Chapter 7

ENGAGING STAKEHOLDERS

In the 21st century world of work, the term stakeholder management is almost an oxymoron. In so many situations, stakeholders try to manage the managers. Stakeholders maintain a distinct advantage, with up-to-the-second communications, extensive media outlets, and instant links to diverse constituencies through collaborative websites. Information simply flows too fast for any project team to be able to control or even manage it. In most cases, the best a project manager can hope to do is stay abreast of the information and try to shape it toward a successful project conclusion. Nevertheless, project managers are often asked to do more than just keep up with the information.

Understanding the power, influence, and importance of the project’s relationships with various stakeholders is key to obtaining and maintaining support, buy-in, and participation. In short, vigorous stakeholder management is critical to the success of a project.

WHO ARE THE STAKEHOLDERS IN FEDERAL PROJECTS?

Federal projects bring together diverse constituencies and powerful people. For federal project managers, getting stakeholders to believe in the project is a key, and challenging, success factor. The best project managers have a story to tell; for their project to be successful, stakeholders need to believe that story. The story could be about defending the nation from attack, cleaning up nuclear waste, or putting a space station into orbit. Federal projects serve the national interest, and stakeholder management should originate from that foundation.

Project managers must view stakeholder management as more than just a set of tasks to be accomplished, but rather as a channel for promoting the project. Stakeholders should understand why a project is important and the rationale behind the project approach and methodology. Federal project managers must be aware of stakeholders’ interests and power to affect the project and to actively engage stakeholders throughout the project.

Internally, stakeholders include the project manager, customer, project team members, and sponsor, as well as the organization carrying out the project. In many projects, the most significant (and immediate) stakeholders are the relevant senior leaders and decision-makers in the organization. The level at which the project is performed (e.g., departmentwide or within a subordinate agency), as well as the project manager’s chain of command, determines who the project’s executive stakeholders are. Project managers should not forget that the agency’s IG might be an important stakeholder as well. Stakeholder groups on federal projects include a wide range of constituents, from federal employees to local governments to industry groups (see Figure 7-1):

   •   Congress. As the ultimate stakeholder, Congress, through committees and oversight activities, has the power to fund, continue, increase, modify, or eliminate most federal government projects. A single large project may fall under the purview of one or several congressional committees.

   •   The President and agency leaders. Elected and appointed leaders often bring with them a specific agenda and have limited windows of opportunity for introducing change. If elected and appointed leaders fail to achieve the necessary buy-in and cooperation from civil servants, they may find that a project is implemented to its minimum requirements and is not “owned” by the stakeholders. Civil servants, on the other hand, provide continuity across administrations, legislative cycles, and priorities. Civil servant leaders have the power to resist change, knowing that time is on their side for any given mandate. This inherent difference in perspective between appointed leaders and civil servants could become either a strong catalyst for effective project management or a war of wills.

   •   Office of Management and Budget. OMB plays a leadership role in defining the priorities, policies, and direction of the executive branch. A variety of OMB’s policies are directly related to the practice of project management in the federal government. As an interested stakeholder, OMB gains insight into major projects through E-300. Further, FAC-P/PM is the training framework OMB has established in its effort to improve project management in the federal government.

   •   Government Accountability Office. GAO is the investigative arm of Congress. Every two years since 1990, GAO has reported on high-risk areas to bring attention to opportunities for improving government performance. The “high risk” GAO identifies is commonly related to “vulnerabilities to fraud, waste, abuse, and mismanagement.” Through GAO’s work, a deep well of lessons learned has emerged, uncovering both the failures and successes of projects and programs across the federal government. Like OMB, GAO is an interested party in project performance. Projects executed by organizations on the high-risk list are clearly under more scrutiny. Furthermore, its government-wide view gives GAO status as a stakeholder in some projects.

   •   Department and interagency stakeholders. Perhaps the most common and direct stakeholders are the department staff involved in a project—whether as team members or as internal customers. Typically, these stakeholders have a significant vested interest in the outcome of the project, often as owners of the new processes, systems, tools, or products. Proactively managing and actively engaging this stakeholder group will likely yield the greatest benefit, ideally by gaining their enthusiastic support or at the very least by overcoming their resistance.

   •   The public. Although in theory the ultimate source of government power in a democracy lies with the people, the public often has very little visibility in federal projects. Through their representative bodies and public hearings, individuals and organizations may participate directly in project reviews as well as in lobbying efforts for and against particular projects and project alternatives.

