What are stakeholders and methods for their analysis

According to its definition, a stakeholder is "a person or company that is involved in an organization, project, system, especially because it has invested money in it"; that is, the people, groups or public interested in a specific organization or project.

Although, according to the above definition, a stakeholder is related to a monetary investment, currently money is not a money is a requirement, moreover, many of them can be considered as such because of their interests. Some examples are listed in Figure 1.

Figure 1. Some examples of stakeholders (image prepared by the author)

Taking stakeholders into account when managing a company is of utmost importance because, although they do not have direct participation in the company's decision making, they do have some influence over the company and failure to manage them correctly can result in both economic and organizational catastrophe.

Due to their importance, several methods have been created to analyze the influence of stakeholders in companies, which help to simplify the related information in graphs, matrices, plans, among other tools. In this article I explore some of the most commonly used ways to analyze the weight they can have in the decision making process of a company or institution.

Interest/Power Matrix

The use of the Interest/Power matrix is one of the best known methods when analyzing stakeholders. This matrix is separated into four quadrants, taking into account the interest factor (on the X axis) and the power factor (on the Y axis), depending on the amount of power and interest that any of them has in relation to the company, is its position within the quadrant, as explained in Figure 2.

Figure 2.Interest/Power Matrix (Image created by the author)

Likewise, the Interest/Power matrix has certain recommendations on what to do in the case of having a stakeholder in any of the quadrants, such recommendations are the following:

• High power - High interest: Actively engage and attract
• High power - Low interest: Engaging and keeping satisfied
• Low power - High interest: Keep informed
• Low power - Low interest: Monitor (minimum effort)

This stakeholder analysis model was created by Kent State University Professor of Management and Information Systems Aubrey L. Mendelow. Among Mendelow's most notable works is "Stakeholder mapping", in which he developed the Stakeholder/Power matrix or Mendelow matrix.

Salience Model

The Salience Model was created by academics Ronald K. Mitchell, Bradley R. Agle and Donna J. Wood. Dr. Mitchell is currently a professor at Texas Tech University; Dr. Agle is a professor of Ethics and Leadership at Brigham Young University; while Wood is a research scholar at the University of Northern Iowa.

This model consists of categorizing stakeholders according to three aspects:

• Power: The authority it has over the organization.
• Legitimacy: Explains whether your influence is in accordance with the right thing to do.
• Urgency: Need to be attended to in a specific time frame.

This model consists of three circles joined in such a way as to create a Venn diagram; in each circle is present each of the three aspects that the Salience model considers: power, legitimacy and urgency, giving rise to eight regions in the diagram, in which each one of them establishes the stakeholder 's characteristics based on what it has and what it lacks. As explained in Figure 3.

Figure 3. Salience Model (Image prepared by the author)

Those that only have one of the three factors present in the diagram are called latent stakeholders, these are divided into:

• Inactive: Those who only possess power.
• Discretionary: Those that only possess legitimacy
• Demanding: Those who only have urgency

However, since there are also combinations of these, there are other types of designations; expectant stakeholders, those that not only have one, but two of the three aspects mentioned in the model. They are referred to as follows:

• Dominant: Those who have power and legitimacy, but lack urgency.
• Dependent: Those who have urgency and legitimacy, but lack power.
• Dangerous: Those who have power and urgency, but lack legitimacy.

That said, the two missing regions are divided into definitive stakeholders and non-stakeholders, the former being those with legitimacy, power and urgency; the latter being those that are a top priority for the organization.

On the other hand, non-stakeholders are those who do not have any of the three characteristics, so they are not considered within the organization; although it should be taken into account that they may, at some point, become relevant to the point that they become one of the aforementioned types.

Stakeholder knowledge base graph

This type of model, like the Interest/Power matrix, is a matrix consisting of four quadrants; however, it differs from the Interest/Power matrix in that the factors considered are knowledge and attitude, as explained in Figure 4.

Figure 4. Knowledge base graph (image prepared by the author).

Unlike other methods, this one takes into account the attitude that a stakeholder has towards the company, dividing the attitude into opposition and support. Something similar happens with knowledge, dividing it into conscious or ignorant.

The quadrants into which it is divided are as follows:

• Conscious - Opposition
• Conscious - Support
• Unconscious - Opposition
• Unconscious - Support

Power/Predictability Matrix

Like the two previous matrices, this one is divided into four quadrants, which now take as factors the power and predictability of the stakeholder in question, as explained in Figure 5.

Figure 5. Power/Predictability Matrix (Image created by the author)

As in the other two matrices we saw previously, the four quadrants differentiate the type of stakeholder that this matrix handles and the divisions are as follows:

• High predictability - High power
• High predictability - Low power
• Low predictability - High power
• Low predictability - Low power

Depending on where the stakeholder is located, the difficulty for the manager to manage it, usually the greatest risk lies in those located in the Low Predictability - High Power quadrant.

This matrix was created by Robert Newcombe and published in the article entitled "From client to project stakeholders: a stakeholder mapping approach".

Stakeholder relationship mapping

Unlike all previous methods, Stakeholder Relationship Mapping adds something that no other method has considered before, the relationship between stakeholders, as explained in Figure 6.

Figure 6. Relationship mapping (Image created by the author)

This type of analysis consists of dividing a plane in half into two quadrants, the stakeholders will be represented as circles, which, depending on their size and their position on the graph, will be the characteristics that they possess, the size of the circle represents the degree of influence against the company, the position of the circle from left to right is an indicator of its position vis-à-vis the company (if it is on the left it indicates opposition, if it is on the right it indicates support), depending on the position from top to bottom it is the amount of participation that the stakeholder has, finally, the line that joins two stakeholders represents the relationship that they have, the thicker the line, the stronger their relationship.

Stakeholder mapping spreadsheets

Likewise, there are other methods that help their analysis, such as the use of spreadsheets like Excel or Google Sheets, which greatly favor the ability to analyze stakeholders, since these spreadsheets allow to customize to a great extent the factors to be considered; for example, if what an organization values most is the interest that the stakeholder has in the company, this can be added to a spreadsheet.

Likewise, in a spreadsheet it is possible to add other data about the stakeholder, for example, it is possible to make a table where you can find their name, their respective contact or you can also add extra information to the table, things like activities, interests or opinions that, although they do not always appear in analysis models, can be quite relevant when dealing with people. This is explained in Figure 7.

Figure 7. Spreadsheet designed for stakeholder mapping (Image created by author)

Conclusion

Stakeholders are quite important for a company, sometimes even crucial for the success of a project, so it is of utmost importance to know how to manage them correctly. Thanks to this need, countless ways of analyzing them and their subsequent management have emerged. These models have advantages and disadvantages, as well as different factors that must be taken into account. For this reason, it is of utmost importance for the manager to know and carefully select the method to be used, since, while one method may be useful in certain cases, it may not be useful in other circumstances.