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Discovering management
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1.4.3 Analysing an organisation’s stakeholders

We have talked already about using maps as a means of identifying stakeholders. While this is often a useful exercise in its own right, stakeholder maps often presuppose that stakeholder positions are fixed whereas in fact they are dynamic and may move according to the issue at hand, level of interest and/or degree of influence they might possess.

In order to manage stakeholders effectively it is important to understand the needs, interests and power of each. This means ascertaining their goals, reviewing past reactions, considering expected behaviour and probable reaction, assessing the likely impact that the organisation’s operations will have on them, and gauging the extent of buy-in and level of support offered.

In an article for Public Management Review, Bryson (2004) describes fifteen different techniques which a manager, or policymaker for that matter, might use to identify and analyse an organisation’s stakeholders. He reminds us that the main purpose of stakeholder analysis is to:

  • identify stakeholders and their interest
  • clarify stakeholder views of the organisation
  • identify key strategic issues
  • begin the process of identifying coalitions of support and opposition.

There is not space for discussion of all fifteen techniques here, but among the most popular is the power versus interest grid or matrix. Although Bryson makes reference to the grid developed by Eden and Ackermann (2003), theirs is but one of many versions in use today. Most share very similar characteristics in that they juxtapose stakeholder interest (in the political sense) with stakeholders’ power to affect the organisation or the issue under consideration.

We have included two alternative power versus interest grids in this reading (see Figures 5 and 6). The first grid (Figure 5) was adapted by Johnson et al. (2008, p. 156) from an earlier model developed by Mendelow in 1991. What is perhaps different about the Johnson et al. version is that the matrix indicates the type of strategy the organisation needs to adopt in relation to each stakeholder group.

To a great extent the strategies are self-explanatory, but according to Johnson et al., the relationship with stakeholders in quadrant C may be one of the most difficult to plan for. On the face of it, stakeholders in this quadrant may appear passive (and therefore easy to manage) but if the level of interest is underestimated and they move to quadrant D, a strategy of ‘keep satisfied’ maybe very risky.

A ‘keep informed’ strategy may not seem contentious. This is because they may also be vital allies in a broader lobbying strategy to influence the attitudes of more powerful stakeholders.

(Source: Johnson et al., 2008)
Figure 5 Power versus interest

The power versus interest map in Figure 6 is similar to the Mendelow/ Johnson et al. matrix except that the emphasis is on characterising the stakeholders who populate each quadrant. Offered as part of a range of tools and techniques to support the management of change, Price (2009) identifies four categories of stakeholder:

  1. Monitors are individuals or groups who are powerful enough to support or undermine the change effort. What is important, argues Price, is that they can work with you but also against you.
  2. Intruders are similar to monitors in that they have the power to support or undermine change, but critically they are sufficiently interested to take action if they choose.
  3. Onlookers may be very interested in the changes taking place but crucially have very little power to do anything or influence planned change.
  4. Outsiders are individuals or groups who rate low on both power and interest.
Described image
Figure 6 Power versus interest (Price, 2009)

Both matrices encourage a proactive approach to the management of stakeholders, but we should note that such categorisation presupposes that stakeholder positions are fixed whereas in fact they are dynamic and may shift according to the issue at hand, so stakeholder vigilance is crucial.

Stop and reflect

Can you think of a stakeholder group for your organisation whose position in relation to an issue has shifted? Why was this and what does it tell you about both the stakeholder group and the issue?

The UK’s Training and Development Agency for Schools (TDA) (2007) offers a somewhat different approach to the ‘mapping of stakeholder disposition’ as part of a ‘remodelling’ toolkit for managing the process of change in schools. Although the example in Figure 7, which illustrates stakeholder disposition towards a school change initiative, is a public sector one, the principles that underpin it can be used for any organisation. In many respects this is a more dynamic tool than the grids described above because it addresses both the strength of relationships and degree of influence by using line thickness and circle size. Clearly, the aim is to get your most influential stakeholders on the right-hand side of the chart and as near to the top as possible.

Described image
Figure 7 Mapping stakeholder disposition – an example

Scholes (1998, p. 155) cautions us to strike a sensible balance between being too simplistic or generic in our selection of which stakeholders to plot and being so detailed that analysis is rendered difficult or meaningless. He also advises against ascribing more power to the stakeholders than they actually possess.

To facilitate the assessment of power and potential influence, Johnson et al. (2008) identify a number of factors that may point to a stakeholder’s power (see following box). However, they rightly stress that no single indicator will give an exact assessment of a stakeholder’s power; rather it is the interplay of measures that will inform the most useful analysis.

Sources and indicators of power

Internal stakeholders

  • status, e.g., position in the organisational hierarchy
  • representation, e.g., committees they may be on
  • involvement in strategic decision making
  • reputation
  • informal influence
  • expertise
  • grade or salary
  • .claim on resources, e.g., size of budget or number of staff
  • . symbol of power, e.g., size and location of office or secretarial support.

External stakeholders

  • control of strategic resources
  • relative size of shareholdings or loans
  • dependence on small number of customers
  • ... reliance on small number of customers
  • negotiating arrangements
  • status, e.g., is the customer or supplier wined and dined?
  • at what level is the customer or supplier ‘managed’ by the organisation?
(Source: adapted from Johnson and Scholes, 2008)