Understanding Different Types of Stakeholders and Their Roles

KEY TAKEAWAYS

Within a professional setting, most projects require a multidisciplinary and interdepartmental team of experts who all contribute to its completion in one way or another. Collectively referred to as stakeholders, these professionals fulfill various roles throughout the project lifecycle. To understand the extent of their influence on a project, here are the different types of key stakeholders in project management and their functions and responsibilities.

What Are the Types of Stakeholders in a Project?

Depending on its size, scope, and scale, a project could have dozens or even hundreds of stakeholders—and being able to differentiate them is an essential skill in project management, especially for beginner project managers.

To simplify the processes associated with assigning and managing key stakeholders, these individuals are often split into various groups. Here are the six common stakeholder groups:

• Employees: These are the immediate team members within the workplace. Employees often contribute the most to the project’s completion. They are involved throughout the process, from the project kickoff meeting through the official closure of the project.
• Customers: Customers and end-users count as stakeholders as they are affected by the quality and timeliness of the finished project.
• Suppliers and vendors: Because they provide raw goods and services that are necessary to complete the project, external suppliers and vendors are also considered stakeholders.
• Investors and shareholders: Investors and shareholders are primarily concerned with their return-on-investment (ROI). It is imperative to keep this group satisfied at all times.
• Local communities: Some projects impact the company’s surrounding community as well, either by creating new jobs, spurring economic growth, or strengthening local health and safety.
• Governmental entities: Because they collect taxes and provide regulatory oversight of all day-to-day operations, the federal government is always considered a stakeholder, even if they don’t directly participate in the project.

While these groups provide a great starting point for designating and managing a team, stakeholders can be further classified according to their level of authority, whether they’re internal or external stakeholders, and other metrics.

Primary Stakeholders

Primary stakeholders are the ones who are the most involved. While they can vary between projects, organizations, and even industries, primary stakeholders typically include:

• Project managers and directors
• Project team members
• Customers or end-users
• External suppliers and vendors
• Business partners

Depending on the project needs and objectives, almost any individual or organization can be considered a primary stakeholder. If they play a hands-on role throughout the completion of a project or if they’re affected—either positively or negatively—by its outcome, they’re classified as a primary stakeholder.

Secondary Stakeholders

While primary stakeholders are easy to identify, secondary stakeholders are not. This group comprises individuals and organizations who are not directly affected by the project but nonetheless have an interest in it as a whole. Common secondary stakeholders include:

• Media and news agencies
• Labor and trade unions
• Advocacy groups
• Local communities

Because they don’t play a significant role in the general project lifecycle, secondary stakeholders are not always considered during the initial project planning phase. However, most successful PMs keep track of secondary stakeholders in order to address any potential concerns or issues as soon as they arise.

Internal Stakeholders

Internal stakeholders are project contributors who are working from inside the organization. Much like primary stakeholders, internal stakeholders are rather easy to identify, as they influence the project’s direction, its goal, and the general flow of resources. Examples of internal stakeholders include:

• Executive management
• Human resources department
• Finance and accounting teams
• Organizational board members

While there is a crossover between primary and internal stakeholders, the former often fulfill a more hands-on role in the project lifecycle. In contrast, internal stakeholders oversee the project from its conception to its completion.

External Stakeholders

If internal stakeholders are overseeing a project from the inside of the company, external stakeholders are monitoring it from outside. As such, they often do not have access to specific project plans, performance analyses, or similar documentation. In some cases, however, they can have just as much influence—if not more—than their internal counterparts. Examples of external stakeholders include:

• Governmental and regulatory entities
• Local and community-based organizations
• Current and prospective clients
• Suppliers and vendors

Similar to the relationship between internal and primary stakeholders, there are similarities in the roles external and secondary stakeholders play. However, secondary stakeholders are not as active throughout the fulfillment of the project. External stakeholders, on the other hand, have a strong influence on the project’s general direction or its quality—keeping these clients happy is of utmost importance.

Direct Stakeholders

Anyone who has direct access or authority over a project is considered a direct stakeholder. These individuals operate either internally or externally. Direct stakeholders typically include:

• Project team members and team leaders
• Project managers and directors

To be classified as a direct stakeholder, an individual has to hold a certain amount of power. They need to have the ability to change the direction of a project, update project deliverables, or affect the overall project implementation.

