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

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.

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.

When considering stakeholders, there are very few one-to-one relationships. Most stakeholders are, and have been, influenced by a range of relationships in and around your project, program and your organisation.

Change Management and Stakeholder Management

Stakeholder management is a key facet of organisational management where stakeholder management is often aligned with marketing, branding and corporate social responsibility (CSR) initiatives.

Similarly, stakeholder management central to change management and the ability to realise the benefits the change was initiated to deliver. The benefits will not be realised unless the key stakeholder communities accept and embrace the changes.

Project and program management also has a focus on effective stakeholder management. In a change initiative, the project and/or program undertakes the work to deliver the elements needed to facilitate the change but are only ever part of the journey from concept to realised value.

A typical evolution of a change initiative would flow along these lines:

• The organisation decides on a major organisational restructure and as a consequence initiates a change management process and appointed a change manager.
• The change manager develops the business case for the program of work and the executives responsible for the organisations portfolio management approve the business case and agree to fund and resource the program.
• The program manager sets up the program management team, established the program management office (PgMO) and charters a series of projects to develop the various deliverables needed to implement the change.
• The projects deliver their outputs.
• The program integrates the outputs with the operational aspects of the organisation.
• The organisation’s management make effective use of the new systems and processes.
• Value is created for the organisation and its owners.

The change manager is the sponsor and primary client for the program but the people who need to be convinced of the value of changing are the operational managers and their staff. If the organisation does not accept and use the new systems and processes very little value is generated.

Within this scenario, stakeholders in the operational part of the organisation, and particularly the managers will be key stakeholders for a range of different entities:

• They are stakeholders in the organisation itself and part of the organisational hierarchy.
• They are stakeholders in the change process being managed by the change manager.
• As end users of the new systems and processes they are also stakeholders of the program.
• As subject matter experts (SMEs) they are likely to be stakeholders in at least some of the projects.

In one respect change management is stakeholder management. Therefore, in a change management initiative, stakeholder management should be an integrated process coordinated at the change manager’s level. All of the organisational elements working on the change need to coordinate their stakeholder management efforts to support the overall outcome. Confusing and mixed messages don’t help anyone.

But this is just one typical business scenario. When considering stakeholders, there are very few one-to-one relationships. Most stakeholders are, and have been, influenced by a range of relationships in and around your organisation. Consequently, focusing on a simple one-to-one view is unlikely to provide the best outcome for anyone.

Effective stakeholder management requires a mature organisational approach. One approach to developing this capability is the SRMM (Stakeholder Relationship Management Maturity) model described in my book. Stakeholder Relationship Management: A Maturity Model for Organisational Implementation. I will outline the SRMM model in a later post.

Several of my recent posts have focused on the need for effective communication up the organisation to senior managers and clients. Successful project management also needs good downwards communication to and with the project team.

I have just finished reading two Executive Book Summaries from Soundview Executive Book Summaries . The first was ‘How did that happen’ by Roger Connors and Tom Smith, the second ‘The five dysfunctions of a team’ by Patrick Lencioni. Together these books emphasise the importance of effective communication within the team.

Lencioni suggests members of truly cohesive teams; trust one another, engage in open discussion of ideas, commit to decisions and plans of action, hold one another accountable for delivering against those plans and focus on achieving effective results. Trust and respect are the elements needed to allow this to happen.

From the perspective of project delivery, the key elements are active discussions leading to decisions that are represented by the project plan and then focusing on achieving the plan. The agreed plan represents the expectations of the project manager and the team for the performance of the work. But how to turn these expectations into reality?

Connors and Smith show how the project manager can hold the team responsible for results in a positive, principled way. The first step is for the PM to test the expectations contained in the plan to ensure each one is consistent with the overall plan, achievable by the currently available resources, and that the ultimate fulfilment of the expectation is measureable. An expectation may be a document, a piece of code, a successful test or any of the other elements needed to deliver the project to meet the expectations of the client.

Communicating specific expectations to the team members responsible for the work uses a why, what, when approach. The ‘why’ needs to be compelling on a personal level to the individuals concerned; this is helped if they are already committed to team achievements. The ‘what’ requires clarity; not just about the deliverable but also the boundaries of the work and the available support. Lastly, the ‘when’ needs to be precisely defined. The schedule, WBS, and other project documents usually contain the needed ‘what and when’ information, the challenge is using these documents as effective communication tools to build commitment and motivation in the team.