   •   Opposition stakeholders. Although not found in every project, this is a special class of stakeholders who perceive themselves as being harmed if the project is successful. An example might be a community that opposes a new government facility being built. Early involvement of opposition stakeholders may result in a more positive outcome; conversely, neglecting these stakeholders can doom a project.

   •   The media. The media generally pay attention to major projects with large budgets. The press has a duty to report objectively but often focuses more on problems than successes.

   •   Vendors/suppliers/industry. In the procurement process, vendors and suppliers are often important stakeholders. Besides selling products or services, this stakeholder group puts its reputation and future business on the line with nearly every project. The tangled web of procurement policies and practices creates a complicated relationship between the companies that “play the game” of government contracting and the federal departments and agencies that execute the projects. Government project managers treat vendors at times as adversaries and at other times as partners. In each case they must be managed appropriately as stakeholders.

   •   Future generations. During its limited tenure, each administration has a responsibility to future generations regarding long-term debt, viable and affordable infrastructure, and a healthy environment. Interest groups that lobby for or against a project’s outcomes often represent these stakeholders.

Effective stakeholder management in the federal sector begins with identification of the individuals, organizations, and markets that will have a bearing on the project. Working with these various, often disparate, groups requires skills that have emerged from the new age of information technology. Treating stakeholders like static entities that need the occasional information update is a mistake. Instead, stakeholders should be viewed as dynamic groups that form, congregate, and separate easily. The federal project manager should strive to build partnerships with stakeholder groups by understanding their concerns and goals related to the project, as well as through effective communication that invites their active participation in the appropriate elements of the project.

MANAGING STAKEHOLDERS IN A COMPLEX ENVIRONMENT

Living in this complex world and engaging in multilayered, complicated federal projects means adopting a vigorous approach to managing stakeholders. Kathleen Hass, in her book Managing Complex Projects: A New Model, describes the following key elements.²

   •   Establish positive relationships with key stakeholders. Use stakeholder assessment and management techniques to help create a positive relationship with key stakeholders. In addition, build and maintain a direct one-on-one connection with the most critical stakeholders by calling (not e-mailing) them on a regular basis. Do not shy away from adversaries; engage them in constructive conversations in an effort to mitigate their influence or turn them into allies.³

   •   Involve customers and users in every aspect of the project. Avoid the urge to limit interaction with customers and users in the time between soliciting their needs and delivering the project results. Maintain their active participation throughout the project in order to uncover unexpected impacts or identify opportunities to improve the project results.

   •   Establish and manage virtual alliances. In the federal government, engage a variety of external stakeholders—political or interest groups, other agencies, suppliers, or industry—to form alliances and thereby provide support, help identify potential issues, or secure needed resources for the project.

   •   Establish and manage expectations. At the outset, as well as throughout the project, document, understand, and address expectations, including resolving unreasonable expectations. Without clearly establishing or managing stakeholders’ expectations, a project manager is almost guaranteed to fail to satisfy them.

The most effective federal project managers develop an approach to stakeholder management that incorporates the nature of the team (collaborative, virtual, command and control, etc.). Projects tell stories, and the best people to tell them are the stakeholders—the people who have come to believe in the objectives of the project.

CONDUCTING A STAKEHOLDER ASSESSMENT

Increasing access to information and the growing number of sources complicates stakeholder management. Given the overabundance of information available today, project managers must assume that stakeholders believe they know as much, if not more, than the project team members. Lacking any real control over the flow of information, the project manager, sponsors, and team members must try to harness the forces that influence stakeholder behavior and attitudes.

An effective tool for managing stakeholder involvement in a federal project is the stakeholder assessment. A stakeholder assessment can be used to gauge the dimensions that drive stakeholder behavior, such as attitudes and biases toward the project, extent of influence over the project team members, aversion to conflict, and geographic factors. The assessment will provide important information that will help the project manager and team develop an approach to managing stakeholders effectively.

Stakeholder assessments can take a variety of forms and can involve various tools and methods. Simplicity and utility are the keys to performing the right level of analysis. The assessment should be simple to understand and execute, and should be designed to provide information that the project manager and team members can use to communicate effectively with stakeholders and achieve the shared project goals. Key elements of any stakeholder assessment should include the group (or individual), their concerns/issues/goals, a description of their influence/impact on the project, and actions to manage/engage them. A straightforward worksheet (see Table 7-1) will suit the needs of most projects.⁴

The following are definitions for the columns in the worksheet:

   •   Stakeholders (individuals or groups): These individuals or groups include those requesting the project; those the project manager must go through for resources, approval, guidance, etc.; those who will use the product/service; and others who can influence the project.

