Stakeholder

My original thesis has recently been published as a book by Lambert Academic Publishing AG & Co (www.lappublishing.com).

Details of the book are:
Project Relationship Management and the Stakeholder Circle [Paperback]
ISBN-13: 978-3838398167
Available from Amazon at: http://www.amazon.com/Project-Relationship-Management-Stakeholder-Circle/dp/3838398165/ref=sr_1_1?s=books&ie=UTF8&qid=1282809735&sr=1-1

The research described in my thesis underpins the Stakeholder Circle methodology and tools which led to the publication of Stakeholder Relationship Management: A Maturity Model for Organisational Implementation and the SRMM maturity model available from Gower Publishing at http://www.gowerpub.com/isbn/9780566088643

I never cease to be amazed by the number of people holding leadership roles in the project management community who denigrate ’soft’ skills. The latest attack on ‘soft’ skills is in a letter to the editor in the May edition of Project Magazine published by the APM, UK.

The Honorary Secretary of the APM Contracts and Procurement SIG, Gerry Orman states ‘soft skills are merely a form of manipulation’; and suggests including them in the knowledge framework for the project management profession will result in the dumbing down of our emerging profession. He also asserts the role of the project manager is to fulfil a contract, not deliver the project so apparently people leading the delivery of internal projects within organisations are not project managers!

Apart from the difficulty of defining projects in terms of one sourcing methodology, writing contracts, Orman seems to conveniently forget the thousands of contracts that end up in the courts each year because of the breakdown in relationships within the contract. Stakeholder management is a key skill for project managers, including identifying, prioritising the project’s stakeholders, and then developing effective communication within relationships that work (for more on this see WP1007 The Stakeholder Cycle). The success of the construction phase of Terminal 5 at Heathrow was largely due to BAA’s focus on the ‘soft’ skills needed to develop and sustain the integrated delivery teams that created the success. This was a revolution in procurement and supply chain management and led to this project being celebrated as the most successful construction project in the UK (for more on this see my presentation to the CIPS Australasia Strategic Procurement Forum in Auckland).

The same argument applies to most project management artefacts. The most perfectly developed schedule is totally useless if the information it contains is not communicated to the people who need to work to the plan; communication is a ‘soft’ skill. But communication on its own is not enough! The people receiving the communication need to understand the message and agree to use the schedule in the coordination of their work. This is unlikely to happen if the people have not been involved in the schedule development which requires more stakeholder engagement and communication, consensus building and a range of other ‘soft’ skills (see: Communication in organisations: making the schedule effective).

Putting it another way, developing an effective schedule that is useful because it is actually used to manage time on the project demands the project manager and/or project scheduler engage effectively with the people who will be responsible for implementing the schedule. This requires interpersonal, contextual and behavioural competencies.

Orman also states professional skills should be unique to the professions, examinable in a written exam and uses the medical profession as an example. Two members of our family recently completed a multi year journey to become qualified anaesthetists. Over the years there were many written examinations but there were also searching interviews and clinical assessments along the way and years of ‘apprenticeship’ under the direction of more senior professionals to ensure they were competent as well as knowledgeable. If medical professionals need more than book learning and written examinations why should project managers be any different?

Project success is achieved by persuading people in the project team to enthusiastically and collaboratively work together to achieve the contracted output. Developing a motivated team capable of achieving this requires a range of ‘soft’ skills including leadership, motivation, communication and conflict management to name a few. Organisations cannot do work; it is the people within the organisation that do the work and management is about directing and leading people!

Answering the question, what is more important, the ‘hard’ skills of scope management, scheduling and cost planning or the ‘soft’ skills of motivation, communication and leadership, is difficult. My feeling is the synergy of ‘hard’ skills powered by ‘soft’ skills will create a far more powerful engine for success than the sum of the two parts in isolation. Successful project managers need both capabilities either within their person or within their leadership team.

If we ignore stakeholders and the ‘soft’ side of our project management skill set we severely reduce our ability to meet our client’s requirements for on time on budget and on scope delivery. ‘Soft’ is not a synonym for easy!