Indirect Stakeholders

While direct stakeholders have a vested interest in the overall project implementation and execution, indirect stakeholders generally only take an interest in the end result. Production issues, staff shortages, or regulatory issues are not a matter of concern for these stakeholders. Their focus is on the final product or service that your team has to offer. These stakeholders typically include:

• Customers and end-users
• Suppliers and vendors
• Governmental and regulatory entities

Although indirect stakeholders do not participate in the planning, execution, or delivery of the project, they are still affected by the outcome, such as when an unsatisfied customer decides to share their concerns on social media or when a governing body slams the organization with regulatory fines and penalties. For this reason, their thoughts and opinions should be considered when planning a new project.

Incorporating Project Stakeholders into the RACI Matrix

With many different stakeholders involved, even the most experienced PMs are bound to face challenges during project planning, implementation, and organization. This is where the RACI matrix comes into play.

An established methodology for tracking project responsibilities and assigning specific roles to the various key stakeholders, the RACI matrix is an invaluable tool that can save PMs significant time and energy.

• Responsible (R): Generally reserved for the project manager, this role maintains responsibility for delivering a timely project according to guidelines and specifications.
• Accountable (A): Stakeholders with this designation are accountable for the overall project direction and progress, including tasks and activities.
• Consult (C): These stakeholders provide direct input regarding the completion of day-to-day project tasks and activities.
• Inform (I): These stakeholders do not contribute directly to the project, but they need to be kept informed on the overall project lifecycle.

The RACI matrix benefits the project management process in the following ways:

• Clarifying project roles and establishing a clear chain of command for the project as a whole
• Analyzing, distributing, and delegating project workloads to team members
• Overseeing project milestones, benchmarks, and deliverables
• Facilitating smooth transitions when transferring projects between teams
• Establishing clear lines of communication between project teammates and stakeholders
• Identifying specific training needs for employees

Likewise, there are some drawbacks to consider before committing to the RACI matrix in project management. Some of the most significant disadvantages include:

• The lack of a sole decision-maker or project leader, which makes it difficult for team members to follow a clear path forward
• An increased potential for team confusion or miscommunication, especially amongst new or inexperienced team members
• The need to assign some individuals to multiple roles, resulting in an uneven distribution of daily workloads
• The inability to classify certain project contributors into one of the four RACI categories

In many cases, the project management concept of employing the RACI matrix offers benefits that outweigh the drawbacks. However, the primary goal of the RACI matrix is to provide clarity and direction to avoid confusion. Since the size of the RACI matrix grows as more team members and tasks are added, much of its clarity is lost when applied to large or long-term projects.

The RACI matrix also has limited use in smaller projects, making the effort of creating and maintaining one ineffective and inefficient. For best results, PMs should determine whether or not to use a RACI matrix at the beginning of each project.

Best practices for building a RACI matrix

The traditional RACI matrix is at its most effective when it is created and maintained according to several key best practices. While many PMs follow a basic set of guidelines, others develop their own best practices over the course of time.

• When using the traditional RACI matrix, every project task should include at least one team member who is marked as Responsible. Although multiple parties can be categorized as Responsible for any given task, this tends to cause confusion amongst project teammates.
• Each task should have only one team member assigned as Accountable. While there are rare cases where multiple parties are accountable for the same project task, the RACI matrix works best when there’s only one team member assigned to each task or activity.
• Every stakeholder should have a specific role assignment in every task. This is true for the traditional RACI matrix and many of the alternatives. Generally speaking, the majority of key stakeholders will be designated as either Consulted or Informed.
• Avoid assigning too many stakeholders to the same category. While it is sometimes necessary to assign large groups to certain categories, especially Consulted and Informed, this can cause unnecessary delays that will hamper the decision-making process.

• Ensure that all stakeholders agree with their individual assignments on the RACI matrix. If not, they should be assigned to a different category or on another project altogether.
• Don’t be afraid to update the matrix as needed. The RACI framework is not rigid or permanent. Project needs evolve as it progresses, and updating the matrix to reflect these changes helps drive communications and clarify roles over a long-term basis.

