Enterprise Solutions White Paper Effective Stakeholder Management
About the Author Fabia McLean Bourda, MBA, SPHR, PMP Ms. Bourda leads TCS' HR Strategy and Transformation Practice, which includes Organizational Change Management around ERP solutions. She has extensive Human Capital Management (HCM) and people management capabilities in systems, processes, strategy, and transformation, and is knowledgeable in Oracle HCM and some niche applications. She has over 20 years of progressive senior management experience working with and influencing Fortune 500 C-level executives in the area of human capital management including organizational change management. She holds an Executive MBA degree in Strategic Leadership and International Management from The University of Texas, Dallas. She also holds two Bachelor degrees and a Master degree, as well as professional certifications in human resources (SPHR) and project management (PMP). She has been teaching at colleges and universities in Canada and the U.S. since 1990.
The successful undertaking of project management requires effective stakeholder management to support organizational and individual objectives through understanding and influencing the internal and external environments. Therefore, the identification and management of stakeholders are a key skill for all project managers. Stakeholders are individuals who represent specific interest groups served by the outcomes and performance of a project or program. Project managers are accountable for the end-to-end management of their projects including performance and expectation management of individuals who may be outside their direct control. Project managers should consider the people issues surrounding projects and recognize that the appropriate involvement and management of stakeholders can be a critical success factor. Consequently, project managers should have a formal stakeholder management process that is appropriate for the circumstances of the project. The planning and approach for stakeholder management will be shared along with the processes and tools that will create positive relationships with stakeholder by setting objectives and managing their expectations.
Contents 1. Introduction 5 2. What is Stakeholder Management? 6 3. The Stakeholder Management Cycle 6 Step 1 Identify, Recognize and Acknowledge Stakeholders 7 Step 2 Analyze Contribution, Commitment and Support 10 Step 3 Develop an Action Plan 12 Step 4 Action the Plan 14 Step 5 Monitor Outcomes and Take Corrective Actions 14 4. Conclusion 16
1. Introduction As a project manager stakeholder management is a key aspect of the role. Ideally, it is a conscious, planned and focused activity associated with clear actions and outcomes, but more often than not, it is an unconscious and unplanned aspect of managing projects on a daily basis. Developing a formalized, documented, repeatable process for mapping stakeholders and embedding a clear methodology for stakeholder management can yield enormous benefits to the project and create value for the stakeholders. Notwithstanding the potential benefits of effective stakeholder management, it is commonly acknowledged that about 80% of the time is wasted on managing stakeholders. In fact, poor stakeholder management and ineffectual communication are two of the key reasons why change often fails. Managing stakeholders effectively is not just about forward momentum, it is also about scale and helping to push and promote change in every corner of the organization. At TCS, stakeholder management is a key component of organizational change management for this reason. Effectively managing stakeholders brings business change at the organizational and individual levels to transition individuals, teams, and organizations from a current state to a desired future state. Change Journey Initial Contact Awareness Understanding Ownership Commitment Adoption Sustain Focus on business impacts and related actions on process, people, organizations, and data Prioritize business risk and degree of change degree Align executives and employees with project objectives Involve stakeholders early and throughout the project Articulate project benefits and reasons Engage in leading change Inform and involve employees at all levels of project activities and new expectations resulting from design Identify changes to people, process, organizations, and data Create actions to address impacts of people, process, and organization Develop actions to mitigate risks Prepare for large scale organization and site levels changes Ensure the process, people, and organizational changes are addressed to meet budget and schedule on time Involve SMEs early in process Train end users and management to operate in the new way of working (process, organization, and system) as well as the new applications Monitor change awareness, understand, ownership with stakeholders and end users throughout project Develop risk assessment and prioritize challenges and risks Business Impact Review Stakeholder Management Communication Management Change Impact Review Organizational Change Readiness Learning Management Change Adoption Figure 1 TCS Organizational Change Management Components TCS' framework takes an organizationally holistic approach and provides an infrastructure to support and sustain change throughout the program's multiple phases while embracing and focusing on the organization's transformative strategies. Implementing new processes and changing the organizational culture can be challenging because it requires transforming how people work and interact. The approach includes activities to minimize the resistance to change by engaging stakeholders in the change program from the outset and securing their commitment to achieving a successful outcome. 5