Your project will only be considered successful if its key stakeholders perceive the project’s outcome as a success. These perceptions of success or failure are heavily influenced by the effectiveness of the project’s communications, and relationships, with its stakeholder community, particularly senior managers. Communicating effectively is both a science and an art framed within a relationship.

The starting point if you wish to be taken seriously is to develop a reputation for credibility. Senior management need to recognise that if you say something, it is backed up by facts, and if you commit to something, it is delivered. Credibility is earned by performance, but there is no harm in quietly making sure your performance is noticed in the right places. Your reputation is a general underpinning to all internal organisational relationships. Developing a specific relationship needs a specific, culturally appropriate focus before you can expect to communicate effectively.

Also, the last few years have seen significant changes in people’s understanding of acceptable behaviours and have forced a re-evaluation of the way Project and Program managers need to communicate to influence their stakeholders; particularly when ‘advising upwards’ and dealing with difficult people. The first key to building any effective relationship is to avoid stereotyping. Upwardly mobile managers with a focus on being promoted, frequently have a different life focus to project managers. These differences are not uncommon in successful senior executives and need to be respected as a component in the relationship, not denigrated.

The second key is to recognise that in every relationship there is a power dimension. How a senior manager uses his or her power is to an extent a generational issue. As long as they understand their purpose, many younger managers would see nothing wrong in a more junior manager setting reasonable boundaries and procedures to the relationship and communication. Older managers used to operating in a command and control environment are likely to react negatively to a ‘junior’ pushing rules upwards.

The solution is mutuality. You need to understand what you need from the relationship (support, resources, backing) and also what the senior manager needs from the relationship. Then, work within the relationship to negotiate mutually beneficial outcomes that meet both sets of requirements. It is by linking your needs to the achievement of the senior manager’s requirements; you can start to achieve real communication.

As already mentioned, crafting advice to senior management to achieve effective outcomes from the communication is as much an art as a science. Communicating for effect requires a clear understanding of the objective of the communication and the skills to create messages that are focused:

• On the right people
• At the right time and carry
• The right information in the right format.

Mutuality and credibility are the two keys to advising upwards, but in the end, all relationships depend on the situation. If you are seen as a serious contributor to the organization’s success and can link your needs to the needs of senior management, there’s a high probability of achieving your desired outcome and benefiting the organization at the same time.

My next book, Advising Upwards: A Framework for Understanding and Engaging Senior Management Stakeholders, will be published by Gower in 2011. For more on the book see: http://www.mosaicprojects.com.au/Books.html#AdvisingUpwards

In the meantime, our popular workshop, The science and art of communicating effectively will be run in Sydney and Melbourne over the next few weeks. For more information see: http://www.mosaicprojects.com.au/Training-Comms.html

Research by Dr. Brian Hobbs, University of Quebec at Montreal, Quebec, Canada published in a White Paper prepared for the Project Management Institute (PMI) highlights the precarious existence of the majority of Project Management Offices (PMOs). Approximately half of the PMO’s in existence are seeing their relevance or very existence questioned.

Whilst PMOs have been popular since the middle to late 1990’s and new PMOs are being created at a relatively high rate; PMOs are also being shut down or radically reconfigured at a similar rate. As shown in the figure below most PMOs in existence today are rather recent creations. The sample suggests more than half the PMOs in existence today (54%) were created in the last two years and only 17% have been in existence for more than five years.

This data suggests a PMO often has only a short time to demonstrate its ability to fit into the organisations culture and create value before it is restructured or closed down. We have looked at some of the issues and challenges associated with PMOs in a Mosaic White Paper ‘PMOs’.

Based on years of observation, the key to achieving an effective start up for a PMO has more to do with the PMO’s management being able to effectively manage their key stakeholders, particularly in the executive suites than any methodology or reporting processes the PMO may import or develop. For more on this see the numerous papers we have published [paper listing]. The key message is technical competence is never going to be enough to justify the existence of a PMO.

Cost performance is a symptom of other management functions. It is impossible to ‘manage costs’. The only way to change cost outcomes is to change the other processes that incur costs.

