Concepts
A critical aspect of preparing for your Portfolio Management Professional (PfMP) exam involves understanding the role and importance of stakeholders in portfolio management. In this context, stakeholders can be defined as persons or groups with an interest or concern in your portfolio. These stakeholders have the potential to impact the success or failure of your portfolio, thereby making them significant entities in portfolio management.
Types of Stakeholders
There are two types of stakeholders in portfolio management: internal and external stakeholders.
Internal stakeholders are individuals or groups within an organization that has a direct stake in your portfolio. They include employees, managers, and owners. They directly influence the activities and objectives of a portfolio and are affected by the outcomes.
External stakeholders, on the other hand, are entities not within your organization but who have essential interests in your portfolio. They encompass customers, suppliers, creditors, competitors, government agencies, and communities.
Stakeholder Analysis in Portfolio Management
Analyzing both internal and external stakeholders is crucial in portfolio management to identify stakeholder expectations, interests, and influence on the portfolio. This can be achieved by utilizing various techniques like meetings, interviews, and surveys/questionnaires.
Methods of Stakeholder Analysis
Meetings
Meeting is a direct technique involving face-to-face interaction with the stakeholders. This method is essential for reducing misconceptions, promoting participation, and facilitating discussion. The advantage of meetings is the ability to instantly clarify uncertainties, negotiate expectations, and facilitate relationship building. For instance, team meetings, board meetings, and workshops can be utilized to engage, uncover interests, and understand the influence of internal stakeholders like managers and employees.
Interviews
Interviews are a more detailed technique for stakeholder analysis. Here, pre-determined questions are asked from stakeholders to figure out their expectations and interests in the portfolio. Interviews can be one-on-one or group-based. This technique reveals more in-depth details than meetings as it focuses on in-person, detailed conversations. For example, comprehensive interviews can be carried out with external stakeholders like customers and suppliers to understand their requirements and issues.
Surveys/Questionnaires
Surveys or questionnaires are a way to collect data from a larger audience and are often used when the stakeholders are numerous, and meetings or interviews are impractical. They contain structured and unstructured questions designed to extract maximum information about stakeholders’ perspectives. Surveys and questionnaires provide quantifiable data, useful for measuring stakeholder’s opinion, importance level of various project issues or their preferences. For instance, a survey can be sent to a community (external stakeholder) affected by the company’s activities to understand their perception and expectations from the organization.
Each of these methods holds its unique advantages depending on the portfolio’s context and stakeholders’ type. Nonetheless, they all aim at the accurate identification of stakeholder’s expectations, interests, and influence, thereby optimizing stakeholder engagement, adding value to the portfolio, and increasing the chances of portfolio success.
Importance of Stakeholder Analysis
In conclusion, analyzing stakeholders using these techniques not only helps in identifying their expectations, interests, and influence but also leads to effective communication, better risk management, increased support, and improved portfolio performance. By understanding and managing both internal and external stakeholders effectively, portfolio managers can create a positive environment for the portfolio’s success. Hence, for a sound portfolio management strategy, it is crucial to understand, evaluate, engage, and monitor stakeholders continually.
Answer the Questions in Comment Section
True or False: In analyzing stakeholders, only external stakeholders should be considered in order to gain the most comprehensive view.
- True
- False
Answer: False
Explanation: Both internal and external stakeholders are important to the success of the portfolio. They both carry interests, expectations, and influence that can greatly impact the portfolio’s outcome.
True or False: Surveys and questionnaires are the most effective methods to identify stakeholder expectations.
- True
- False
Answer: False
Explanation: There’s no “most effective” technique to identify stakeholder expectations. It varies depending on the situation and the stakeholders involved. Techniques can include meetings, interviews, surveys/questionnaires.
Which of the following techniques is NOT commonly used for identifying stakeholder expectations, interests, and influence?
- A) Meetings
- B) Interviews
- C) Surveys/Questionnaires
- D) Guesswork
Answer: D) Guesswork
Explanation: Guesswork is not a recommended technique for stakeholder analysis, wherein meetings, interviews, and surveys/questionnaires are more effective and professional strategies.
In what way can meetings be used to assist with stakeholder analysis?
- A) To get to know each stakeholder’s favorite color
- B) To identify each stakeholder’s dietary preferences
- C) To understand each stakeholder’s expectations and interests
- D) To decide on the theme for the office party
Answer: C) To understand each stakeholder’s expectations and interests
Explanation: Meetings are held with stakeholders in order to clearly communicate with them and understand their specific expectations, interests, and potential influence in the project.
Which of the following are key things to identify when conducting stakeholder analysis?
- A) Stakeholder expectations
- B) Stakeholder interests
- C) Stakeholder influence on the project
- D) All of the above
Answer: D) All of the above
Explanation: A comprehensive stakeholder analysis includes identification of stakeholder expectations, interests and their influence on the project or portfolio.
True or False: Stakeholder influence on the project is not pertinent to the success of the portfolio.
- True
- False
Answer: False
Explanation: Stakeholder influence can have a significant impact on the success of the portfolio. Their influence determines the acceptance or rejection of project deliverables.
True or False: External stakeholders can have as much influence on the success of the portfolio as internal stakeholders.
- True
- False
Answer: True
Explanation: Both external and internal stakeholders can significantly influence the success of the portfolio, depending on their level of involvement, interest, and power.
Stakeholder expectations are typically identified by ____
- A) assuming what they want
- B) asking them directly
- C) consulting a magic 8 ball
- D) ignoring them completely
Answer: B) asking them directly
Explanation: Direct communication through meetings, interviews, and surveys/questionnaires is the most effective way to understand stakeholder expectations.
True or False: Internal stakeholders usually have less influence on the success of the project.
- True
- False
Answer: False
Explanation: Internal stakeholders often have direct involvement or interest in the project, and therefore their influence can be significant to the project outcome.
The stakeholder’s level of interest in your project could be gauged by?
- A) Their level of participation in meetings
- B) Their responses to surveys/questionnaires
- C) Their eagerness during interviews
- D) All of the above
Answer: D) All of the above
Explanation: Each of these methods can provide insight into the stakeholder’s level of interest. The more engagement and involvement they show, the higher their interest is likely to be.
Great insights on stakeholder analysis. Meetings are indeed very effective to identify stakeholder expectations.
I agree with you. Meetings can provide a face-to-face interaction, which offers more clarity.
Interviews are my go-to technique. They allow a deep dive into individual stakeholder needs.
I appreciate the blog post!
Surveys and questionnaires seem too impersonal for stakeholder analysis.
Disagree. Surveys can gather data from a large number of stakeholders quickly.
Each technique has its own pros and cons. It’s about choosing the right mix for your portfolio.
Thanks for this comprehensive guide.