What is Stakeholder Management? A stakeholder is anyone who has an interest in the project or will be affected by its deliverables or outputs. It is important to understand the values and issues that stakeholders have in order to address them and keep everyone on board for the duration of the project. Stakeholder management is the process of managing the expectation of anyone who has an interest in a project or will be affected by it and is a key leadership tool. When there is a conscious and structured approached, stakeholder management secures the ownership and accountability necessary for delivering changes. It is a way of aligning multiple teams with a single vision and providing a thread of relevance to the strategic aims of the organization. Stakeholder identification and management is a key skill for all project managers, program managers and executives (collectively called project managers for the purpose of this paper). It is essential to conduct the initial stakeholder analysis before the change or transformation begins so that the business leader or project manager can drive positive outcomes by detecting negativity, resistance or misunderstandings early on and take appropriate action. Stakeholder analysis can also be helpful when a project changes direction. The Stakeholder Management Cycle Stakeholder management plans operate at many different levels across any organization, from peak executive bodies to individual streams of projects. The stakeholder management cycle, which leads to the identification of stakeholders and the development of a stakeholder management plan, can be applied at each level in the same manner. The stakeholder management cycle consists of the five steps as shown in Figure 2. Step 1 Identify, recognize and acknowledge stakeholders Step 2 Analyze contribution, commitment and support Step 5 Monitor the outcomes and take corrective actions Step 3 Develop an action plan Step 4 Action the plan Figure 2 Stakeholder Management Cycle 6
Although these steps can be initiated in a logical sequence, they can also occur concurrently and iteratively. The same steps are then used to review stakeholders and ensure ongoing alignment. Step 1 Identify, Recognize and Acknowledge Stakeholders As part of defining a project's requirements, stakeholders are identified and solicited. Stakeholders are those who have a stake in the project which is someone who is affected by the project or who can affect the project in some way. Stakeholders come from all parts of the organization, and occasionally from the wider community (vendors, suppliers, unions, residents, and so on). When identifying stakeholders, consideration should be given to any interested party. While a project may appear to have a very large stakeholder group, there will inevitably be a hierarchy that will simplify the identification of stakeholders. For example, a state-wide system project may appear to include every manager in its stakeholder group. However, this would be unmanageable, so the group will need to be reduced by identifying the leaders of interest groups, specifically those influential within the system, and by other project criteria. However, presentations to the wider group may be required during the project and key stakeholder activities will be targeted throughout the hierarchy. Different stakeholders may have commonality of purpose at a very general level. For example, providing quality services' or 'increasing organizational efficiency, but at more detailed levels they may wish to impose different purposes and priorities. The level of importance to a stakeholder's' needs and interests is also key to the success of strategy and project development. A stakeholder must have the right to influence and have importance to the project. Influence Power of a stakeholder in terms of influencing direction of the project and outcomes Importance Stakeholders whose problems, needs and interests are a priority for the project To help identify project stakeholders, a list of all individuals who will have an interest in the outcomes of the project should be developed. Some ways of identifying key individuals include: Perform a stakeholder analysis to determine who is and will be impacted by the change Consider individuals involved in the requirements gathering and scope definition process Undertake a benefits analysis (who will benefit from the solution?) Develop a list of standard stakeholders (for example, technical support, business users, SMEs) Scan employer and employee associations, informal employee group leaders, and so on Discuss with other project managers and review documentation from similar past projects Discuss the list with the project sponsor and other stakeholders as the list develops It is important to understand that individuals and groups behave differently in different situations. The impact stakeholders can have on organizational policy, strategy, and the project is dependent on their relationship to either the organization itself or the issues of concern, or both. There are two forms that can be used to capture details regarding stakeholders Stakeholder Plan and Stakeholder Map. Both are essential to managing stakeholders effectively and have different purposes and audiences. 7
