What is the Stakeholders' Bargain with the Project?

Susannah Finzi - Antelope Projects Susannah_Finzi@Antelopes.com

Suzanne Robertson - The Atlantic Systems Guild suzanne@systemsguild.com

Aidan Ward - Antelope Projects Aidan_Ward@Antelopes.com

A stakeholder is anyone whose knowledge, views and actions affect the success of the project. But different people have completely different reasons for having a stake in a project. Managers are concerned with the business advantage, marketing are concerned with the cost and packaging, people who will use the product focus on usability, technicians think more about the technology, lawyers focus on the legal implications, customers focus on the price.the list is endless. Not surprisingly, every stakeholder sees his stakeholding from his own point of view and often does not appreciate what is important to other people. For example, the packaging that adds margin to a product's price in the shops is anathema to the local environmental group. The machine that improves the tolerance on a key component, thus giving the customer a more reliable product also means retraining some workers and puts a key supplier's nose out of joint..

To make it possible for stakeholders with differing interests to work together we need to have a way of making a sustainable bargain between the stakeholders. The holding of a stake should mean that the stakeholder has an agreed reason for being involved in the project along with a commitment to contribute. We need to consider how to find a balance between the need of a project to align stakeholders with the business aims of the project, and the legitimate defence of a stakeholder's position or interest when these are threatened.

It does not help that we work under the pressure for immediate results. Working relationships no longer get built over months and years. There is a flattening of organisations, a stripping out of middle management who were there to make the joins, to provide continuity of practical experience. So now each project has more people to relate to more quickly and they come from a wider variety of backgrounds.

All of this assumes that we have found the right stakeholders. But we observe that projects are becoming more and more like a hastily assembled orchestra of partly freelance players and we cannot be sure that we have everyone necessary to make beautiful music. The conductor (the project manager) is not necessarily known to, let alone respected by, them all. There is little or no time for rehearsal, the performance starts now.

The Project as a Conjuring Trick

Suppose that you identify a business objective and set up a task force to achieve it. Then you send the task force to a remote Hawaiian island and forbid them to communicate with the rest of the world. But you still expect them to come up with a solution that will satisfy your needs. The only way that this will work is by magic.

We know that to succeed we need to have the courage to talk to a wide range of stakeholders and get them on side. The damage is done when people kid themselves and their colleagues that this work (and it is hard work) can be avoided. Stakeholders are human. They have their own problems and their own concerns. They may not welcome attempts to manage them in the name of some project they may have been coerced into signing up to. They have their own perspectives on the direction the business needs to take and the value of the ideas and plans in circulation. But they do have an interest in the project. [JH1] otherwise they wouldn't be stakeholders. If the holders of the stakes in a project do not or cannot accommodate their concerns with the concerns of the project then the project will fail. If we find out what stakeholders really think then we can discover the real risks and opportunities and make a project plan that is based on truth rather than magic.

The real problem here is that time is against us. With humans we need relationships, and relationships are not built overnight. It takes time to build trust and to understand agendas. A hasty move now may add to difficulties for years to come. How long does it take to rebuild a customer base once customers feel let down? How long does it take to know how far you can push without causing offence? We may not even see the same things or have values that relate to each other. Frank exchanges of views are not to be had for the asking.

Conducting the orchestra of stakeholders requires a range of understanding of different dynamics and different perspectives and a high degree of sensitivity for human feelings. This all takes a lot of time, but if stakeholders can see that they are being listened to, considered and treated as an asset, then they are much more likely to contribute to the project's success. Clever companies realise that their greatest investment is in human capital [TDM,TRL1] (the knowledge and experience of their employees) and every project that they run is an opportunity to increase the value of this investment.

So Who is a Stakeholder ­ exactly?

A stakeholder is a person who can affect the outcome/success of the projects and/or is affected by its outcome/success. To run a successful project we need to identify and involve all the people who fall into this category.

Instead we often take a very introspective view and limit our stakeholders to members of the project team (people who are paid from the project budget) and people we intend will be users of the product that we are building. Certainly the project team and potential users are key stakeholders but so are key suppliers, members of the Board, key customers, business managers in related areas, members of regulatory bodies, part of the supply chain, members of the public, professional societies, and anyone else whose knowledge affects the outcome. Apart from identifying the stakeholders, getting to know how they relate to the project is a vital part of making it work. Figure 1 illustrates how the stakeholders surround a project like planets in a solar system and each stakeholder has a combination of power to make decisions, proximity to the project work and interest in the results.

Figure 1: Stakeholders surround a project like planets in the solar system. Some close, some further away, some more powerful, some weaker. The real nature of the relationships between them is not immediately visible. They can perturb the paths of projects as well as the orbits of other planets

Stakeholders need to be involved when project objectives are being set, when requirements are being developed, when risks and opportunities are being assessed, and when decisions are being made. The point of identifying and getting to know stakeholders early means that we can involve the right people throughout the project.

