks any changes in the stakeholder landscape.

Relationship Management


a group of people talking

Building a successful project is often closely tied to maintaining healthy stakeholder relationships. Managing and developing these connections on an ongoing basis can make or break the project or organisation's success.


Building Relationships:

  • Active Listening: When stakeholders talk, listen carefully; it's a simple but effective way to show that their opinions matter.

  • Regular Check-Ins: These don't have to be formal meetings. A quick coffee catch-up or a brief phone call can suffice.

Maintaining Relationships:

  • Conflict Resolution: Address any disagreements or conflicts directly and professionally.

  • Consistency: Keep your communications and actions consistent to build trust.

Tools for Relationship Management:

  • Customer Relationship Management (CRM) Systems: For large stakeholder groups, a CRM can help you keep track of your interactions and notes about key stakeholders' concerns or preferences.

Addressing these aspects makes you more likely to achieve and build a project environment where stakeholders feel heard, valued, and engaged. In the end, this can greatly influence stakeholders and enhance their support for your project's chances of success.


Conclusion

Stakeholder engagement is not a one-time effort but an ongoing process that permeates every aspect of project management.


From planning to implementation, understanding and managing stakeholders' needs and expectations are critical for success.


By taking a proactive approach to stakeholder engagement and risk management, project managers can anticipate challenges, allocate resources to support them more efficiently, and execute plans more effectively, ensuring project success.


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