Stakeholder Plan A good stakeholder plan identifies the stakeholders, discusses goals, determines work methods and identifies the risks involved in the project. It is for public use and will often be included in project related documents, such as business cases or project charters. It will generally be a subset of a larger plan for the division or department. Plan Elements Goals Description Even though the needs of stakeholders may differ, their ultimate goals should be the same and that is for the project to be successful and profitable: Interviews can be conducted to discuss issues, if any Clear and concise goals so that the plan can be organized to meet needs Methods Risks To achieve the established goals, the stakeholder plan must outline the work methods that will be used in the project: Include project cost and due date List the individuals who will work on the project and any supplies they need Location of the project and whether any testing must be completed Alternate method in case the first method cannot work All risks involved should be listed to help plan mitigation; potential risks include: Exceeding budgets or overshooting timelines allotted to the project Communication risks, if stakeholders are not regularly continuously informed of any problems or delays with the project Once these risks are identified, mitigations should be determined, logged and continuously updated during the project Table 1 Stakeholder Plan Elements Stakeholders have a vested interest in the success or failure of a project, and they sometimes find themselves at odds with each other because they have conflicting ideas of how best to make the project successful. Stakeholder plans can be a useful device to bring stakeholders together by outlining a common way to meet the project objectives. Stakeholder Plan Project XXX Stakeholder Position Organization Goals Methods Risk Ernie Peters Director Finance Single source Corporate Owner of the process Helen Walker Vice President Finance Systems Peter Hinds Union Rep Plant Standardization Validate changes Ensure total IT spend is managed effectively Cost effective Approve design changes Cost effective Corporate Sponsor and champion of the IT governance process Shared data Approve design changes Provide director and make business decisions relating to IT spend standardization Plant Failure to communicate may impact change adoption Review changes Niles Marks Super User Accounting Single source Corporate Heavy workload around month-end Bryon James Manager Engineering Tester Shared data Plant Failure to communicate may impact change ad Single source SME Figure 3 Stakeholder Plan 8
Stakeholder Map A stakeholder map (Figure 5) provides a visual representation of the various stakeholders (individual and groups), their level of interest and their importance to the project. It is for the personal use of the project manager and the management team. It is used to identify the level of support currently being received by stakeholders and to map actions to maintain or increase that support. Step 2 Analyze Contribution, Commitment and Support A good stakeholder management strategy is required to effectively manage stakeholders. It should identify and document the approach to take to increase support and decrease negative impacts of stakeholders throughout the life of the project. The three key areas for analysis are contribution, commitment and support which is leveraged in the stakeholder map and used extensively to guide stakeholder management. Stakeholder Analysis Project XXX Stakeholder Position Organization Primary Relationship Influence Interests Ernie Campbell Director Finance Bill Smith Medium Owner of the process Ensure total IT spend is managed effectively Helen Burke Vice President Finance Systems Bill Smith High Sponsor and champion of the IT governance process Provide director and make business decisions relating to IT spend Peter Barker Union Rep Plant Tom Hughes Medium Knowledgeable about processes Bryon Wilkes Build effective relationship Niles Forman Super User Accounting Ernie Campbell High Sub-process owner Strong function and technical experience Bryon Wilkes Manager Engineering Tom Hughes Low Downstream impact and needs to be consulted Contribution Figure 4 Stakeholder Analysis There are a number of factors that determine the extent to which a stakeholder is required to contribute to a project to ensure its success. These factors include the stakeholder's position and authority within the organization, the degree to which the project relies upon the particular stakeholder to provide a product or service, the level of 'social' influence of the individual and the degree to which the individual is familiar 10
