10-The Power, Legitimacy and Urgency Model

The Power, Legitimacy and Urgency Model
Maps stakeholder behaviour according to its balance of three characteristics:
Power: Of the stakeholder to influence the organisation
Legitimacy: of the relationship in terms of desirability or appropriateness
Urgency: The expectations of the stakeholder in terms of criticality and time-sensitivity

The Power, Legitimacy and Urgency Model
Maps stakeholder behavior according to its balance of three characteristics:

• Power: Of the stakeholder to influence the organisation
• Legitimacy: of the relationship in terms of desirability or appropriateness
• Urgency: The expectations of the stakeholder in terms of criticality and time-sensitivity

9-Why stakeholder analysis is important

Decision makers / Project Managers have been required to work more inclusively with a wide range of stakeholders. Stack holder’s values, political concerns and ability to influence the top management many times shadow the purely technical viewpoints. We must bring stake holder’s values into the risk assessment. Stakeholders are no longer satisfied with the “Three-‘I’ Model’: ‘inform, invite, and ignore.’” It is acknowledged that the results of a decision-making process have a better chance of being viewed as fair and credible when stakeholders have participated in the deliberation process.

It can be summarized as

• Identify the stakeholders likely to be affected by or influence the activities of the organisation
• Assess how those stakeholders could be impacted or impact upon the organisation
• Anticipate the consequences of any change in the organisation’s activities
• Identify stakeholders’ ‘success criteria’
• Assure a successful outcome for the organisation by developing co-operation with stakeholders

8-Advantages and disadvantages of Stakeholder Analysis

Advantages of Stakeholder Analysis

• Get to know stakeholders better:
• Relative importance, power and interests 
• Better managed relationships
• Risks identified 
• Make better strategies and decisions
• Greater acceptance of organisation actions by stakeholders

Disadvantages of Stakeholder Analysis

• Best done on continuous basis
• Assessment of analysis may be subjective
• Maybe not all stakeholder interests can be met at the same time
• Focus on most important stakeholder
• Balance & reconcile all interests according to importance or urgency

6-Categorize Stakeholders

Categorize Stakeholders

• Internal and External Stakeholders
• Internal stakeholders are those who are  ‘members’ of the business organization. E.g. Owners and shareholders, Managers, Staff and employees
• External stakeholders are not part of the firm. e.g. government & trade associations, Suppliers, Customers
• Some groups can be both internal and external stakeholders, such as staff or shareholders who are also local residents

• Primary, Secondary & Key Stakeholders
• Directly affected: e.g. employees & stockholders
• Indirectly affected: e.g government & media
• Most significantly affected: those with the most influence from either group

5-Characteristics of Stakeholders

Characteristics of Stakeholders

1. Owners and Shareholders

• The number of owners and the roles they carry out differ according to the size of the firm
• In small businesses there may be only one owner (sole trader) or perhaps a small number of partners (partnership)
• In large firms there are often thousands of shareholders, who each own a small part of the business

2. Managers:

• organise
• make decisions
• plan
• control
• are accountable to the owner(s)

3. Employees or Staff:

• A business needs staff or employees to carry out its activities
• Employees agree to work a certain number of hours in return for a wage or salary
• Pay levels vary with skills, qualifications, age, location, types of work and industry and other factors

4. Customers:

• Customers buy the goods or services produced by firms
• They may be individuals or other businesses
• Firms must understand and meet the needs of their customers, otherwise they will fail to make a profit or, indeed, survive

5. Suppliers:

• Firms get the resources they need to produce goods and services from suppliers
• Businesses should have effective relationships with their suppliers in order to get quality resources at reasonable prices
• This is a two-way process, as suppliers depend on the firms they supply

6. Community:

• Firms and the communities they exist in are also in a two-way relationship
• The local community may often provide many of the firm’s staff and customers
• The business often supplies goods and services vital to the local area
• But at times the community can feel aggrieved by some aspects of what a firm does

7. Government:

• Economic policies affect firms’ costs (through taxation and interest rates)
• Legislation regulates what business can do in areas such as the environment and occupational safety and health
• Successful firms are good for governments as they create wealth and employment