The three key areas of business operations and project management that incur costs and where a change in the process will cause a change in costs are:

1. Changing the procurement / purchasing / supply chain processes that acquire the required inputs to the process being managed.
2. Changing the way the work that transforms inputs to outputs is undertaken through enhanced management and leadership including skilling, motivating and directing the people involved in the work and ensuring they have the correct resources and equipment to undertake the work.
3. Focusing on the quality of the outputs produces to ensure the ‘right scope’ has been delivered at the ‘correct quality’. Too low and there are cost consequences in rectification, too high and you may have spent money unnecessarily.

These three elements exist in a risk frame. Whilst risk management will not ‘control’ the future, it will allow opportunities to be identified and grasped and threats mitigated and avoided by changing the way the work is undertaken and as a consequence optimise cost outcomes.

The two key facets that permeate all of the above are stakeholder management and time management.

• Stakeholder management both within the team and externally, (including effective communication) is central to achieving a successful outcome at the best price. Stakeholders are in the supply chain, include the project team and contractors and can have a major impact on the risk profile of the work. For more posts on stakeholder management see: http://www.stakeholder-management.com/blog/?cat=5
• Time management focuses on ensuring the right people are in the right place at the right time, with the right resources and equipment to do the work in the optimum sequence. For more posts on time management see: http://mosaicprojects.wordpress.com/category/project-controls/scheduling-project-controls/

Both of the above need regular reviews and adjustment within the overall frame of the emerging risk profile.

Where ‘cost management’ adds value is via techniques such as Earned Value (EV). Applying EV effectively allows the symptoms of a deviation from the expected performance to be highlighted through Cost Variances and other reports.

As with medicine and diseases, it is capability to recognise and correctly interpret symptoms that allows diagnosis that leads to the effective treatment of the under-laying problem. In project and business management space, this should translate to the requirement for managers not only to report a cost variance, but also to identify the cause of the variance and to recommend and/or implement corrective actions.

Whilst it is impossible to directly manage or control costs; timely and accurate information on cost performance can be a valuable diagnostic tool to remedy the real issues. What’s needed is for senor managers to stop focusing on ‘cost’ and start asking deeper questions about performance and risk.  I know many readers of this blog will say this already happens in their organisations, but I also know that far too many other managers focus on the symptom of cost performance rather than the under-laying problem to the detriment of their businesses.

One of the interesting similarities between stakeholder management and risk management is the challenge of knowing what we know and more importantly understanding what we don’t or can’t know.

An enduring part of Donald H. Rumsfeld’s legacy will be his somewhat garbled comment at a DoD news briefing in 2002: “as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.” Despite the wide spread ridicule these comments have attracted, Rumsfeld was right!

The challenge in both risk and stakeholder management is to identify the things we don’t know. This is made more important because what we don’t know about key stakeholders may constitute a significant risk to the project or business.

Plotting what we know in terms of our knowledge of the person’s wants expectations and attitudes in one dimension and how aware we are of that knowledge in another offers four possibilities.

The consequences of the four quadrents are:

• Management Zone: When we are aware of our knowledge proactive management is possible. We know we know and can take appropriate actions. This is where tools such as the Stakeholder Circle® are at their most useful.
• Risk Zone: When we are aware that we don’t know something, we can assess the implications and invest effort as needed. This is the zone traditional risk management works best in and we can use risk management techniques to asses the probable impact of our lack of knowledge and take appropriate actions to mitigate any undesirable consequences.
• Research Zone: We don’t know we have access to knowledge that we could use ‘if we ask the right questions’. This zone is created by amnesia, inexperience and false assumptions (eg, assuming you cannot ask someone a question). Research and experience minimise this quadrant. Facilitated processes such as brainstorming, affinity diagrams and focus groups can help to unlock the knowledge that exists and allow it to be used effectively.
• Reactive Zone: We don’t know we need to know. Particularly with people, there can be many issues problems and opportunities that you are simply unaware of. This area cannot be managed, you have no knowledge you need to be managing something. When issues and opportunities arise you need to be ready to react quickly and there needs to be processes in place to regularly scan the overall stakeholder environment to identify emerging opportunities and issues as early as possible.

