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Stakeholder Analysis - Part 2

By Rachel Allen, Client Manager, TLF Research

The success of any business, policy or project is usually judged by how satisfied stakeholders are. In an ideal world, all stakeholders would be completely satisfied – but things are rarely so easy.  When stakeholders have different issues and objectives, keeping everyone happy is not as straightforward as it might appear.  To give themselves a fighting chance, businesses can conduct simple stakeholder analysis to improve their understanding of stakeholder dynamics and how they might affect the project in hand.

In order to achieve this it is vital to not only identify all stakeholders (groups and indi­viduals) but to ensure they are treated appropriately according to the role they play.  The last issue of Stakeholder Satisfaction explored two straightforward techniques for identifying stakeholders and categorising them to gain a greater understanding of how they need to be treated.  Firstly, the article explained how the simplest way to identify stakeholders is to hold workshops or focus groups with employees and gather their feedback, creating an extensive list of stakeholders. Secondly, it described how compiling a Power versus Interest grid (based on stakeholders’ power to affect the project and interest in the project) creates a framework that shows clearly how stake­holders should be managed. Again, employees can potentially play a key role at this stage of the analysis by feeding back their views on stakeholders’ ‘power’ and ‘interest’. 

Improving Employees

There are numerous techniques available for analysing stakeholder involvement and gaining a greater understanding of stake­holder relationships.  This article builds on those covered previously and introduces some techniques that take the analysis a stage further, using the Power versus Interest grid as a starting point.  One of the greatest benefits of these techniques is that they provide a basis for discussion, and more than likely, heated debate. Employees often know more than they think they do and it is more than likely that they store a wealth of information about stakeholders but, too often, lack the forum to share their knowledge and com­pare and contrast it with their colleagues’ viewpoints. For the purpose of stake­holder analysis, it is particularly beneficial to include a wide range of staff, from a variety of job roles, in the discussions to get as wide a range of opinion as possi­ble.

To recap - the power versus interest grid, considers the Stakeholders’ interest in the project and Stakeholders’ power to affect the project and is shown in Figure 1. Stakeholders are placed in the appropri­ate quadrant based on their characteristics.

[figure 1]

Briefly: 
Players – Good working relationship is essential for the project to succeed. Develop a partnership approach.

Subjects – Could present a risk to the success of the project.  Identify and pro­tect. The project is a failure if it doesn’t meet subjects’ needs.

Context setters – Could present a risk to the success of the project.  Take a pro­active approach.  Manage and monitor their activity.

Crowd – Require only limited monitoring and evaluation. Keep at arms length to reduce costs.

Stakeholder influence diagrams

Stakeholders on the Power versus Interest grid not only affect the outcome of the business or organisation’s project (whether it is a success or not) but they can also have an effect, or impact, on each other.  The purpose of stakeholder influence diagrams is to explore these inter-relationships and uncover any new relationships that may have previously been unrecognised.  Shown as Figure 2, the approach is straight forward.

  • Start with the completed Power ver­sus Interest grid – stakeholders will appear in each quadrant. The easiest way to view this is to stick this on the wall or flip chart.
  • In the group environment (with col­leagues), discuss which stakeholders influence each other.  Draw lines on the chart, from one stakeholder to another, to suggest the lines of influence.
  • Draw an arrowhead to indicate the direction of the influence.  (It is useful to bear in mind that two-way influ­ences are possible.)
  • Discuss which of the relationships is the strongest or most influential.  The thick­ness of the line can be used to represent the strength of the relationship.

As the diagram develops it is easy to see which stakeholders are likely to be under pressure from a number of other sources. The chart will also show which stakehold­ers exert the pressure.  This approach helps when it comes to viewing the proj­ect from a stakeholder’s angle as well as gaining an overview of the project as a whole and the stakeholder dynamics.

[figure 2]

Stakeholder influence mapping

The Stakeholder influence triangle is an alternative way of looking at the relative influence stakeholders have over deci­sion-making. Shown as Figure 3, the diagram shows the relative size of stake­holder groups, how much influence they exert and their relationships with each other.  As with the other techniques, this is best created in a group environment where opinions and views can be shared and challenged.

  • To create the triangle, define the proj­ect and the time period being mapped.
  • If it has not already been done - iden­tify the stakeholders that have an impact or interest in the project. 
  • Draw a triangle on a large sheet of paper.  A selection of various sizes of paper circles will also be useful. 
  • Revisit the list of stakeholders. Write the name of the largest stakeholder groups on the biggest paper circles.
  • Under guidance from the group, arrange the circles on the triangle to reflect their influence and the strength of their relationships with other stakeholders.
  • Take time to discuss the positioning of the circles and understanding the range of views from the group. Where the relationship between stakeholders is strong – this can be represented by placing the circles closer together.
  • Keep a record of the final diagram for future reference.

figure 3

Bases of power - directions of interest analysis

The ‘bases of power’ analysis highlights the tools that are available to key stakeholders (i.e. the sources of power) and what they hope to achieve. The purpose of constructing the dia­gram is to identify the powers that might have influence on a project.  An example is shown as Figure 4. The benefits of constructing the diagrams are two fold: 1) They help identify common ground amongst stakeholders 2). They provide background information that will help planners understand the way stakehold­ers react to problems or proposals.

  • To create a ‘Bases of Power’ diagram, start with a flipchart and write the stakeholder’s name in the middle.
  • In a group setting, brainstorm the ‘bases of power’ as they apply to the stakehold­er and write these on the bottom half of the sheet. This is about understanding what gives the stakeholder its strength. Draw an arrow on the sheet to indicate the direction of power.
  • After this has been done, brainstorm the ‘directions of interests’ (goals) the stakeholder may have. Write these on the top half of the sheet. Draw an arrow on the sheet to indicate the direction of interest.
  • Exploring the power and interest of each stakeholder in this way, is extremely useful for gaining a greater insight into the nature of stakehold­ers. Much of the value lies in the discussion process itself.

[figure 4]

Issue interrelationship

Stakeholders may be ‘related’ to each other through their common interest in certain issues connected with the project. The Stakeholder-issue interrelationship diagram helps understand the issues that could potentially be a source of disagreement or agreement between stakeholders. It uncovers common ground and therefore provides planners with useful insight and an example is shown as Figure 5. Once more, the technique used to gather this information is straightforward to employ.

[figure 5]

References:

Bryson, J. (1995) Strategic Planning for Public and Nonprofit Organizations (rev. edn), San Francisco, CA: Jossey-Bass.

Bryson, J., Cunningham, G. and Lokkesmoe, K. (2002) 'What to Do When Stakeholders Matter: Public Administration Review, 62:5

Eden, C. and Ackermann, F. (1998) Making Strategy: The Journey of Strategic Management, London: Sage Publications

C. Eden and F. Ackermann, MAKING STRATEGY, The Journey of Strategic Management, SAGE Publications, London, UK (1998) ISBN 0-7619-5225-X p. xii+507 £26.99

F. Ackermann, C. Eden and I. Brown, The Practice of MAKING STRATEGY, A Step-by Step Guide, SAGE Publications, London, UK (2005) ISBN 0-7619-4494-X p. vi+265, £21.99

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