4-The Stakeholder Analysis process

The Stakeholder Analysis process

1. Identify all stakeholders (Brainstorming)
2. Identify stakeholder needs & interests
3. Classify groups of interests (Stakeholder Mapping)
4. Identify areas of conflict: Organisation v Stakeholder, Stakeholder v Stakeholder
5. Prioritise, reconcile and balance stakeholders
6. Align significant stakeholder needs with organisation’s strategies and actions

Remember : The stakeholder attributes used for Stakeholder analysis are subjective & can depend on who is mapping. Also the attributes are not steady, but can change over the time. E.g. A powerful stake holder may loose his power over the time.

Stakeholder Mapping

• Several techniques for categorising stakeholders
• Helps identify which stakeholders may support or oppose change / organisation’s actions
• Which stakeholders are the most powerful, have most influence
• Help decision makers formalise / prioritise strategies

3-The Power / Dynamism Matrix

The Power / Dynamism Matrix

• Classifies stakeholders in relation to the power they hold and their aptitude for action (dynamism)
• Can be used to indicate where political effort should be made before instigating change

• Stakeholders in groups A & B: are the easiest to deal with.
• Stakeholders in group C: are important because thy are powerful. But low dynamism means their reaction is predictable and expectations can be managed.
• Stakeholders in section D: Need most management attention because they are powerful and reaction is difficult to predict. May need to ‘trial’ new strategies with them.

2-The Power / Interest Matrix

The Power / Interest Matrix

• Classifies stakeholders in relation to their power and the extent to which they are likely to show interest in the actions of the organisation.
• Can be used to indicate the nature of the relationship which should be adopted with each group

• Stakeholders in group A: Need only minimum effort an monitoring
• Stakeholders in group B: Should be kept informed as they may be able to influence more powerful stakeholders
• Stakeholders in group C: Are powerful, but level of interest is low. Generally expected to be passive, but may move into group D on an issue of particular interest
• Stakeholders in group D: Are both powerful and interested. Their co-operation is of key importance for new strategies

1-What is Stakeholder Management

The term ‘Stakeholder’ refers to persons, groups, or organizations that must somehow be taken into account by leaders, managers, and front-line staff. W. Edward Freeman, in now classic text Strategic Management: A Stakeholder Approach(1984), defined a stakeholder as “any group or individual who can affect or is affected by the achievement of the organization’s objectives”.
For some authors, (for profit organizations) stakeholders can only be people or groups who have the power to directly affect the organization’s future; absent that power, they are not stakeholders.
Any person or organisation who can be positively or negatively impacted by, or cause an impact on the actions of a company. (Freeman, 1984)
The individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and are therefore its potential beneficiaries and / or risk bearers. (Post, Preston & Sachs, 2002)
For Government & non-profit organizations, the definition differs a little. Typical definitions of stakeholder from the public and nonprofit sector literatures include the following variants:

• “All parties who will be affected by or will affect [the organization’s] strategy (Nutt and Backoff 1992: 439)
• “Any person group or organization that can place a claim on the organization’s attention, resources, or output, or is affected by that output” (Bryson 1995: 27)
• “People or small groups with the power to respond to, negotiate with, and change the strategic future of the organization” (Eden and Ackermann 1998: 117)
• “Those individuals or groups who depend on the organization to fulfill their own goals and on whom, in turn, the organization depends” (Johnson and Scholes 2002: 206)

While specific stakeholder definitions vary, this paper takes into account the need for stakeholder support to create and sustain winning coalitions and to ensure long-term viability of organizations, as well as policies, plans, and programs. Key stakeholders must be satisfied, at least minimally, or public policies, organizations, communities, or even countries and civilizations will fail.

A typical list of Stakeholders

• Owners, stockholders & investors
• Banks and creditors
• Partners & suppliers
• Buyers, customers & prospects
• Management
• Employees, unions, works councils
• Competitors
• Government & regulators: local, national, international
• Professional and industry associations
• Media: local, national, trade, financial
• NGOs
• Communities & other interest groups