with specific aspects of the business. Each of these factors can be analyzed in more detail during stakeholder analysis. The outcome is summarized into a contribution index, which has the following values: Values Description Critical The stakeholder has the power to make or prevent the project from succeeding Commitment Desirable Non-essential The project can be completed even without an active contribution from the stakeholder, but this would have a serious impact on the quality, elapsed time and cost of execution The stakeholder is able to act as an advocate for the project to peers Although the stakeholder can contribute to the project, this contribution is either not essential or can be more easily obtained from other stakeholders An individual with a contribution index below 'Non-essential' is not a stakeholder Table 2 Stakeholder Contribution Values Each stakeholder will display a different level of commitment to the project, even throughout the life of the project. The range of commitment to a project is represented by the following values: Values Committed (make it happen) Supportive (help it happen) Neutral (let it happen) Description The stakeholder has committed to contributing to the project, preferably in writing, and is available to do so The commitment may be documented in the form of an agreed plan, or other forms of written communication (e-mail, memo, letter, contract, statement of intent) describing what will be provided and by when The stakeholder is well informed, sees value in what is being done, understands his or her contribution and is willing to provide it, although no formal commitment has been made The stakeholder may or may not be informed about the project and while they do not disagree, they are not actively involved in any capacity, or may be indifferent about the project objectives and outcomes Disagrees (stop it from happening) The stakeholder may or may not be informed, but does not see value in the project and the work being performed He or she would rather not be involved and in fact would prefer the work not to be carried out at all Table 3 Stakeholder Commitment Values Stakeholder Map Project XXX Commitment Contribution CRITICAL Ernie Helen DESIRABLE Peter Niles NON-ESSENTIAL Byron DISAGREES NEUTRAL SUPPORTIVE COMMITTED Figure 5 Stakeholder Map 11
Support Review each stakeholder and determine what their current level of contribution and commitment are, and enter their name on the stakeholder map. The next step is to identify where each stakeholder 'needs' to be to ensure an adequate level of contribution and commitment towards the project. This will reflect the ideal or target scenario for the project. Enter each stakeholder's name onto the map in the target position. If the stakeholders target is further right or upwards draw an arrow from current to target. If the stakeholder is currently in the ideal position, simply circle the stakeholder's name. Stakeholder Target Map Project XXX Commitment Contribution Ernie CRITICAL Ernie Peter Helen DESIRABLE Peter Niles Niles NON-ESSENTIAL Byron DISAGREES NEUTRAL SUPPORTIVE COMMITTED Step 3 Develop an Action Plan A stakeholder analysis is used by business leaders and project managers to identify the key influencers associated with a particular project or program then assess their attitude, level of interest and the importance they attach to it. This knowledge helps the program to interact in the most effective way with stakeholders, particularly in planning optimal pro-active communication The identification of any obstacles to the full contribution and commitment of the stakeholders is the first step towards identifying any activities that may serve to remove these obstacles. Therefore, it is a good practice to identify any such obstacles during stakeholder analysis so that they can be taken into account when planning. Obstacles could include items such as: Lack of knowledge and information Insufficient engagement during planning and decision-making Not yet been requested to participate Figure 6 Stakeholder Target Map Already committed to another project or responsibility and therefore not available 12
Cannot be made available due to expected location and duration Does not agree with the changes proposed, sees the changes as a potential threat Does not have the requisite level of authority to be able to contribute effectively Does not have the requisite skills to be able to contribute effectively Conflict with other stakeholders Is an external provider and no formal agreement has yet been put in place Potential doubts about the capability, stability or availability of an external supplier, consultant or contractor Based on the positioning of stakeholders on the stakeholder map and the obstacles that have been identified, appropriate activities can be listed and included in an action plan. The main purpose of these activities is to remove the obstacles and influence stakeholders towards the desired state, rather than necessarily