Chapter 1 -_intro_to_project_stakeholder_management[1]

INTRODUCTON TO PROJECT
STAKEHOLDER MANAGEMENT

Week 1

Lesson Outcome
 1.1 The needs to manage stakeholder
 1.2 Organizational stakeholder
 1.3 Project stakeholder
 1.4 Some examples of stakeholder influence
 1.5 Some examples of successful stakeholder
management

Introduction

SUCCESSFUL
ORGANIZATION /
PROJECTS

Bring project in on time, on Meet all stakeholder
budget and satisfying its expectations
objectives for the customers

Stake
 A stake is an interest or a share in an undertaking.
 Example: If a group is planning to go out to dinner
and a show for the evening, each person in the
group has a stake, or interest, in the group‟s
decision. No money is being invested yet but each
member sees his / her interest (preference, taste,
priority) in the decision.

 A stake is also a claim.
 A claim is a right to something. A claim is a
demand for something due or believed to be due.
 Example: Stockholder has an interest in and an
ownership of a share of a business.

Stakeholder
 Stakeholder is an individual or a group that has one
or various kinds of stakes in a business.
 Stakeholders may be affected by the actions,
decision, policies, or practices of the organization.
Also, these stakeholders also may affect the
organization‟s actions, decisions, policies, or
practices.
 Therefore, there is a potential two-way interaction
or exchange of inﬂuence between stakeholders and
organization.

What is Stakeholder?
 Classic definition (Freeman, 1984):
 “Any group or individual who can affect or is affected
by the achievement of the organization‟s objectives”
 Freeman, 2004:
 “Those groups who are vital to the survival
and success of the organization”

R. Edward Freeman
(December 18, 1951-
Present)
Click Here

Stockholders

The
General Creditors
Public

Local Employees
Communities

Type of
Stakeholders

Competitors Customers

Unions Suppliers

Governments

Example of stakeholders and their
interests
Stakeholders Examples of interests
Participate in distribution of profits, election of board of directors,
Stockholders additional rights as established in the contract with the
corporation.
Creditors Credit score, new contracts, liquidity.
Employees Rates of pay, job security, compensation, respect.
Customers Value, quality, customer care, ethical products.
Providers of products and services used in the end product for the
Suppliers
customer, equitable business opportunities.
Government Taxation, low unemployment, social welfare.
Trade Unions Product quality, staff protection.
Norms established by society and the industry for competitive
Competitors
conduct.
Community Jobs, environmental protection, social protection.

The Need to Manage Stakeholder

 Stakeholders are individuals or groups that benefit
from an organization.
 Stakeholders can affect an organization‟s
functioning, goals, development and survival.
 They are beneficial when they help you achieve
your goals and they are antagonistic when they
oppose your mission.
 Therefore, stakeholders have power to be either a
threat or a benefit to an organization (Gibson,
2000).


 Their influence can be small or great and can be
exercised either intentionally or incidentally.
 Individuals and organizations need to be wary of
their stakeholders and their influences.
 If stakeholders have negative influence on us, why
should we deal with or bother about them? WHY?


 Simply because organizations are depending on
external stakeholders for resources, services and
information.
 Stakeholders have claims, rights and expectations
that ought to be honored and not taken lightly.
 Thus, stakeholders must be managed properly to
avoid any negative influences, especially those that
could contrary to the organization‟s objectives.

Organizational Stakeholder

Example of an organization‟s stakeholders (Caroll &Buchholtz, 1999)

 There are 2 steps for analyzing organizational
stakeholders
1. Step 1: Identify Stakeholders
 Think of all the people within the organization
who are impacted by your work, who have
influence over it, or have a stake in its successful
completion.
2. Step 2: Prioritize Stakeholders
 Which stakeholder influence or interest is at the
highest priority.

 It is important that an organization understands it‟s
stakeholders, strategies to satisfy all stakeholder‟s
goal and objectives, along with a prediction of the
future impact of that stakeholder‟s actions on a
project‟s outcome.

Project Stakeholders
 Each project has its own unique set of stakeholders.

Considering the
potential influence
of the project‟s
stakeholders
Development of
Identification of all strategies to facilitate
project stakeholders the “management” of
and their relevant the stakeholders
stakes in the project. during the life cycle of
the project.

Successful
Project
Management

Example
 A project managers who must make
recommendation concerning the design of a new
plant must be aware of the state and local land
use, plant design, tax laws and the area’s likely
pattern of growth.

Hmm…Is that all?
Are you sure?

 The project manager also must be aware of:
1. Local political climate.
2. Availability of a skilled labor force.
3. Public attitudes towards the location of the plant in
the community.
 Politics can also have profound impact on the outcome
of a project.
1. E.g.: The project manager who neglects the building
and maintenance of alliances with key political
stakeholders will soon find indifference or opposition
to his/her project.

 The success of a project depends on taking into
account the potential impact of project decisions on
all stakeholders during the entire life of the project.

Stakeholder Influence
 Stakeholders will manifest the attributes of
legitimacy and power (Carroll and Buchholts,
2006).
 Legitimacy - validity of a claim to a stake
 Power - the capacity to induce or persuade the
actions of others and is displayed when one part in
a relationship is able to impose its will on the other
part (Johnson et al.,2005).

 Power may be displayed through:
1. Force (coercive power)

2. Material or financial resources (utilitarian
power)
3. Symbolic resources (normative power)

 Therefore, stakeholders must be managed to avoid
any of their inﬂuences contrary to an organization
or project objectives.
 An ideal way is to optimize by maximizing the
beneﬁts from stakeholders while minimizing their
potential negative impacts.

Example of Stakeholder Influence

Example 1
 In a 1-million-square-foot addition to the New York
Hospital, environment, political and social
challenges existed.
 Over 45 agencies – „stakeholders‟ – Need to be
satisfied even though no public money was involved in
the project. Issues such as the highway, the river,
working space, historical preservation and other issues
need to be considered.

Example of Successful Stakeholder
Management
Example 1
 James Webb and his colleagues at NASA practiced
stakeholder management during the Apollo
program.
 NASA gained the support not only from the aerospace
industry and related constitutions but also from the
educational community, the basic sciences and weather
forecast profession.

Example of Successful Stakeholder
Management
Example 1
 The 12.5 miles, $490 million highway project
through Glenwood Canyon in Colorado is one of the
expensive nonurban sections of the interstate
system.
 Required more than 10 years to plan and 12 years to
construct.
 Involved a high degree of cooperation among project
team, environmentalists and tourists to create a major
highway that preserved and enhanced the nation's
premier natural settings.

 Theproject experienced fierce opposition initially,
countless design changes and physical constraints but a
remarkable cooperation between all stakeholders
created a four-lane highway that even
environmentalists love.

NEXT
Glenwood Canyon highway (source: wikipedia)

Group Activity
 Gather one example of a successful and one
example of a failure in the implementation of
stakeholder management.

 Requirements (due date: 20/9/2012)
1. Work in a group of 5
2. Explain the background or purpose of the project.
3. Why is the project a successful / failure one.
4. Groups will be randomly picked to present their
findings.

 Additional Requirement:
1. Successful in Implementation (minimum 200 words).
2. Failure in Implementation (minimum 200 words).
3. Hard copy – Typed
4. Presentation slides – Max 6 slides.

Chapter 1 -_intro_to_project_stakeholder_management[1]

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Chapter 1 -_intro_to_project_stakeholder_management[1]