Stakeholders in Project Management and their Role

All of us are interconnected. None of us can work in isolation. If today I am earning more and spending more, I am actually affecting the lives of thousands of individuals. For example, if I am earning more, I would like to live a luxurious lifestyle. I will employ house help. This housekeeper will have more work and, hence, more money. They will spend the money on buying more food and vegetables. The vegetable seller will be able to sell more than usual and hence will have more income. With the increased income that the vegetable seller has now, he might send it to his relatives in the rural area. Now relatives in the rural area can buy things that they want other than basic food, thereby increasing the sales of the local ration shop owners, and this chain goes on and on. This is the perfect example of what Stakeholders mean. Stakeholders are people who have a direct or indirect vested interest in the company and its working and they are affected by the company’s working.

Stakeholders in a Company and their Role

Stakeholders represent all the participants (internal or external) who have a vested interest in the company and its workings. Stakeholders is a broader term. A company will have many stakeholders because its work affects the community at large. Some are affected directly while some are affected indirectly just like in the story mentioned above. Different projects that a company undertakes ensure that new stakeholders are added to the organization.

In this article, we will be understanding the different stakeholders of a company and their role in project management.

  • Customers or Clients − This includes the present customer, potential customers in the future, and past clients that a company has had. They play a major role in project management. The desire of the customer actually determines the output of the project. The entire project is based on what the customer wants when they want it, and how they want it done. Customer satisfaction directly determines the success rate of the project. Customers are the company's external stakeholders.

  • Suppliers − This includes all the suppliers providing the company with raw materials, technological help, support services, spare parts, and others. They have a significant impact on project delivery because a delay on their end causes the project to come to a halt. A good relationship with suppliers helps the company procure goods at a lower rate and aids in emergency situations. The success rate of a project is also to some extent determined by the suppliers and their work. The profitability of the company determines the amount of business that these suppliers will have. Suppliers are the company's external stakeholders.

  • Communities and societies at large − If a business releases harmful substances in the environment or in its surroundings in terms of chemical waste, waste materials, e-waste, harmful radiations, harmful gases, toxins, and others, they affect the quality of life of individuals and also cause harm to communities. Hence, the community and society have an interest in what the company does and how it plans to compensate them for the waste dumped in society. The company's external stakeholders are communities and societies.

  • Investors or Sponsors of the project − These people provide the organizations with the money that they require for working and therefore have an interest in how the company is performing and what its future course of action is. These stakeholders can be involved in the workings of an organization or can act only as spectators. It is important to keep them happy because they can withdraw money whenever they want. Investors or project sponsors are the external stakeholders of the company.

  • Regulatory bodies or lawmakers − These people also indirectly affect the workings of a company. A project team has to ensure that it is following all the guidelines and rules laid down by the law-making body. Failure to do so might lead to financial costs or a loss of image in front of a larger public. Being lawful and ethical is very important for the company and its image. A bad image can withdraw investors, clients, and end users. The end consumer will not trust a company or its project if it is not lawful and ethical. The project and its work might be impacted by the different laws or regulations coming up. Regulatory bodies or lawmakers are the company's external stakeholders.

  • Project Manager or the PMO − A PMO is the leader of the project. They place the project's stepping stones. They decide upon the human resources needed for the project, the project deadline, and the cost of the project. They are directly responsible and answerable for the success or failure of the project. A PMO is a point of contact for the client and the organization for any information related to the project. The success of a project will provide the project manager with monetary gains, an image boost, and increased reliability. A PMO is an internal stakeholder of the company.

  • Project Team Members − This includes all the members involved in developing and delivering the project. from the designers, developers, quality control team, admin help, and support staff needed to the business analyst. The members are accountable to the PMO for their work. The workings of the project team determine the success or failure of the project in the company. They are the most crucial resource for a project. Project Team Members are the company's internal stakeholders.

  • Upper management and shareholders − These people are the decision-makers of the organization. With their approval, only a project manager can take important daily decisions and kickstart projects. These people are responsible for the success of the organization and have a say in the work of the project. All important information related to the project has to be conveyed to the upper management without fail. This might contain the CXO, directors, CTO, CEO, director or directors, and others. Upper management is the internal stakeholder of the company. Upper management also includes the shareholders of the company.

All the stakeholders, whether internal or external, are crucial for project management. Their cooperation is what leads to the success of the project. Happy stakeholders will ensure that projects are delivered on time and that there are new projects coming up for the organization.