Effective stakeholder management is focused on moving all of the key and important stakeholders into the Management Zone. However, you can never be 100% certain you know everything about everyone that matters and need to regularly review the other three quadrants to identify opportunities and minimise issues.

Several thousand years before Rumsfeld, Confucius said: To know that we know what we know and that we do not know what we do not know – that is true knowledge. Given the continually evolving nature of the stakeholder community surrounding any endeavour, achieving true knowledge is always going to be a major challenge.

In addition to normal bound books, Stakeholder Relationship Management: A Maturity Model for Organisational Implementation, is also available as a Gower eBook. We have just been updated on the first quarter sales for the 150 or so Gower books that are available as eBooks and Stakeholder Relationship Management is the second best-seller for the last quarter.

Gower’s eBook can be purchased in their entirety or you may opt for short term access to the book or access to only one or two chapters. The eBook format currently available is Adobe eBook (pdf). For more information visit the Ashgate/Gower website.

To purchase normal books, see http://www.mosaicprojects.com.au/Book_Sales.html for the options available.

20 years ago, stakeholder management and shareholder/owner management were almost synonymous. In the intervening period, much has changed.

Most enlightened thinkers now place stakeholder management at the centre of effective business operations. The business needs to support, empower and satisfy the people working within the organisation, the general public and customers (now classes as Corporate Social Responsibility or CSR) and the owners of the business. All of these people are stakeholders.

Since the passing of the Sarbanes Oxley Act, organisational governance has become an important focus. For all types of organisation this is directly linked to governing the work of the people engaged in the work of the business; ie, stakeholders.

Since the GFC effective risk management has also become of increasing concern. Risk management is not the foolish attempt to avoid all risk – this is impossible, rather the effective management of risk within the risk tolerance thresholds of key stakeholders including the organisations owners and managers; ie, stakeholders.

Stakeholder Management

As summarised by the diagram above, business operations are intrinsically linked to, and require, effective governance, to meet the expectation of the organisations owners, within acceptable risk parameters to deliver value to society and the organisations clients or customers.

However, whilst stakeholder management is central to all of these processes, effective stakeholder management requires the allocation of scarce management resources to focus on the relationships between the work and the most important stakeholders. At the most fundamental level, the purpose of the Stakeholder Circle® methodology is understand ‘who’s who, and who’s important’ in the stakeholder community surrounding your work.

Once you understand this the effective management of stakeholders becomes possible. However, without the clarity of insight created by the careful analysis of the stakeholder community to determine who is really important the potential for wasted effort is enormous. As with most planning process, the payback from effort expended in analysis, is the reduced incidence of issues and problems as the work proceeds.

Can you afford not to focus some effort on effective stakeholder management?

PMI has selected Stakeholder Relationship Management: A Maturity Model for Organisational Implementation for its on-line book store and will be promoting the book at the PMI EMEA congress in Milan (10-12 May).

I will be in Milan for the congress to present on ‘The future of the PM Hero’ followed by my SeminarsWorld® workshop ‘The science and art of communicating effectively’.

I will be happy to sign copies of the book for anyone who buys a copy during the congress and look forward to exploring the delights of Italy.

I have been posting a few bogs on communication recently, mainly focused on differentiating reporting from communicating.

Reports have a definite value but it is limited, ‘The Value of Reports’ posted on the PMI ‘Voices of Project Management’ blog defines their key uses.

The step beyond reporting is managing stakeholder perceptions. This was the topic of ‘Stakeholder Perceptions Are Paramount’ also posted on the PMI ‘Voices of Project Management’ blog.

These two posts and more were brought together in my paper ‘Beyond Reporting – The Communication Strategy’ presented last week at the PMI Asia Pacific congress.

What all of this feeds into is the process of developing an effective communication plan. Communication planning is more than just developing a report distribution list. It must involve the full spectrum of communication options deployed to engage effectively with stakeholders ranging from ‘lift meetings’ and coffees through to formal presentations.

This is one reason why our workshop, ‘How To’ develop a Communication Plan is separated from our SeminarsWorld® workshop The science and art of communicating effectively. Whilst communicating without a plan can be counterproductive, the communication plan itself needs to canvass both the efforts needed to ‘communicate for effect’ and the routine distribution of reports.