Stakeholder Management

One of the most important aspects of change management is stakeholder management. Stakeholders are the ones who will determine the success of the project, thus, setting and managing their expectations are crucial steps in ensuring that the change goes smoothly.

Project managers are responsible for creating an environment of constructive dialogue with the stakeholders, to ensure that they are listened to, consulted for, and fully informed of the situation, throughout the entire change process. Stakeholders aren’t just people from within the organisation; they are also the suppliers, the consumers, the professionals that an internal organisation team are working with, all of them are stakeholders. Identifying the different types of stakeholder is key to establishing an effective change management plan, including stakeholder management, and the selection of the right methods and channels to communicate with them.

Managing Power and Politics

As with any organisation, there is an internal currency that people use to get results and this is called power. Understanding who possesses what kind of power and what it can do to steer the results to the planned path towards the desired outcome, is a skill that project managers must possess and be able to harness, in order to deliver results.

Organisations are political arenas that operate on a systems of power, where power is fixed and preserved through policies, rules, and procedures. Often, organisational politics is associated with negative impressions and are usually immediately met with a negative state of mind. While there is some truth to this, organisational politics, when done the right way, is actually beneficial to the organisation and its stakeholders. A healthy “political arena” has a healthy political environment; one that enables the leaders to run the organisation and make decsions in ways that are beneficial to many, if not all of its stakeholders. It is governed by leaders and managers who have the power and the ability to write the rules and decide how things should be done, in a way that will benefit the organisation, as well as both the internal and the external stakeholders.

The political environment is a huge consideration when it comes to managing stakeholders, especially when the organisation is going through a change process. It is through the leaders that project managers can gain approval and acceptance for their project, as well as get assistance in persuading the employees that the change is necessary and will be beneficial to the organisation and the team.

When it comes to selecting the people to put in a seat of power, certain traits and qualities must be present in the potential candidate, as these are what will determine one’s eligibility for the role. Some of the qualifications include tenureship, experties, knowledge, and most importantly, one’s work ethic and reputation. Leaders are looked up to and are role models in an organisation. The ease or difficulty of change management depends on the level of trust and on the amount of respect that the employees have for these leaders. These are the factors that determine the overall health of the political environment. Toxic environments are often led by people who use coersion to drive people and teams to do what they would like to have them do. This can lead to blaming and finger pointing later on, and is often a situation that is quite tricky to navigate, even during typical daily situations, but all the more in uncertain situations due to the occurrence of change.

People are judged based on these things, whether they are being selected by the people they manage or by the people who manage them. These are identified as bottom-up and top-down political action.

The Bases of Power

There are 5 bases of power in leadership, and these can be categorised into two major categories: Formal Power and Personal Power.

In the first category is where formal power comes from. There are three bases of power under this category, and all of these bases can be used by a leader, in order for them to drive results. This power stems from their position or role. This category  includes the following:

1. Coercive Power – the use of threat and fear to drive performance in order to meet objectives and achieve the desired results

• Reward Power – the use of positive reinforcement, where people gain something of value to them by putting in all their effort to meet objectives and achieve the desired results

• Legitimate Power – the use of authority brought about by one’s position or role within an organisation, and are often people who can make decisions for the organisations and its members

The second category is where personal power comes from. There are two bases of power under this category, and both of these bases are built by the leader themselves and given to them by the people they work with. This category includes the following:

• Expert Power – gained through knowledge, training, and hands-on experience, and people recognise the leader or the individual who has these qualities, as an expert or the go-to person for situations that require problem solving, subject matter expertise, and the ability to get the work done

• Referrent Power – determined by the people with whom an individual or a leader works with, as well as the by other members of the organisation who aren’t directly working with them or part of their team. This is gained through trust and respect, and mostly root from the leader or an individual’s reputation at work and for their work ethic.

Looking at these 5 bases of power, not all of it are reserved for people in position; the bases of personal power can be attributed not just to leaders but to non-leaders in the organisation, as well. Suffice to say, people leaders and non-leaders can both gain and harness personal power, while only leaders have and can use formal power to influence and direct stakeholders and members in and out of the organisation. However, personal power is often more valued as it is not something that comes with a leadership title, but determined by other individuals in the workplace – leaders or not.

Personal power, in a leadership role, can be strengthened through collaborative leadership. It is finding ways to inspire people to take action and get the work done, leading as a peer problem-solver, bringing relevant stakeholders together and involving them in the work process, making each individual and stakeholder feel valued, leading by example, and leading with credibility and integrity.

