FEATURED PAPER
By Massimo Pirozzi
Rome, Italy
ABSTRACT
This paper focuses on stakeholders, and on their importance with respect to projects. At first, the origin and the history of this word help to understand the complexity of this role, which includes several key concepts as interest, support, participation, organizational behavior, influence, value, ethics, and risks. Then, the centrality of stakeholders, who are both the doers and the beneficiaries of each project, is demonstrated: while, on the one side, the stakeholder work is basic for project implementation, on the other side, the stakeholder satisfaction is the main success factor in all projects. Then, an accurate overview about all different project stakeholders is made, with a special focus on project manager, on project team, on reluctant stakeholders, on negative stakeholders, and on personal stakeholders. Finally, the concepts of importance both of stakeholder relationships – as real and proper business and/or social relationships – and of stakeholder management are introduced. This paper is extracted from the first Chapter of my new book “The Stakeholder Perspective: Relationship Management to Increase Value and Success Rates of Projects”, CRC Press, Taylor and Francis Group, October 2019.
THE EVOLUTION OF STAKEHOLDER’S CONCEPT
Stakeholders are persons, without a doubt: but why do we use a word that specific, which incorporates so many concepts that some hundreds of its different definitions exist in the literature, and direct translation of which in other languages is nearly impossible? In fact, some history, and a little in-depth analysis, of the meanings of this word can help us to reveal a significant part of the mystery.
The word stakeholder dates back to the beginning of the eighteenth century, in England, and it meant the person who was entrusted with the stakes of bettors: he was the holder of all the bets placed on a game or a race, and he was the one who was paying the money to the winners. Therefore, the first stakeholder was a holder of interests, and this is, even today, one of the most common meanings, if we consider, in addition, that “having a stake” is a synonym of “having an interest”, and that stakes (meaning “strong sticks”) can be pushed in the ground either to mark a property, or to be part of a fence that settles the boundaries of an estate, so defining the perimeter of an interest.
But stakes (still meaning “strong sticks”) can be hammered in the ground also for supporting plants: in fact, it is believed that the first modern meaning of stakeholders, which has been attributed (Freeman, 1984) to an internal memorandum of Stanford University Research Center dated 1963, was “those groups without whose support the organization would cease to exist”. Therefore, stakeholders are the strongest supporters of an organization (we could also say that they may be ready to “go to the stake” for it!), and their contribution is foundational to the existence of the organization itself: main emphasis is, in this definition, on internal stakeholders, who are the doers of organization’s performances, and who need to be properly engaged to give an effective contribution. Meanwhile, in the above-mentioned perspective, stakeholders do not act anymore as individuals only, but they are considered as part of groups, too: stakeholders interface each other through processes, start to act collectively, by sharing their resources and by integrating their efforts, and they do it through relations, so that their behavior becomes organizational, and not only personal.
Furthermore, in the first text on the theory of stakeholders (Freeman, 1984), the definition of stakeholder was “a stakeholder in an organization is any group or individual who can affect or is affected by the achievement of the organization’s objectives”. Since “to affect” is a synonym of “to influence”, it was here that one other of the most common concepts in stakeholder definitions came in: stakeholders influence the organization’s objectives, and are influenced by them, and this is the first time that the nature of stakeholders’ centrality in the organizations became evident, since stakeholders were defined as both the actors and the recipients of the organization’s results.
In the original PMBOK (Project Management Institute, 1987), the stakeholders were considered as the participants to the project. In addition, some years later (Freeman, 1994), the foundational concepts of participation and of created value were enhanced too, and stakeholders were defined as “participants in the human process of joint value creation”. At first, in fact, stakeholders participate in the organizations, as far as other stakeholders would like to participate in the same organizations, and, in both cases, they want to do so jointly, e.g., by becoming, and then being part of a specific community, which is deeply characterized by common goals, behavioral rules, specific languages, and so on. Thus, regarding the created value, the extraordinary importance of this concept, on the one hand, is due to the enhancement of the stakeholders’ role on the joint creation of the business and/or social value, while, on the other hand, is because it introduces the issue that actual value which is added by stakeholders must be considered arithmetically: in fact, it can be positive, but also null or negative. Indeed, in, and outside of, all the organizations, there are positive stakeholders to engage, but there are generally also neutral/reluctant stakeholders, who require special additional efforts for their engagement, and negative/hostile stakeholders too, who have to be properly combated.
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How to cite this paper: Pirozzi, M. (2019). Stakeholders, who are they? PM World Journal, Vol. VIII, Issue IX, October. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/10/pmwj86-Oct2019-Pirozzi-stakeholders-who-are-they.pdf
About the Author
Massimo Pirozzi
Rome, Italy
Massimo Pirozzi, MSc cum laude, Electronic Engineering, University of Rome “La Sapienza”, Principal Consultant, Project Manager, and Educator. He is a Member and the Secretary of the Executive Board, a Member of the Scientific Committee, and an Accredited Master Teacher, of the Istituto Italiano di Project Management (Italian Institute of Project Management), and he is a Senior Examiner for Certifications in Project Management, and for Professional Project Managers, too. He is Certified as a Professional Project Manager, as an Information Security Management Systems Lead Auditor, and as an International Mediator. He is a Researcher, a Lecturer, and an Author about Stakeholder Management, Relationship Management, and Complex Projects Management; in particular, he is the Author of the Book “The Stakeholder Perspective: Relationship Management to Increase Value and Success Rates of Projects”, CRC Press, Taylor & Francis Group, October 2019. He has a wide experience in managing large and complex projects in national and international contexts, and in managing relations with public and private organizations, including multinational companies, small and medium-sized enterprises, research institutes, and non-profit organizations. He worked successfully in several sectors, including Defense, Security, Health, Education, Cultural Heritage, Transport, Gaming, and Services to Citizens. He was also, for many years, a Top Manager in ICT Industry, and an Adjunct Professor in Organizational Psychology. He is registered as an Expert both of the European Commission, and of Italian Public Administrations.
Massimo Pirozzi serves as an International Correspondent in Italy for the PM World Journal. He received the 2018 PM World Journal Editor’s Choice Award for his featured paper “The Stakeholder Management Perspective to Increase the Success Rate of Complex Projects”.
E-mail: pirozzi@isipm.org