Ideas for Discovering the Stakeholders

We have already discussed how difficult it is to find all the right stakeholders; there are a number of ways to do this. You could simply ask a well-informed and open-minded project manager commonsense questions like, "who is involved in this project?". It is often necessary to combine informal questioning with a more systematic search , here are some ideas for doing that.

List the names of people who you think are stakeholders. Some of these will be obvious, like members of the project team. Put everyone you think of on this list ­ even those who seem remote, you can always reduce it later. Now change your focus and make a list of all the job roles or organisations that you think might be stakeholders ­ once again list everything you can think of. Now try to trigger more ideas by asking the question ­ what categories of knowledge or subject matter is this project concerned with? Make a list ­ depending on your project, this will contain a mixture of things like: finance, insurance, traffic scheduling, health, safety, database design, usability, security, environmental issuesthe list contains every subject that you can think of that your project will be concerned with. Now you can use the three lists to help you to identify who your stakeholders are and how you need to involve them in the project.

Stakeholder Name Stakeholder Role/Job/

Position/

Organisation Category of Knowledge Influence

A ­ high

B ­ medium

C - low Participation

How much time?

When?

Figure 2: Use this table to discover your stakeholders by matching your lists of stakeholder names, roles and categories of knowledge and filling in the gaps.

Using Figure 2 as a guide take an item from any one of your lists, put it in the appropriate column and see if you can fill in the other columns. For example, if you have a stakeholder called Bob Fosse, then your entry in the second column (Role/Job/Position/Organisation) might be The Modern Dance Association, and the next column (Category of Knowledge) might be Choreography. If you have already thought of these two entries (Modern Dance Association and Choreography) then they will come from one of your other two lists. Otherwise you will ask the question ­ if I have identified Bob Fosse as a stakeholder, then what role does he play and what categories of knowledge will he contribute to the project? There are many complex relationships here because the same stakeholder might play many roles and conversely a role might be played by many stakeholders and the same is true of the relationships between stakeholders and categories of knowledge. To start with fill in all the columns as best you can and then you can look for overlap.

The next thing to do is to look for categories of knowledge that have more than one stakeholder and try to identify what degree of influence each stakeholder has on that particular knowledge, you should do this together with the stakeholders concerned. Your aim is to make people aware of how they might affect the project and help them to align themselves with the project goals. The answer to the degree of influence depends on a mixture of how powerful the stakeholder is, how much he knows about the category of knowledge and of course how closely he is affected by the results of the project. These are difficult questions because they bring conflicts and contradictions to the surface. The point of thinking about the influence is to help stakeholders to see that at some stages during the project you will need to have some kind of mechanism for discussing and negotiating different views of the same knowledge.

Participation, the last column is to assess precisely until you know more about the size of the project. However even early in the project, you can at least help the stakeholders to realise that they will need to allocate some time (depending on the category of knowledge) to the project. You are helping the stakeholders to take ownership of their interest in the project.

Authentic or Pseudo Stakeholding?

People are sometimes included in a project team as representatives of something that lies outside of the project. We often see user representatives included, or a tame client. Frequently such people are given no real mandate for action or decision. To be a pseudo-stakeholder, which is what they really are, is a thankless position. As such they often have the effect of a buffer between real stakeholders and sponsors, or often have the effect of an "energy sink".

Look at this from the stakeholders' points of view. The project already has delegated authority to achieve its goals under the direction of a professional project manager. If your interests as a stakeholder are also delegated to a representative, then the chances of any conflict of interest between you and the project sponsor being negotiated successfully by these representatives are very small.

If the stakeholding is inauthentic, then your interests as a stakeholder are at risk but so is the success of the project. Stakeholders typically personify particular business perspectives on the project. If your particular perspective is not realistically represented, then the project may not be able to succeed as its model of the world will be flawed. This leads us to consider what it means to you to be a stakeholder.

What's in it for Me?

Understanding your stakeholding means admitting that you have strong feelings about your knowledge, views and actions, the way that they are used and the way that you are treated. You also have ambition and like most humans you are not necessarily enthusiastic about change where it affects you directly. As a stakeholder you can think of yourself as a gainer or loser of power [TDM1]. There are lots of situations in which you gain power; your knowledge is used to further the project, one of your needs is satisfied, your responsibilities are increased, you are seen as a success. On the other side you can also stand to lose power; you give your knowledge to the project and fear that it might make you redundant, one of your needs is not met, you lose some of your responsibilities because of the project

Effective stakeholding is about knowing what you know and what you don't know and where I fit as part of the project's solar system To be open to expanding what you know requires balance between the stakeholder characteristics that we discussed earlier: Power, Proximity and Interest. Figure 3 illustrates how a balance between these characteristics means that your stakeholding contributes a positive Connection to the elements of the project. The picture illustrates the individual positive elements that contribute to each characteristic. For example Power is a very positive force if you are truly concerned with good leadership, authority that gives people confidence and direction and the ability to make intelligent compromises. A positive stakeholding helps to keep the elements of the project in tune with each other and contributes to success.

