Stakeholders have an interest in or influence over your project, and effective stakeholder management is a critical factor in the successful completion of projects. There are several methods to categorize stakeholders, and one of the most commonly used methods is the Power/Interest Grid.
Power/Interest Grid in Stakeholder Analysis
The Power/Interest Grid, sometimes known as a Stakeholder Matrix, allows you to categorize stakeholders according to their power (their ability to impose their will) and their interest (the degree to which they are affected by the project). This categorization allows project managers to strategize how to handle different stakeholders. The matrix is typically divided into four quadrants as shown below:
| High Interest | Low Interest | |
|---|---|---|
| High Power | Key Players (Manage Closely) | Keep Satisfied |
| Low Power | Keep Informed | Minimal Effort |
- High Power, High Interest: These are your ‘Key Players’. They have a significant effect on the project and care deeply about the outcome. Effective management of these stakeholders is critical for the project success.
- High Power, Low Interest: These stakeholders are powerful but have less interest in your project. They need to be kept satisfied with regular updates to keep them on your side.
- Low Power, High Interest: These stakeholders are interested in your project but do not have a great deal of power. They should be adequately informed to ensure their continued support.
- Low Power, Low Interest: Stakeholders who fall into this category require less management. Keep them informed but do not invest a lot of time here.
Stakeholder Analysis Tools: Salience Model
Another method to categorize stakeholders is the Salience Model, which combines power, urgency, and legitimacy.
In this model:
- Power is the same as in the Power/Interest Grid.
- Legitimacy is the perception that the actions of a stakeholder are appropriate.
- Urgency is the degree to which stakeholder’s demands require immediate attention.
Stakeholders are thus categorized into seven types, based on the attributes they possess:
- Dormant (Power only)
- Discretionary (Legitimacy only)
- Demanding (Urgency only)
- Dominant (Power, Legitimacy)
- Dangerous (Power, Urgency)
- Dependent (Urgency, Legitimacy)
- Definitive (Power, Legitimacy, Urgency)
Each category in this model implies a different approach to stakeholder management; hence, understanding the properties of each group is critical for a PMP candidate.
Why Categorizing Stakeholders is Important
Categorizing stakeholders helps project managers devise effective communication and engagement strategies. Some stakeholders require a high amount of attention and engagement due to their level of power and interest, while others might only need to be kept informed. This identification and categorization process, therefore, assists in ensuring that stakeholders’ needs and expectations are met, fostering positive relationships, and reducing potential risks.
In short, classifying stakeholders in project management is a way of prioritizing who project managers need to focus on and aids in aligning the project planning and implementation with stakeholder expectations – a topic of utmost importance for the PMP exam.
Practice Test
True or False: The project manager is not a stakeholder in a project.
- True
- False
Answer: False
Explanation: The project manager is a stakeholder because they have a vested interest and active involvement in the project.
Stakeholders are categorized based on ____
- A. Their role in the organization
- B. Their ability to influence
- C. Their interest in the project
- D. All of the above
Answer: D. All of the above
Explanation: Stakeholders can be categorized based on their level of interest, power and influence in the project and their role within the organization.
True or False: External stakeholders include shareholders, regulators and the local community.
- True
- False
Answer: True
Explanation: External stakeholders are those who may be affected by the project but do not actively participate in the project itself.
Which of the following are internal stakeholders?
- A. Customers
- B. Suppliers
- C. Team members
- D. Government agencies
Answer: C. Team members
Explanation: Team members are internal stakeholders as they are part of the organization executing the project.
Multiple select: Which of these are valid ways to categorize stakeholders?
- A. Influence and power
- B. Blood type
- C. Attitude
- D. Interest or lack thereof
Answer: A. Influence and power, C. Attitude, D. Interest or lack thereof
Explanation: Stakeholders can be categorized based on their influence and power in the project, their attitude towards the project (positive, neutral, negative), and their interest or lack of interest in the project.
True or False: All stakeholders have the same level of interest and influence in a project.
- True
- False
Answer: False
Explanation: Stakeholders have varying levels of interest and influence in a project, which is why they need to be categorized appropriately.
True or False: Stakeholders’ impact on a project doesn’t change over time.
- True
- False
Answer: False
Explanation: A stakeholders’ impact, interest and power can change over the life of the project.
Multiple select: Stakeholder categorization helps in ____
- A. Identifying stakeholder’s needs
- B. Developing an effective communication strategy
- C. Deciding the project budget
- D. Influencing stakeholder’s expectations
Answer: A. Identifying stakeholder’s needs, B. Developing an effective communication strategy, D. Influencing stakeholder’s expectations
Explanation: Categorizing stakeholders helps ensure that each stakeholder’s needs and expectations are met, and their issues appropriately managed.
Who among the following are typically considered as negative stakeholders?
