Stakeholder Analysis

Assessing who or what really counts. Explanation of Stakeholder Analysis.

What is Stakeholder Analysis? Description

A Stakeholder Analysis is an approach that is frequently used to identify and investigate the Force Field formed by any group or individual who can affect or is affected by the achievement of the objectives of an organization. Stakeholder Analysis identifies the ways in which stakeholders may influence the organization or may be influenced by its activities, as well as their attitude towards the organization and its targets.

According to the Stakeholder Value Perspective of Edward Freeman (Strategic Management: a Stakeholder Approach 1984), the very purpose of the firm is to serve as a vehicle for coordinating stakeholder interests. In this view, Stakeholder Analysis is an end in itself. But even when we take a Shareholder Value Perspective, stakeholder analysis is an important means to achieve the corporate purpose.

The role of management is to formulate and implement strategies and to make decisions that satisfy all or most of the stakeholders, or to ensure at least that no powerful and legitimate stakeholders are left too unhappy.

Here is a comprehensive list of typical stakeholders:

Owners and stockholders, investors
Banks and creditors
Partners and suppliers
Buyers, customers and prospects
Management
Employees, works councils and labor unions
Competitors
Government (local, state, national, international) and regulators
Professional associations, Industry trade groups
Media
Non-governmental organizations
Public, social, political, environmental, religious interest groups, communities

More individuals or groups may be identifiable in specific circumstances. Some individuals can be part of multiple stakeholder groups. Some stakeholders may have an explicit, formal organization, others may not. There are Internal Stakeholders (such as employees) and External Stakeholders (such as government).

The interests of all stakeholders are closely related with the general success and wealth of the organization. However, certain stakeholders interests are particularly important at times when certain issues must be addressed, for example:

Customers are important when quality of products are discussed.
Employees are important when circumstances or safety at work is discussed.
Government is important when dealing with the environment or legislation.

Stakeholder Analysis - Primary and Secondary Stakeholders We can also distinguish between Primary Stakeholders (such as stockholders) and Secondary Stakeholders (such as government). Where the line is drawn precisely, is a source of much debate.

Usage of Stakeholder Analysis. Applications

Making a list of all stakeholders
Analyzing the interest of the various stakeholders
Analyzing potential conflicts of interest with or between stakeholders
Basis for further Stakeholder Mapping
Basis or major influencing factor for Strategy formulation and Decision-making
Evaluating existing strategies
Basis for stakeholder communication
Can also be used in Program Management and Project Management environments

Steps in Stakeholder Analysis. Process

Identify stakeholders (Brainstorming)
Understand stakeholder needs and interests. Classify them into meaningful groups. Compare: Stakeholder Mapping
Prioritize, balance, reconcile or synthesize the stakeholders
Integrate stakeholder needs into the strategies of the organization and into its actions

Results of Stakeholder Analysis. Benefits

Better insight can be obtained per stakeholder in:
- The relationship with the stakeholder
- Coalitions or organizations of which the stakeholder is a member
- The significance of the stakeholder to the organization
- The power of the stakeholder
- The priorities of the stakeholder
- Associated risk areas
Better strategies and decisions
Better acceptance of the strategy and decisions of the organization

Limitations of Stakeholder Analysis. Disadvantages

Ideally, a Stakeholder Analysis should be performed regularly or even continuously, since the relevant stakeholders, their power and associations may change quickly.
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.
It is normally impossible for management to satisfy all demands of all stakeholders completely. Therefore managing becomes a balancing act or even a reconciliation or synthesizing act, with the following options:
- Focusing on one leading stakeholder group, and satisfying all others to the extent which is necessary or possible. The leading stakeholder group could be the owners or stockholders (Shareholder Value Perspective) or even the managers themselves.
- Trying to balance or reconcile or synthesize all interests according to their weight, importance or urgency (Stakeholder Value Perspective).
Note that quite often, a constructive cooperation with stakeholders is missing.

Stakeholder Analysis Forum

Recent User Comments

    			 
  			   Guy Grandchamps - Belgium
  	       
  		     Stakeholder Analysis
  	  		 "I discovered "hand on maps", about the same sorts of maps, developped by Paul Defourny (a Belgian colleague) with the aim to create opportunities connecting the different stakeholders.
I use the same sort of maps in a strategic context: in the center I note the organization capacities, what the organization can deliver to stakeholders, around the center hollow squares for performance markers (numbers or colors). I complete the map adding the key success factors, the vision and the values, even with a marker for each of one.
The map is becoming then a very suitable tool to animate a strategic seminar to determine for instance the "Mission Statement", the priorities in developping relationship and organization capacities.
"
  			   
  	  		 -1