Gaining and Using Power

An effective leader can use their power to move a project towards the direction they want and at the same time be able to inspire and motivate the people around them to put in their individual efforts to achieve a common goal. This type of skill and form of expertise is what gives someone more power in terms of influence and pull. There are 5 ways to gain and use power.

1. Promoting reputation – highligting the competency and qualification of an individual or a leader, through the use of perception management

• Increase others’ dependence on mangers – having what stakeholders and other people need, and being able to provide them what they need

• Minimise managers’ dependence on others – challenging existing and ongoing dependency relationships and identifying other chanels of resources that a manager needs, in order to carry out their work

• Buildin collaborative relationships – improving relationships and creating ties between internal and external stakeholders, and between key people within the organisation, in order to achieve the desired outcome

• Negotiating advantageous agreements – that can be used to influence decision makers and stakeholders, especiallly in situations where change management is required

Problem-solving skills and building broad-based involvement are two of the major factors that determine a leader’s or an individual’s ability to negotiate advantageous agreement’s.

Identifying Stakeholders

Stakeholders, as mentioned earlier, can be internal or external people who work with the organisation. This means there are different types of them and there are appropriate ways to communicate with them, specific to their needs.

• High power, interested people – management requires full engagement and great efforts to satisfy, manage very closely

• High power, less interested people – management requires systematic engagement and providing relevant information to keep them involved and updated

• Low power, interested people – management reqiures keeping them informed and working with them can be beneficial to the project; heat checks may be necessary to ensure any sort of issue can be addressed immediately

• Low power, less interested people – management requires constant monitoring and strategic communication and delivery of information to keep them well-informed but not bombarded with information which do not seem relevant to them

The form of communication and the type of information delivered, is based upon who the stakeholder is, according to the description given above. For example, a high power and interested stakeholder will appreciate receiving detailed information like change logs and status updates, the same bits of information may not be as important to someone of the same power but less interested in the situation. Low power stakeholders, even if they are interested, may not find this bits of information useful to them. Understanding who the stakeholder is, will help project managers and leaders come up with a communication plan to ensure that every stakeholder type in the grid is involved, based on the level of power and interest that they have.

Stakeholder Models

These are models designed to help managers understand the stakeholders and identfiy the proper approach to use for each type, based on where they are on the grid (types discussed above). There are 3 values of the stakeholder model, and these are the following:

• Descriptive value – describes an organisation in terms of how it works, its impacts internally and externally, showing its intrinsic value

• Instrumental value – stakeholder management leads to achieving organisational goals, and how it benefits the organisation in terms of growth, profitability, and sustainability

• Normative value – pertains to the inherent value of each stakeholder. This value is determined by the level of power and level of interest that they have, which serves as the basis of analysing and gauging their legitimacy and importance as stakeholders.

Stakeholders and Organisational Life Cycle

A basic organisatonal lifecycle model has 3 stages: Start up stage, growth stage, and maturity stage. An organisation is meant to reach its maturity stage but avoid stagnaiton in that state. As changes can occur in each of these stages, the stakeholders play a crucial role in determing the needs for change and how these changes will be rolled out.

In an organisational lifecycle, it shows how an organisation fulfills its responsibility to each type of stakeholder to varying extents, on each stage of its lifecycle.

For example, an organisation that is in the growth stage will be looking for ways to improve its system, and therefore, will be looking at how their dependency on external resources affect the way the organisation functions internally. As they focus on Resource Dependency Theory, they will need to communicate and engage with external stakeholders, as well as the teams who are directly impacted by the abundance or the lack of resources.

As an orgainsation reaches its maturity stage, more changes can occur. This is where stakeholders who have the capacity to make decisions become extremely important. At this stage, an organisation may be looking to expand and venture into other projects. The decisions made at this point will be based on  Prospect Theory, where progress and profitability is measured using the organisation’s current state and how it can potentially look like in its future state, when certain changes are made.

A stakeholder’s intrinsic value increases or diminishes depending on an organisation’s lifecycle stage. Some stakeholders will be more valuable than others at varying times. How a stakeholder is valued is directly related to the value of the outcome of a project. This is how managers determine who among the stakeholders they need to communicate and engage with, so that they can get their buy-in and support, as these factors can highly affect the success or failure of a project. Different types of stakeholders posses different levels of power, abilities, and skills, including level of interest in the outcome. It is the responsibility of the project manager to identify the stakeholders and get to know them, so that they can harness the power of established relationship and measure a stakeholder’s intrinsic value accordingly.