- A. Customers
- B. Competitors
- C. Suppliers
- D. Employees
Answer: B. Competitors
Explanation: Competitors usually have a negative influence on the project and thus, they are often considered as negative stakeholders.
True or False: Stakeholder categorization is a one-time process.
- True
- False
Answer: False
Explanation: Stakeholder categorization is an ongoing process that should be reviewed and updated at regular intervals throughout the project. It is not a one-time activity.
What is the main goal of stakeholder categorization?
- A. To determine who gets the most profits
- B. To ensure all stakeholders are satisfied
- C. To manage stakeholder expectations and influence
- D. To create a hierarchy within the team
Answer: C. To manage stakeholder expectations and influence
Explanation: Categorizing stakeholders allows the project team to effectively manage their expectations and influence on the project.
True or False: A project sponsor is usually an example of a key stakeholder with high power, high influence and high interest.
- True
- False
Answer: True
Explanation: A project sponsor normally has high levels of power, influence and interest in the project because of their vested stake in its success.
The categorization of stakeholders is not necessary in which stage of the project life cycle?
- A. Initiating
- B. Planning
- C. Execution
- D. None of the above
Answer: D. None of the above
Explanation: Categorizing stakeholders is crucial at every stage of the project life cycle as it helps in better stakeholder management.
True or False: Knowing how to categorize stakeholders improves the allocation of resources in a project.
- True
- False
Answer: True
Explanation: Understanding who the stakeholders are, what their expectations and influence are, helps in effectively allocating resources to meet their needs and manage their impact.
An infringement of stakeholder categorization can lead to ____.
- A. Better project outcomes
- B. Misallocation of resources
- C. Decreased project costs
- D. All of the above
Answer: B. Misallocation of resources
Explanation: Incorrect or omitted stakeholder categorization can lead to misallocation of resources, potentially impacting project success.
Interview Questions
What are stakeholders in project management?
Stakeholders in project management are individuals or organizations that are actively involved in the project, or whose interests may be affected as a result of project execution or project completion.
Why is it important to categorize stakeholders in a project?
Categorizing stakeholders helps to prioritize the level of attention each stakeholder requires, enables more effective communication, allows better management of expectations, and aids in identifying potential risks associated with stakeholders.
Can you name the key categories of stakeholders in project management?
The key categories of stakeholders typically include customers, sponsors, team members, suppliers, and internal and external stakeholders.
What are internal stakeholders?
Internal stakeholders are individuals or groups within an organization who have interest in a project, such as project managers, project teams, and other employees of the organization.
What distinguishes external stakeholders from internal stakeholders?
External stakeholders are not part of the organization but have interest or are affected by its projects. These can include clients, contractors, suppliers, or regulatory bodies.
What is the Power/Interest Grid in stakeholder management?
The Power/Interest Grid, also known as the Power/Influence Grid, is a visual tool used in stakeholder management to categorize stakeholders based on their level of authority (power) and their level of concern (interest) regarding project outcomes.
How can a Power/Interest Grid help in stakeholder management?
A Power/Interest Grid helps project teams to prioritize stakeholders and understand where to focus their time and resources. It can also help identify potential risks and manage stakeholder expectations effectively.
How can a project manager communicate effectively with different categories of stakeholders?
A project manager can use different communication methods based on the stakeholder category. For instance, they may decide to use written communication for external stakeholders for record keeping, while they may use verbal communication for internal staff for collaborative purposes.
Who might be considered a high-power, high-interest stakeholder in a corporate project?
High-power, high-interest stakeholders in a corporate project might include project sponsors, executives, or top management, as their decisions can significantly affect the project.
What category may a project manager fall into when considering stakeholder categorization?
A project manager can be seen as an internal stakeholder with high power and high interest, as they are directly involved with the project and its outcomes.
How does stakeholder categorization help in risk management?
Categorizing stakeholders can help identify potential risks associated with stakeholders, such as resistance from internal teams or regulatory complications from governmental bodies, and develop strategies to mitigate these risks.
Why might a project manager categorize a supplier as a lower power, high-interest stakeholder?
A supplier would be categorized as a lower power but high-interest stakeholder because, although they have a keen interest in the project’s success as it could affect future business, they have less influence over the project’s outcomes compared to other stakeholders.
What is a key consideration when categorizing stakeholders in public sector projects?
A key consideration when categorizing stakeholders in public sector projects is the public’s interest and the potential political influence, as these factors can considerably affect the project’s success.
Suppose a project has stakeholders who are generally indifferent and have low power. How should a project manager interact with these stakeholders?
These stakeholders should be monitored, but they would not require a significant amount of attention or resources compared to the stakeholders with more significant power or interest in the project.
What stakeholder management strategy should be used for high-power, low-interest stakeholders?
High-power, low-interest stakeholders should be kept satisfied with regular and appropriate communication, ensuring that their power is recognized but not overly solicited due to their low interest.
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