Figure 3: Positive stakeholding means keeping a balance between your power, your proximity and your interest.

On the other hand a negative stakeholding, illustrated in Figure 4, means that the effect on the project is to disconnect the pieces. For instance if Power is misused by bullying, or excluding people or demanding nothing but perfection, then this saps the energy of the project and reduces the chances of success.

Figure 4: When power, proximity or interest is misused it leads to a negative contribution to the project.

Spelling out the Stakeholders' Bargain

A project is something that the organisation has committed to, it uses the resources of the organisation to achieve its goals. As we mentioned earlier, the holding of a stake in a project should mean that the stakeholder has an agreed reason for being involved in the project along with a commitment to contribute.

When a stakeholder makes this commitment he agrees:

• To communicate clearly and truthfully where his interests lie
• To communicate where helping the project conflicts with other responsibilities the stakeholder may have
• To use his knowledge and influence to aid the project
• To take ownership of project risks he is best placed to manage
• To understand and maintain the agreed level of involvement

When a stakeholder makes this commitment to the project then the project makes a bargain with the stakeholder to keep him appropriately informed and involved.

Responsibilities that a project has to its stakeholders are:

• To understand and communicate the impact of the project on their interests
• To understand and communicate the risks posed by the project
• To negotiate a form of the project which is most favourable to all the interests involved
• To collaborate to reduce the overall cost to the organisation, taking into account cost to the stakeholder and cost to the project
• To jointly investigate issues outside the scope of the project which are important to the success of the project
• To communicate project progress and issues

Participating as a Stakeholder

As a stakeholder you need to assert your interests practically (so that they are understood) and symbolically (so that they are seen by the organisation to be understood. If your interests are being harmed by the project, then either: this is an inevitable effect of the project's business purpose and you should try to resolve the issues without involving the project, or this is poor project management and you should assert your interests forcefully.

In practice these distinctions can be hard to achieve, because of the difficulty and cost of evaluating many scenarios of how the project goals can be reached, the difficulty of reconciling the values of the parties, and different belief about the likely results of different plans. However, resolution of these conflicts is made much easier if the interested stakeholders make their positions clear to each other.

Of course you have lots of other relationships besides your involvement with the project: your line management, your peer group of other managers, informal connections, and you may very well be a stakeholder for other projects going on at the same time. If a project results in a substantial shift in your position, then you will need to clearly explain your position so that your colleagues who are not stakeholders in the project can understand why you have changed. All of these needs for communication result in costs that are almost never factored into the cost of a project.

Another cost that is often ignored is that caused by simultaneous involvement in multiple projects. Often there are particular key individuals within an organisation who will end up being stakeholders for almost any significant project that is run. This means that these individuals will be forced to reconcile any conflicts between parallel projects that have not been resolved or understood when the projects were set up. It can be awkward for projects to understand these conflicts which are outside their scope.

If you are a key stakeholder for more than one project, the degree of fragmentation reduces your effectiveness and is very frustrating. Key stakeholders get to be a serious constraint on the number of projects that can be run successfully; these stakeholders would not be key if they were not performing important and pivotal roles for the organisation. This is a problem with the management system of the organisation and not with the project and points to a need to restructure the way the business responsibilities are allocated.

Of course you cannot and do not want to know every detail about the project, but to be an effective stakeholder there are some things you need to be sure of. You need to understand which of your knowledge and expertise is needed by the project and why it makes a difference to the project's success. This gives you a sense of purpose and helps you to decide when your participation is necessary. It also it helps to understand who the other stakeholders are and why they are involved in the project. Then, when there are conflicts of interest, you will be in a better position to participate in negotiations. You also need to understand what you expect the project to deliver to you. Depending on your stakeholding, this might be a product or it might simply be some feedback on how your contribution has affected the project.

If you have this understanding and you put it into practice, you will feel a sense of achievement and purpose and your time as a stakeholder will be well spent.

References

JH1 Jim Highsmith III - Adaptive Software Development Dorset House, New York, 2000

TDM,TRL1 Tom DeMarco and Timothy Lister. Peopleware: Productive Projects and Teams. Dorset House, New York, 1987

TDM1 Tom DeMarco Personal Communication

WM1 Will McWhinney Paths of Change Revised Edition, Sage, Thousand Oaks, CA, 1997

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