1) Problem Statement:
Today, an investment manager needs to satisfy an ever more growing range of stakeholders. Such is the case due to the growing number of stakeholders and indeed the growing chasm between different stakeholder goals and objectives. To illustrate, an investment manager who invests in an oil field needs generate as much financial returns as possible to satisfy her shareholders, while at the same time making sure that the field operates within strict environmental boundaries, which at many times come at a cost. Such conflicting stakeholder goals require an intricate and structured approach to stakeholder analysis and mapping, in order to set expectations, manage stakeholders and ensure stakeholder coherence.
2) Stakeholder Mapping Tools:
Within the context of this blog, a stakeholder is a person, group or organization who could potentially be affected by or have an effect on an investment or project (Rabinowitz, 2013).
Having identified stakeholders, each has to be mapped in order to determine the actions that need to be taken in order to ensure that the stakeholders are adequately managed. While many techniques are available, this blog compare the following two mapping approaches:
A) Impact vs. influence mapping:
Each stakeholder is analyzed based on their influence and impact on the investment. The following is an example of different stakeholders mapped on the impact-influence chart, along with the style required to manage each:
Figure 1 (Sharma, 2010)
B) Spheres of Influence:
The spheres of influence approach adds another layer to the analysis. Instead of merely analyzing a stakeholder’s influence and impact, a stakeholder is analyzed based on attitude, interest and power. The following is a depiction of such an approach:
Figure 2 (McDonough, 2010)
3) Comparison of each tool
The Impact-Influence mapping tool allows investment managers to understand the potential impact –negative or positive- that each stakeholder could have on the investment. However, no analysis is required for the amount of interest and attitude –and hence, the likelihood- of each stakeholder taking an action.
On the other hand, the Influence Sphere tool allows an investment manager to gauge on the stakeholders interest, ability to take action and likelihood of taking an action, be it positive or negative.
4) Acceptable criteria for Stakeholder Mapping in Investment Management.
In investment management it is critical to understand the power of each stakeholder. In addition, it is also critical to predict what action a stakeholder is likely to take.
5) Summary of Comparison
The following table summarizes both tools against the acceptable criteria and outlines the whether each criterion could be met:
6) Tool of Choice for Investment Managers
It can be clearly seen that the Influence Sphere is a more comprehensive tool to manage an investment’s stakeholders. Not only does the tool allow an investment manager to determine which stakeholders have the most power to impact the project, but it also gives an investment manager an indication as to what sort of action will be taken.
7) Action Reporting and Tracking
Stakeholder management is a continuous activity that only ceases as the investment is divested. As such, each stakeholder will be tracked periodically to understand where he or she stands in the sphere. In addition, by regularly using the tool, further refinement could be introduced should the need arise.
Rabinowitz, P. (2013). Identifying and Analyzing Stakeholders and Their Interests. Retrieved June 13, 2014, from http://ctb.ku.edu/en/table-of-contents/participation/encouraging-involvement/identify-stakeholders/main
Sharma, R. (2010, August 18). Example of the Influence/Impact Grid. Retrieved June 13, 2014, from http://www.stakeholdermap.com/stakeholder-analysis/stakeholder-salience.
McDonough, M. (2012, March 18). Stakeholder Analysis – Spheres of Influence – Power, Attitude, Interest. Retrieved June 13, 2014, from http://www.brighthubpm.com/project-planning/23481-stakeholder-analysis-spheres-of-influence/#imgn_0