Wednesday, June 15, 2011

Principles of Stakeholder Management

In the article entitled “Principles of Stakeholder Management”, the authors summarize a document intended to provide general business managers with guidelines to help them interact with business stakeholders. In the article, stakeholders are referred to as “constituencies that are affected (favorably or adversely) by the operation of the corporation” (Clarkson, Donaldson, Preston, & Brooks). In business, for a corporation to continue to grow and flourish, it must learn to balance its own interests with the interests of its stakeholders; in doing so they will meet the needs of the society (Clarkson et al.). Although the article was intended for general business management, project managers can adopt the same principles. By applying these principles, project managers will build a solid foundation for managing stakeholder relationships within their projects.

Overview of Principles

The primary purpose of the principles of stakeholder management is to provide managers of organizations guidelines to help balance corporate goals and the needs of organizational stakeholders. In addition, the principles “make managers more aware of the diverse constituencies that they are obligated to serve and increase the openness of management processes” (Clarkson et al.). The seven principles, if applied by project managers, will achieve a similar objective—to help project managers meet the needs of the project stakeholders.

Principle 1: Project managers should consider project stakeholder concerns during decision-making.

“Managers should acknowledge and actively monitor the concerns of all legitimate stakeholders, and should take their interests appropriately into account in decision-making and operations” (Clarkson et al.). It is important in business to be aware of stakeholder diversity. Projects, like businesses, have multiple stakeholder interests. The project manager must take the time to identify the different stakeholder types and understand their unique interests. This can be a challenge for the project manager, especially during large projects with many stakeholders. However, like in business, this does not mean project managers must address every need of every stakeholder. At a minimum, the project manager should evaluate stakeholder interests to determine how they impact the project. Ultimately the project manager should prioritize stakeholder interests by stakeholder type and give primary attention to core stakeholders.

Principle 2: Project managers should communicate effectively and openly with stakeholders.

“Managers should listen to and openly communicate with stakeholders about their respective concerns and contributions, and about the risks that they assume because of their involvement with the corporation” (Clarkson et al.). For a project manager, open communication with project stakeholders is critical to the success of the project. It is important for the project manager to realize communication must be two ways. For a project manager to communicate effectively with project stakeholders the project manager must carefully listen to the needs of the stakeholders; they must collectively engage in dialog that allows both parties, the project manager or team and the stakeholders, to openly ask questions and communicate project concerns or issues. However, the authors warns open communication should not imply a “commitment to collective decision-making” (Clarkson et al.). Instead, the project manager should use the information gathered during dialog sessions to gain a better understanding of stakeholder needs and to use that information to drive better project decisions.

Principle 3: Project managers should tailor communication to meet stakeholder needs.

“Managers should adopt processes and modes of behavior that are sensitive to the concerns and capabilities of each stakeholder constituency” (Clarkson et al.). There are many different types of stakeholders. Some stakeholder groups are large and have diverse needs, while others are small with very specific needs. It is the project managers’ responsibility to identify the needs of each stakeholder type and then tailor communication to the individual stakeholder type. However, regardless of the stakeholder type, even through the communication method and audience may change, the core message behind the communication must remain consistent. For example, the project manager may change the level of detail when communicating the purpose or objectives of a project, but the actual core message should remain consistent across communication channels.

Principle 4: Project managers should treat stakeholders fairly.

“Managers should recognize the interdependence of efforts and rewards among stakeholders, and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity among them, taking into account their respective risks and vulnerabilities” (Clarkson et al.). The authors identify two types of stakeholders in the article: voluntary and involuntary. Voluntary stakeholders are those who participate in the business by choice. Involuntary stakeholders are those who are impacted by the business regardless of choice. Both stakeholder types are impacted by the changes made during the implementation of projects. In order to ensure that stakeholders remain engaged in the project, project managers ensure stakeholders receive adequate benefit from the project and that the risks are managed to a level that the stakeholders are willing to bear. This may require addition effort on the part of the project manager for involuntary stakeholders and they may tend to focus on the risks and minimize the potential for rewards.

Principle 5: Project managers should develop partnerships with stakeholders.

“Managers should work cooperatively with other entities, both public and private, to insure that risks and harms arising from corporate activities are minimized and, where they cannot be avoided, appropriately compensated” (Clarkson et al.). Change is difficult for most of us. Sometimes changes produced by a project are wanted by the stakeholders; at other times, the consequences of a project are undesirable. In order to reduce some of the undesirable results of project changes, project managers may need help from key stakeholders. Therefore, instead of waiting for problems to occur, it is important for the project manager to proactively develop relationships with stakeholders who can help solve project challenges.

Principle 6: Project managers should clearly outline risks for stakeholders.

