INTRODUCTON TO PROJECTSTAKEHOLDER 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 EmployeesCommunities Type of Stakeholders Competitors Customers Unions Suppliers Governments
Example of stakeholders and theirinterestsStakeholders 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 theSuppliers customer, equitable business opportunities.Government Taxation, low unemployment, social welfare.Trade Unions Product quality, staff protection. Norms established by society and the industry for competitiveCompetitors 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).
The Need to Manage Stakeholder 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?
The Need to Manage Stakeholder 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 StakeholderExample 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).
Stakeholder Influence Power may be displayed through: 1. Force (coercive power) 2. Material or financial resources (utilitarian power) 3. Symbolic resources (normative power)
Stakeholder Influence 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 StakeholderManagement 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 StakeholderManagement 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 nations 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 – Typed4. Presentation slides – Max 6 slides.