all the way to the committed level. For example, it may be preferential to have the Vice President, Director and the selected software vendor 'Committed'. On the other hand, a business unit leader could be encouraged to be 'Supportive' to actively promote the project rather than ignore the project (Neutral). The level of effort expended on each stakeholder should be enough to move them to the desired state, and then maintain that state throughout the project. In addition, increasing and maintaining the contribution of stakeholders that are already in agreement or committed also increases the likelihood of a successful project. Special care needs to be taken when dealing with 'Critical' and 'Desirable' stakeholders that are in disagreement. If it is not possible to obtain their commitment, it becomes necessary to reduce the project's dependence on their contribution by moving them from 'Critical' or 'Desirable' to 'Non-essential'. In dealing with disagreement, employ good skills in listening, understanding and acknowledging issues and concerns. The action plan can be used to identify the actions that need to be taken to increase stakeholders' commitment to the project. 13
Step 4 Action the Plan The stakeholder action plan is derived from the stakeholder analysis. The plan moves stakeholders into stronger positions of support by putting the planned activities into action. It can include: Communicating with stakeholders and keeping them informed of matters that are likely to be of interest to them Obtaining information from stakeholders that will be relevant to the project Managing the expectations of stakeholders Involving stakeholders in all key decisions about the project Stakeholder Current Level Target Level Stakeholder Action Plan Project XXX Primary Relationship Ernie Critical Critical Committed Bill Weekly Meeting one-on-one. Neutral Invite to weekly project briefings. Actions Attends status and steering committee. Ian to meet monthly prior to steering comm. Helen Critical Committed Critical Committed Bill Ask for commitment to fill Acting Chair role when Helen is away. Weekly meeting one-on-one. Hold informal Phase 2 discussions when Paul is in town. Arrange vendor site visit for January. Peter Desirable Critical Committed Ian Discuss inclusion in weekly status meetings (confirm with Helen first). Disagrees Provide industry scan documents to show reasoning for decisions todate. Increase one-on-one meetings from monthly to fortnightly. Niles Desirable Desirable Bill Fortnightly one-on-one meetings to discuss project status. Byron Supportive Committed Understand role and duration. Non-essential Neutral Non-essential Neutral Peter Understand power base. Discuss role of Union Consultative Committee in future planning sessions. Invite as observer. Suggest coffee after next status meeting. Figure 7 Stakeholder Action Plan Step 5 Monitor Outcomes and Take Corrective Actions The purpose of this step is to periodically re-assess the position of each stakeholder to determine what further action (if any) is required to maintain stakeholder commitment and support to the project. It essentially requires a review of the previous four steps to determine whether there are any new stakeholders, where they are positioned in terms of their commitment and influence and what action needs to be taken in relation to them. A similar review of existing stakeholders should also be conducted to determine whether any variations to the stakeholder management plan are required. 14
How well stakeholders are managed is critical to achieve project outcomes. Most of the focus is generally spent on the frontend analysis with little or no consideration for the performance management. Stakeholder feedback can be deployed for evaluating stakeholder management to determine what adjustments are needed to get back on track. A tool should be created to reflect significant and/or overlooked aspects to managing key stakeholders. Objectives Set the context Be explicit to a point Allow, but track detailed design feedback separately Provide general instructions and examples Make providing feedback easy Description Clarifying the current stage of the process and the type of feedback that is most appropriate A simple diagram can be helpful in explaining what is appropriate for the current stage and provides a preview of the types of stakeholder feedback that will be most appropriate at later phases Ask questions or list areas for feedback Guide stakeholders to providing feedback on the highest-priority issues that need consensus It is important to give stakeholders an outlet for documenting details that are important to them, so they can then move on and look at other elements Give stakeholders explicit instructions when asking for feedback Instructions should be brief and to the point, generic enough to avoid bias, and include examples where possible Stakeholders' time is valuable so consult and get feedback from stakeholders as efficiently as possible Table 4 Stakeholder Feedback Objectives The feedback tool should not be long and excessively detailed so that stakeholders will take the time and interest in providing timely and accurate