Types of Stakeholders in Project Management

Individuals who may have vested interests in the outcome of your project are referred to as Stakeholders. Project team members, Project Managers, Executives, Project Sponsors, Customers, and end-users are all examples of the many types of Stakeholders. Individuals who will be affected by your project throughout its lifespan are referred to as Stakeholders. The decisions they make can directly impact the outcome of the endeavor. When working together on a project, practicing efficient Stakeholder management and keeping communication channels available is essential. Before we deep dive into the different types of Stakeholders in Project Management, it is necessary to understand the role of stakeholders in a project's success.

Importance of Stakeholders in Projects

Suppose a Project Manager fails to consider the requirements of a Stakeholder. In that case, this might result in considerable financial losses and severe delays in completing the project, among other potential adverse effects. Suppose the Manager requires specific resources to carry out the project following its plan. If the Project Manager has successfully handled the expectations of the Human Resources manager, the Human Resources Manager will provide the Project Manager with some level of indirect help. On the other hand, the Project Manager risks getting the opposite effect if they haven't adequately handled the HR Manager's expectations.

In addition, to ensure that the desired result is achieved, a Project Manager is responsible for managing all project Stakeholders' influence on the project's requirements. The Project Manager is responsible for striking a balance between the needs of the project and the interests of those involved in the project.

What is Stakeholder Management?

Having discussed the role of Stakeholders, it is imperative to discuss the importance of Stakeholder Management. Management of Stakeholders is, without a doubt, an essential component of a successful collaborative effort for a project. Managing Stakeholders requires establishing positive relationships with all of them and understanding how each party contributes to the overarching success of the project. A Project Manager must never forget this: the Stakeholders' knowledge from their previous experiences, initiatives, and deliverables may provide suggestions for boundaries or requirements. On the other hand, effectively managing your Stakeholders may also help the Project Manager recognize possible risks and threats connected to your project.

We can discuss the classification of Stakeholders. Stakeholders can be classified into different types:

• Stakeholders within the organization and External Stakeholders
• Direct or Indirect Stakeholders
• Primary and Secondary Stakeholders. 

This article will explain the types of Stakeholders in Project Management in greater detail.

1. Stakeholders within the organization & External Stakeholders

Members of the organization are considered to be internal Stakeholders. The project directly impacts them as a result of the fact that they are employed by the organization that is overseeing it. These may include investors, workers, owners, members of the board of directors, managers of ongoing projects, and other relevant parties. For example, Employees are parties dependent on jobs and the security of those jobs. They have direct stakes in the organization since it helps them financially and provides other benefits.

Similarly, Investors are parties interested in profiting from this venture. They could be stockholders and debtors at the same time. They want to profit from the money they have invested in the company.

External Stakeholders

Individuals from outside the organization that the project will directly or indirectly impact our external Stakeholders. They are affected by the organization's work, but the organization itself does not employ them. Suppliers, customers, creditors, clients, intermediaries, competitors, society, the government, and others could fall within this category. For example, Customers are Stakeholders who want to ensure that the project does not negatively impact their health, safety, and economic growth. Local businesses and organizations can significantly impact the number of jobs created, the amount of money spent, and other aspects of the economy just by their location or involvement in local projects. Similarly, vendors and suppliers are stakeholders whose income is tied to the project since they are the ones who provide the goods and services to the company in charge of the project. If the initiative is successful, it will result in greater business.

2. Direct or Indirect Stakeholders

Any individual or organization has the potential to influence the decisions the project team will pursue. Direct Stakeholders take part in activities undertaken by the team and have the capacity to influence the overall direction of the project. Your employees, their managers, and the product owners are examples of direct Stakeholders.

Indirect Stakeholders

Individuals or organizations that care more about the project's outcome than how it is carried out are called indirect Stakeholders. These include both your customers and your suppliers. Even if they are not participating in your activities, they have a vested interest in your accomplishments (or failure).

3. Primary and Secondary Stakeholders.

Principal Stakeholders are individuals or groups who will be significantly impacted by your project positively or negatively. Include all of your employees, customers, managers, suppliers, and other business partners.

Secondary Stakeholders

Secondary Stakeholders are persons and organizations not directly affected by your initiative. They are more challenging to identify than significant Stakeholders. When planning, project teams do not usually include secondary Stakeholders because they often do not affect project implementation and operations until they become actively involved and outspoken about their opinions. When this occurs, their influence can be enormous. Governments, labor unions, and advocacy organizations are examples of secondary Stakeholders.

At this stage, the various roles that Stakeholders play in the success of a project are also essential. An organization's Stakeholders consist of everyone within the organization to whom it is obligated to offer the required services. As a result, an organization cannot function without its Stakeholders. Those in charge of the IT services will be able to define roles and responsibilities of supporting organizations, processes, and the management of interfaces between roles and functions if they understand the many parties interested in the IT services.

Furthermore, establishing priorities is one of the most critical components of Project Management. Stakeholder management is no exception.

A project manager may also provide various markers to prioritize each stakeholder based on their influence and relevance to the project. These data can assist the Manager in determining who should be given priority and analyzing change requests that impact the project's scope, timeline, and resources. The Manager must collect information on the significant people and organizations that have been identified and their priorities, expectations, and how your project will affect those areas. Concerns and fears should be discussed.

Key functions that Stakeholders:

Putting the Service Into Operation: One of the responsibilities of service portfolio management is involving relevant Stakeholders in defining and assessing a service.

Putting in Place the Service: Keeping Stakeholders up to date on the deployment of the service is a crucial component of the project that must be carried out throughout its whole. By carrying out these steps, Stakeholders will be included in developing the service.

Monitoring of Services and System Administration: The activities will immediately impact the relevant parties. To obtain optimal outcomes from a project, it is vital to understand the interests of the Stakeholders and how they use the services. Through monitoring, we can ensure that both service level management and IT service management and the customer receive rapid data.

Finally, it must be recognized that effective communication with Stakeholders is crucial. A Project Manager is required to be aware of the mode of communication and the best time to communicate (in the case of a virtual team) with each of the Stakeholders that have been identified. Communication difficulties may be significantly reduced if a report format is thoroughly addressed. As a result of this, a Project Manager needs to be aware of the format that Stakeholders require for reading progress reports, task status reports, trend reports, and other similar reports. Using these reporting methods can help reduce the number of disagreements that arise. 

Conclusion :

People who are affected by a project or who are interested in it are considered Stakeholders. They may be internal or external; they could have a direct or indirect impact; they could be primary or secondary; and so on. A Project Manager needs to manage these Stakeholders effectively and meet their expectations for the project before they can successfully carry it out. Should a Project Manager fail to do so, the integrity of their project may be jeopardized. The expectations of project Stakeholders should be evaluated regularly by the Project Manager to ensure that the project's requirements are met. Meanwhile, the Manager is responsible for managing the expectations of the Stakeholders while also keeping track of the dates of their milestones, the quality planning, the cost budgeting, and the performance baselines. If the Project Manager can handle all of them, then the project they are working on will be perfect. If they effectively manage the Stakeholders' expectations, they will save both time and money. Simpliaxis for comprehensive training in project management, ensuring you're equipped to handle stakeholder expectations effectively and optimize project success