To maintain accountability, it is vital the PM routinely inspects what is expected. Making sure the ongoing work is aligned with the original expectations and any changes are properly managed. Holding people accountable needs the PM to precisely understand things as they really are and to be able to identify and diagnose any problems. Accountability is not ‘blame’ it is a joint process to commit to the truth and then act to develop solutions, overcome obstacles and deliver results.

Accountability is the key! Team members hold themselves and their colleagues accountable and work together to achieve results that meet the expectations of the PM and the project’s clients. To achieve accountability, open and effective communication between everyone in the team is critical and the PM has to be the ‘first among equals’ leading the process. This is one of the reasons a PM should spend 90% of her time communicating.

More next time.

Wiley-Blackwell has published a new book on stakeholder management in the construction industry, edited by Ezekiel Chinyio from the University of Wolverhampton and Paul Olomolaiye from the University of the West of England. This book is designed to map the current state of stakeholder management in the construction industry with input from a range of well known academics and researchers.

Our chapter on Mapping Stakeholders can be previewed on our Interesting Book’s page with links through to the publisher’s web site.

The concept of temporary organisations has been recognised in project management literature for many years. The primary tool of project management, the project team, is a temporary organisation.

The concept of TKOs builds on this concept and recognises the team is a network of complex responsive human connections and disconnections focused on creating the new knowledge needed to successfully deliver their project. This human network is non-linear. People’s actions and responses may be more or less proportional to the stimulus; unexpected, emergent actions will arise; and emotions, uniformity and diversity are all played out within the team. Consequently, traditional, linear approaches to project management are no longer likely to be adequate for meeting the needs and emergent outcomes of project teams in contemporary organisations.

The new management paradigm, which the TKO represents, is a shift from technically determined mechanistic activities to socially organised learning, co-constructed knowledge creation and problem solving through sense-making processes within the complex adaptive system of the project team. The individual team members co-create meaning and order, rather than having it imposed.

The role of leadership in a TKO is ‘we-centred’ rather than ‘I-centred’ participative leadership that will:

• guide, mentor, assist, coach, partner with team members
• co-create and co-evolve meaning and context
• keep an eye on the network horizon; what connections are happening between team members and with the external stakeholder community?
• give feedback based on performance/execution of project tasks to facilitate learning and improvement

Traditional project artefacts such as schedules still have important roles to play as communication and sense-making tools within the TKO. This is a totally different concept to the old paradigm of ‘control tools’.

Can project management adapt to this new environment? To read more on the challenges see some of the papers by Patrick Weaver:

• Scheduling in the Age of Complexity
• Project Controls in the C21 – What works / What’s fiction
• A Simple View of ‘Complexity’ in Project Management

One of the implicit elements of the Stakeholder Circle® methodology is the cyclical nature of the overall stakeholder management process. But this is not a simple circle.

The Stakeholder Cycle

The starting point is Step1 – Identification. Whilst this is the critical first step, the methodology suggests that a fresh scan of the environment is undertaken on a regular basis to understand changes in the overall stakeholder community. This process can be usefully timed to support a routine risk review (there is a strong correlations between stakeholders and risk – this will topic for s future post.). Identification includes assessing the stakeholder’s needs, perceptions and expectations on the one hand and what we need from the stakeholder on the other (mutuality).

Step 2 – Prioritization ranks the stakeholders based on a combination of power, proximity and urgency. Power and proximity are associated with the stakeholder’s position and should be relatively stable. Urgency is more subtle and includes how likely the stakeholder is to take action and how significant the stakeholder’s stake in the project is to that person. If the stakeholder feels comfortable with the overall running of the project, these factors are likely to be low. If the stakeholder is unhappy with the overall shape of the project they are likely to be higher. Managing these perceptions by effective communication is the core skill in stakeholder management (steps 3 and 4). Effective communication is likely to reduce the levels of ‘urgency’ and consequently reduce the stakeholder’s level of prioritization.

Consequently, after the initial prioritization, there are two inputs to re-prioritization, the current, changed, attitude of existing stakeholders who have been the subject of targeted communication plus any new stakeholders from identification.

The last of the processes in this phase of the cycle is Step3 – Visualization. The management team is looking for trends and patterns to understand what’s happening both to individual stakeholders and the overall stakeholder community. This information feeds directly into the engagement process.