feedback. Some tools available are: Objectives Survey Form Description Provide very explicit instructions, ask clear questions, collect feedback in a very consistent manner, and consolidate comments easily, avoiding collections of comments scattered across various email threads One drawback is that this does take a bit of setup and may not be convenient for stakeholders Online Service Several online tools allow interactive commenting, provide version control, and offer a central place for various stakeholders to view consolidated comments There are a number of different tools to choose from, offering various features and functions. Email This is what stakeholders use most often, and it is likely the most convenient option for them A simple, concise email message asking key questions and providing clear instructions goes a long way toward avoiding the problems that might be encountered Report Card High level assessment of the feedback with action status Used to track of the execution of activities to monitor the consequences arising from these actions Can be combined over time to show progression Table 5 Stakeholder Feedback Tools 15
Conclusion Stakeholders are individuals who represent specific interest groups affected by the outcome and performance of a project or program. Project managers are accountable for the end-to-end management of their projects, including performance and expectation management of individuals who may be outside their direct control. Stakeholder management, ideally, should be a conscious, planned and focused activity associated with clear actions and outcomes, but more often than not, it is an unconscious and unplanned aspect of managing projects day-to-day. Developing a formalized, documented, repeatable process for mapping stakeholders and embedding a clear methodology for stakeholder management can yield enormous benefit. Stakeholder management brings classic returns in terms of time, money and motivation. The bottom line is that every minute invested in driving effective stakeholder management will bring in significant business benefits. In practical terms stakeholder management keeps decision-makers and influencers engaged and on-track which is the pathway for a successful project. 16
What TCS Provides TCS' Enterprise Solutions improve operational efficiency and help you transform your business, empowering you to take advantage of emerging opportunities and market changes more quickly. From IT strategy and transformation to enterprise-wide software applications, we optimize technology and business processes. A quick review of our case studies reveals our deep expertise across the IT alphabet soup : ERP, CRM, SCM, TMS, ECM and others. Application Expertise Our expertise and success is bolstered by long-term strategic alliances with the world's most advanced business software companies, helping us deliver better, faster, and more cost-effective solutions. Oracle: We are one of ten global Diamond Partners, with specializations in 20+ Oracle applications, including Siebel, PeopleSoft, Hyperion and JD Edwards suites. SAP: SAP is one of TCS' earliest strategic partners. Our advisory services are focused on SAP pre-implementation THINK systems, such as Business Process Harmonization, Landscape Planning and Solution Strategy and Roadmap. TCS is SAP Certified in Run SAP Implementation and Operations, which help make your systems run more efficiently and effectively. Microsoft: Dynamics, SharePoint and Azure Customer Relationship Management: Oracle Siebel, SAP, Microsoft, Salesforce.com and Right Now Enterprise Content Management: EMC, MS SharePoint, OpenText and Autonomy-Interwoven Niche Growth Platforms: Infor, Lawson, QAD and Progress Alliances: TCS has a strong network of strategic and solution partners with the joint objective of helping its customers become high-performance businesses by maximizing the value of their technology investments. 17
Contact For more information about TCS consulting services, contact global.marketing@tcs.com Subscribe to TCS White Papers TCS.com RSS: http://www.tcs.com/rss_feeds/pages/feed.aspx?f=w Feedburner: http://feeds2.feedburner.com/tcswhitepapers About Tata Consultancy Services (TCS) Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled infrastructure, engineering and TM assurance services. This is delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. A part of the Tata Group, India s largest industrial conglomerate, TCS has a global footprint and is listed on the National Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at www.tcs.com IT Services Business Solutions Consulting All content / information present here is the exclusive property of Tata Consultancy Services Limited (TCS). The content / information contained here is correct at the time of publishing. No material from here may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributed in any form without prior written permission from TCS. Unauthorized use of the content / information appearing here may violate copyright, trademark and other applicable laws, and could result in criminal or civil penalties. Copyright 2013 Tata Consultancy Services Limited TCS Design Services I M I 07 I 13