“Managers should avoid altogether activities that might jeopardize inalienable human rights (e.g., the right to life) or give rise to risks which, if clearly understood, would be patently unacceptable to relevant stakeholders” (Clarkson et al.). When it comes to managing projects, we can not anticipate everything in advance. Stakeholders do not like surprises, especially when they are negatively impacted by them. The project manager should identify all stakeholders that are potentially impacted by project risks and openly dialog with them about the risks. Stakeholders should collaborate with the project manager to identify potential risk reduction strategies and should continue to look for ways to identify and reduce risks. However, ultimately, the project manager is responsible to strike a balance between stakeholder risks and stakeholder rewards. If the project manager is unable to bring this to a balance that is an acceptable and agreeable by the stakeholders, the project manager should consider delaying or canceling the project.

Principle 7: Project managers should balance their interests as a stakeholder.

“Managers should acknowledge the potential conflicts between (a) their own role as corporate stakeholders, and (b) their legal and moral responsibilities for the interests of all stakeholders, and should address such conflicts through open communication, appropriate reporting and incentive systems and, where necessary, third party review” (Clarkson et al.). As indicated, project managers are also a major stakeholder within a project. However, the project manager is in a unique position as a stakeholder. As the author suggests, with direct access to sometimes privileged information and with direct influenced over decision making, the project manager is in a position of power and control (Clarkson et al.).  In addition, the project manager does not want the project to fail; a project failure could impact the project managers’ job security, rewards, or their responsibilities and influence within the organization. Therefore, the project manager must find a way to balance the power and desire for perceived project success with the needs of the project stakeholder. The project manager should encourage the implementation of a process that will generate this balance. In doing so, the project manager will gain credibility with stakeholders and within the organization.


Ultimately, project managers should apply the same principles of stakeholder management as are recommended for general business managers. By showing concern for stakeholders and treating them fairly, project managers are able to open communication channels and forge partnerships. Working together, project managers and stakeholders are able to identify risks and share rewards. Through a collaborative and balanced relationship, all stakeholders collectively help to improve the likelihood of a project success.


Clarkson, M. B. E., Donaldson, T., Preston, L. E., & Brooks, L. J.Principles of Stakeholder Management. Retrieved September 22, 2004, from

1 comment:

  1. Dear Author,

    I read you stakeholder management article with interest, and I would like to further elaborate.
    It should firstly be noted that a stakeholder is a person with a vested interest in the outcome of the business transaction or project deliverable, hence there are internal and external stakeholders to manage, these can be categorized into stakeholder groups e.g. regulators, customers, workforce, political actors and social environmental etc. (Roloff, 2008). Therefore stakeholders need to be identified as early possible to reduce any impact further into the initiative or transaction. Literature suggests the use of a stakeholder register or matrix that identifies the stakeholder interest in the projects, and the impact the stakeholders bring either positive or negative (PMBOK, 2008). External stakeholders have a powerful voice that can disseminate and stop projects in their tracks and/or have projects shelved or rejected altogether, such as the proposed third runway at Heathrow (Bowcott, 2010), and The Transmission Gully motorway project in New Zealand that has been debated since the early 1900’s (Elias, Jackson & Cavana, 2004). Although these projects are of significance they illustrate the power of the external stakeholder.

    Further to the stakeholders needs, there is a clear correlation between stakeholder’s commitment and project success, the project manager has the task of aligning stakeholder goals with project goals and gaining commitment from all vested interests of stakeholders (Leung et al., 2004), this is best achieved through collaboration interaction and for all core stakeholders to be integrated into a partnering team, this is further enhanced by assigning stakeholder responsibility (Davies, Gann & Douglas, 2009).

    Thus stakeholder management is more complex than the author enacts, however a stakeholder platform developed strategically for organizational business will reduce negative impact and improve positive impact.

    Many thanks



    Davies, A., Gann, D. & Douglas, T. (2009) ‘Innovation in megaprojects: systems integration at London Heathrow Terminal 5’, California Management Review, 51 (2), pp.101-125, EBSCO Host, [Online]. Available from: (Accessed: 28 March 2013).
    Elias, A.A., Jackson, L.S. & Cavana, R.Y. (2004) ‘Changing positions and interests of stakeholders in environmental conflict: a New Zealand transport infrastructure case’, Asia Pacific Viewpoint, 45 (1), pp.87-104, [Online]. Available from: (Accessed: 28 March 2013).
    Bowcott, O. (2010) Heathrow protesters win third runway court victory, The Guardian [Online]. Available from: (Accessed: 28 March 2013)
    Leung, M-Y., Chong, A., Ng, S.T. & Cheung, M.C.K. (2004) 'Demystifying stakeholders' commitment and its impacts on construction projects', Construction Management & Economics, 22 (7), pp.701-715, Business Source Premier, EBSCO Host, [Online]. DOI: 10.1080/0144619042000300736. (Accessed: 28 March 2013).
    Project Management Institute. (2008) A guide to the project management body of knowledge (PMBOK® guide). 4th ed. Newton Square (PA): Author.
    Roloff, J. (2008) 'Learning from Multi-Stakeholder Networks: Issue-Focussed Stakeholder Management', Journal of Business Ethics, 82 (1), pp. 233-250, EBSCO Host, [Online]. DOI: 10.1007/s10551-007-9573-3. (Accessed: 28 March 2013).


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