The Stakeholder Cycle

Step 4 – Engagement involves the planning and implementation of the stakeholder communication process. This should encompass everything from face to face meetings through to routine reports and newsletters. But the ‘doing’ of communication is not sufficient. It is critical that the effectiveness of the communications are monitored in real time and appropriate adjustments made to the messages and communication plan.

Step 5 – Monitor, is focused on this. Providing a continual watching brief delivering short term feedback to the communication process day-by-day, and a more comprehensive analysis to the next major review cycle. The inputs to monitoring should include formal assessments and informal ‘intelligence’ picked up by different team members as they go about their business. The core element in this step is the proactive seeking of information and then putting the information to effective use.

Just like the penny-farthing the stakeholder cycle has a large and small wheel – and both cycles are critical for effective stakeholder management.

The CIOB is finalising the publication of ‘The Guide to Good Practice in the Effective Management of Time in Complex Construction Projects’ with a public consultation period planned before Christmas leading to publication in 2010.

The primary purpose of this Guide is to set down the standards of project scheduling necessary to facilitate the effective and competent management of time in construction projects by defining the standard by which project schedules will be prepared, quality controlled, updated, reviewed and revised in practice.

Before embarking on the guide, the CIOB conducted a survey between December 2007 and January 2008 of the state of time management in a range of UK construction projects. The outcome of the survey was surprising. On simple construction projects, the range of outcomes (late, on time, early) were more or less the same regardless of the use or non-use of effective time management processes.

However, as the projects became more complicated, the difference between projects with an effective time management system and those without became significantly more noticeable. Projects with a well defined time management system were far more successful than those without!

The definition of simple and complicated derived from this study is:

• Simple Projects comprise those in which construction has the following characteristics:
  • design work is completed before construction starts;
  • single building or repetition of identical buildings;
  • less than 5 stories high;
  • without below-ground accommodation;
  • carried out to a single completion date;
  • without phased possessions or access;
  • with services not exceeding single voltage power, lighting, telephone, hot and cold water and heating;
  • a construction period of less than 9 months;
  • with a single contractor; and
  • with less than 10 sub-contracts.
• Complex Projects comprise those in which construction comprises, one or more of the following characteristics:
  • design work is to be completed during construction
  • more than one building
  • more than 5 stories high
  • with below-ground accommodation
  • with multiple key dates and/or sectional completion dates
  • with multiple possessions or access dates
  • with short possessions
  • with services exceeding single voltage power, lighting, telephone, hot and cold water and heating.
  • accompanied by work of civil engineering character
  • a construction period greater than 12 months
  • with multiple contractors
  • with more than 20 sub-contracts

This opens the question why? I would suggest the likely answer, transferable to any project and any industry, is in two parts; both related to stakeholders and communication.

The initial benefit of the process of developing the schedule on a complicated project is the insights the act of creating the schedule gives to the project management team. It is impossible to effectively communicate to the project team and other stakeholders what has to be done when if the project management group don’t have a very clear idea themselves.

‘Simple projects’ are small enough and routine enough to be mapped out in an experienced managers mind. The person intuitively knows what needs to be done. As the project becomes more complex the analysis and serial decision making inherent in the schedule development process creates insights, new information and allows the testing hypothesis until an acceptable solution is devised. At the end of the planning process, a way forward has been determined, optimised and agreed.

The greater benefit though is likely to be in the area of coordination and communication during the work of the project. No schedule is ever perfectly correct. But having an agreed schedule that everyone works towards achieving minimises coordination issues and as elements of the work occur out of alignment with the schedule, the schedule and the variance information provide the foundation for proactive discussion and decision making.

A final intangible benefit of having a schedule has been identified in new research by Jon Whitty. It would appear that simply having a schedule is important for the credibility of the project manager. The project manager’s managers expect the PM to have a schedule and consequently give more credibility to communications from the PM if the schedule is present.

The challenge facing both PMs and their managers as a consequence of these findings is to determine for their industry the difference between simple projects where minimal systems are needed and complicated project where not having a reasonably sophisticated system to help manage time, and other elements of the project, is a distinct liability.

It would seem size does matter! And the old saying ‘if you fail to plan, you plan to fail’ really only applies to the larger more complicated projects.

Our sister company, Mosaic Project Services has developed a range of papers on the art and science of planning and scheduling available from Mosaic’s Planning and Scheduling Home Page.