This list is not all-inclusive, but these best practices provide a great starting point for both experienced and novice PMs who don’t know how to begin their RACI matrix.

Popular alternatives to the RACI matrix

Although it’s one of the most popular strategies in use today, the RACI matrix is not the only way to organize and track key stakeholders. It is true that many of the alternatives follow a similar approach of assigning individual stakeholders to various groups, but the categories themselves vary greatly. As a result, some of the alternative matrixes are primarily reserved for specific projects, industries, or occupations.

ARCI

The ARCI (Approve, Recommend, Consulted, Informed or Accountable, Recommend, Consulted, Informed) framework is closely based on the RACI matrix. However, instead of assigning team members as Responsible or Accountable, this approach replaces the first two categories with Approvers and Recommenders. As these titles suggest, their jobs are to approve project decisions and recommend actions or activities, respectively.

CAIRO

Sometimes known as RACIO, the CAIRO (Consulted, Accountable or Approve, Informed, Responsible, Out of the Loop or Omitted) expands on the standard RACI matrix with the addition of a category for those who are Out of the Loop or Omitted. These individuals don’t contribute to the project nor do they need to be informed of its day-to-day progress but are nonetheless still considered stakeholders.

DACI

While the RACI matrix focuses on individual responsibilities and accountabilities, DACI (Driver, Approver, Contributor, Informed) puts more emphasis on the decision-making process as a whole. Most project stakeholders will be classified as either a Contributor or marked as Informed, as the overall number of Drivers and Approvers is best kept at a minimum.

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Read more in DACI Model: Top Decision-Making Framework

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PACSI

Teams that want to focus more on individual stakeholders and their input use the PACSI (Perform, Accountable, Control, Suggest, Inform) matrix. It is also ideal for projects that require day-to-day collaboration and teamwork. Like RACI, PACSI follows a strict hierarchy or chain of command. Unlike RACI, the PASCI framework allows for suggestions to be made by project participants and gives contributors (designated in the Control category) the ability to veto or approve these recommendations.

RACIQ

Experienced PMs can introduce quality control to the typical RACI matrix with the implementation of RACIQ (Responsible, Accountable, Consulted, Informed, Quality Review). In this framework, the added category assigns specific key stakeholders to the quality assurance and review team. While this process typically takes place at the end of the project lifecycle, ongoing quality control is sometimes used.

RACI-VS

Another expansion of the traditional RACI matrix, the RACI-VS (Responsible, Accountable, Consulted, Informed, Verifier, Signatory) framework introduces enhanced quality control and verification. When the RACI-VS methodology is used, it’s the Signatory who is ultimately responsible for the project’s success or failure.

The Importance of Stakeholder Communication

Regardless of the project management methodologies used, it is important to maintain communications with project stakeholders. Not only does this keep them engaged and strengthen their confidence in the team, but it also allows project managers to collect feedback and implement changes as needed.

There are a variety of ways to stay in contact with project stakeholders, all of which will increase the stakeholders’ understanding of the RACI matrix. Telephone calls, emails, and SMS make good communication channels. Face-to-face and remote meetings are viable options as well.

Other tools and strategies successful PMs use when communicating with key stakeholders include the following:

• Utilizing automated newsletters or email blasts to keep everyone informed
• Hosting one-on-one and group-based meetings or presentations
• Documenting individual stakeholder needs to better determine their roles within the RACI matrix
• Providing transparency and visibility into the project lifecycle with ongoing performance reviews, milestone reports, and project benchmarks
• Using custom dashboards in project management software to automatically track and report important project metrics
• Reviewing stakeholder feedback with project teammates
• Maintaining detailed project plans, schedules, and timelines
• Organizing special events, dinners, or luncheons with key stakeholders

Communication is an important part of any project. Knowing the communication preferences of all stakeholders, custom-tailoring reports to meet their interests, and maintaining a consistent schedule of updates all go a long way in building trust and ensuring satisfaction throughout the process.

Bottom Line: Driving Success Through Stakeholder Analysis

Understanding the different types of key stakeholders in a project, including their roles and their individual responsibilities, and determining and meeting their needs and demands through stakeholder analysis are keys to success in any project. When all collaborators are operating on the same page, the whole project lifecycle becomes a highly organized, efficient, and productive process that benefits everyone involved.