Stakeholder Analysis in conflict resolution, project management, and business administration, is the process of identifying the individuals or groups that are likely to affect or be affected by a proposed action, and sorting them according to their impact on the action and the impact the action will have on them. This information is used to assess how the interests of those stakeholders should be addressed in a project plan, policy, program, or other action. Stakeholder analysis is a key part of stakeholder management.
Following or during a Stakeholder Analysis process, it is often useful to categorize the various stakeholders by drawing further pictures of what the stakeholder groups are, which interests they represent, the amount of power they possess, whether they represent inhibiting or supporting factors for the organization to realize its objectives, or methods in which they should be dealt with. Stakeholder Mapping is the process of creating such pictures to clarify the position of the stakeholders of the organization.
Included among the generic methods that can be used to analyze stakeholders are: Internal/External Stakeholder Analysis, Primary/Secondary Stakeholder Analysis, Force Field Analysis, SWOT Analysis, and Actor Influence Diagrams. Actor Influence Diagrams help to picture the formal and, more importantly, informal relationships that exist: the networks. These relationships are captured as a directed graph of arrows linking one stakeholder to another. Formal and informal relationships are captured using different arrow types.
Below you can find some more, specialized stakeholder mapping methods.
One example of such maps is called the Power / Dynamism Matrix. This stakeholder map classifies stakeholders in relation to the power that they hold and the dynamism of their stance. The Power / Dynamism Map can be used to ascertain where political efforts should be focused during the development of new strategies.
- The stakeholders in group A and B are the easiest to deal with.
- The stakeholders in group C are important, because they are powerful. However their dynamism is low, so their stance is predictable and their expectations can often be met in a relatively easy manner.
- Stakeholders in group D should have the most management attention, because they are powerful and their stance is difficult to predict. They can sometimes be dealt with by testing out new strategies with them before final decisions are made.
Another example is the Power / Interest Matrix. This stakeholder map classifies stakeholders in relation to the power that they hold and the extent to which they are likely to show interest in the strategies of the organization. The Power / Interest Map can be used to indicate what type of relationship the organization should have with each of the groups.
- The stakeholders in group A require only minimal effort and monitoring.
- The stakeholders in group B should be kept informed. They can be important to influence the more powerful stakeholders.
- Stakeholders in group C are powerful, but their level of interest in the strategies of the organization is low. They are generally relatively passively, but may suddenly emerge as a result of certain events, moving to group D on that issue. They should be kept satisfied.
- The stakeholders in group D are both powerful and highly interested in the strategies of the organization. The acceptability of strategies to these key players should be an important consideration in the evaluation of new strategies.
A more recent Stakeholder Mapping model is the Power, Legitimacy and Urgency Model described by Mitchell, Agle and Wood (1997, 1999). This model maps stakeholder behavior into 7 types, depending on the combination of three characteristics:
- POWER of the stakeholder to influence the organization.
- LEGITIMACY of the relationship and actions of the stakeholder with the organization in terms of desirability, properness or appropriateness.
- URGENCY of the requirements being set for the organization by a stakeholder in terms of criticality and time-sensitivity for the stakeholder.
The stakeholders who show only one of the 3 characteristics (number 1, 2 and 3 in the picture) are defined as the Latent Stakeholders. They are sub-classified further as dormant, discretionary or demanding stakeholders.
The stakeholders who show two out of 3 of the characteristics (number 4, 5 and 6 in the picture) are defined as Expectant Stakeholders. They are sub-classified further as dominant, dangerous or dependent stakeholders.
The stakeholders showing all 3 characteristics are called Definitive Stakeholders.
Note that the management of an organization has to assess the position of each stakeholder. It is the subjective perception of management that will ultimately decide the way in which the organization will act towards its stakeholders.
Source: Gardner, J.R., Rachlin, R. and Sweeny, H.W.A. – Handbook of Strategic Planning (1986)
Source: Mitchell, R.K., Agle, B.R., Sonnenfeld, J.A. – Who Matters to CEOs? An Investigation of Stakeholders Attributes and Salience, Corporate Performance and CEO Values (1999)