   •   Involvement/role: Based on the stakeholder description, identify their role or involvement—sponsor, requester, owner, resource supplier, customer, or end-user.

   •   Priorities/concerns: What are the important or risky areas of this project from the stakeholder’s perspective?

   •   Level of support needed: “1” = Their support is not necessary now; “2” = Helpful to have their support; and “3” = Critical to have their support.

   •   Current level of support: “+” = Actively supports the project; “0” = Neutral to the project; “–” = Opposes the project and may work against it; and “?” = Unknown level of support.

   •   Influence strategy: Methods for engaging and managing the stakeholder’s participation on the project.

Another, more complex assessment tool, originally developed in the adult education arena, addresses the “influence” and “interest” relationships between stakeholders and the project (see Figure 7-2).⁵ This tool guides project managers and team members in the tactics they can employ to manage relationships with their stakeholders.

Why use such an involved technique? For complex or politically charged projects (common in the federal government), a detailed stakeholder assessment can guide project leaders toward specific actions that will enable them to manage stakeholders more effectively. In addition, team members will gain a greater appreciation for the interests and concerns about the project from the stakeholders’ perspectives. The project manager and team members will then be able to adjust their behavior, the information they provide, and the methods they use to communicate with each stakeholder accordingly.

Each quadrant in Figure 7-2 describes the techniques a project manager should employ depending on the extent of agreement or conflict between the project and each stakeholder (individually or as a group). For example, alignment of interests and influence allows the project manager to be more consultative or collaborative, while misalignment requires escalating levels of action on the part of the project manager—either more diplomacy or the engagement of other stakeholders to appeal or apply pressure as needed.⁶ This approach enables the project manager to communicate effectively with stakeholders and provides the team the information needed to meet the stakeholders’ expectations.

Stakeholders with influence equal to the project manager’s and with compatible interests (cell 1) are important allies to a project. The project manager and team should maintain a good working relationship with these stakeholders; the communication plan should reflect methods for keeping them informed and supportive, and they should be encouraged to champion the project.

Stakeholders with unequal influence and compatible interests (cell 2) are allies of the project and should not require a high level of resources to enhance their relationship with the project; however, a project team member could be designated to address their needs. The project communication plan should include methods for keeping them informed.

Stakeholders with equal influence but conflicting interests (cell 3) may pose a limited risk to the project. The risk plan should include an item that addresses monitoring these stakeholders in case their level of influence changes. They should also be kept informed about project progress through general communications.

Stakeholders with unequal influence and conflicting interests (cell 4) may pose a significant risk to the project and therefore require active management throughout the project. The risk management plan should include a mitigation plan with regard to these stakeholders. The communication plan should include ways to keep them appropriately informed as well as ways to persuade them to take ownership and to gain their support. These stakeholders will need to be monitored closely. If these strategies fail, the project manager may be faced with giving in to their demands.

The result of the analysis can yield a better understanding of the relationships between stakeholders and the project manager, and can also improve the quality of interactions with each group. Above all, project managers and team members must remain focused on constructively engaging stakeholders as part of their efforts to achieve project goals and outcomes.

Today more than ever, it is important for project managers in the federal government to understand a project’s relationship with executive stakeholders and the considerable power and influence they wield. Project managers can employ a structured stakeholder management approach and skills to lead the relationships with their stakeholders and maintain their support. Project managers must work closely with stakeholders, listening to their wants and needs and employing techniques to advance their support. This two-way communication is a key ingredient of effective project management.

NOTE

1.    Remarks made May 13, 2004, before the Federal Reserve Bank of Chicago’s Smart Money Conference, https://fraser.stlouisfed.org/historicaldocs/ag04/download/29216/Greenspan_20040513.pdf (accessed April 2013).

2.    Kathleen B. Hass, Managing Complex Projects: A New Model (Vienna, VA: Management Concepts, 2009, pp. 219–224. Adapted with permission.

3.    Brian Irwin, Managing Politics and Conflict in Projects (Vienna, VA: Management Concepts, 2008).

4.    Hass, p. 218. Adapted with permission.

5.    Ronald M. Cervero and Arthur L. Wilson, “The Politics of Responsibility: A Theory of Program Planning Practice for Adult Education.” Adult Education Quarterly 45 (1) (Fall 1994): 261.

6.    David I. Cleland and Lewis R. Ireland, Project Management Handbook: Applying Best Practices Across Global Industries (New York: McGraw Hill, 2008).