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International Journal of Managing Projects in Business Sustainable development and project stakeholder management: what standards say Pernille Eskerod, Martina Huemann,

Article information: To cite this document: Pernille Eskerod, Martina Huemann, (2013) "Sustainable development and project stakeholder management: what standards say", International Journal of Managing Projects in Business, Vol. 6 Issue: 1, pp.36-50, https://doi.org/10.1108/17538371311291017 Permanent link to this document: https://doi.org/10.1108/17538371311291017

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https://doi.org/10.1108/17538371311291017

Sustainable development and project stakeholder management:

what standards say Pernille Eskerod

Department of Leadership and Strategy, University of Southern Denmark, Slagelse, Denmark, and

Martina Huemann Projektmanagement Group, WU Vienna University of Economics and Business,

Vienna, Austria

Abstract

Purpose – The purpose of this paper is to analyze how various approaches to stakeholder management, as well as sustainable development principles, are included in internationally-used project management standards; and to consider the demands these approaches and principles place on project stakeholder management.

Design/methodology/approach – An analytical framework was developed based on stakeholder theory within general management, as well as on sustainability research. Desk research was carried out by applying the analytical framework to three project management standards: ICB, PMBOK and PRINCE2.

Findings – The research findings suggest that stakeholder issues are treated superficially in the project management standards, while putting stakeholder management in the context of sustainable development would ask for a paradigm shift in the underpinning values. The current project stakeholder practices represent mainly a management-of-stakeholders approach, i.e. making stakeholders comply to project needs, whereas a management-for-stakeholders approach may be beneficial.

Research limitations/implications – As the analysis is based on document studies of bodies of knowledge, the authors cannot be sure to what extent the standards represent real-life practices. However, the standards are developed by practitioners agreeing on common practices. Further, they are used to certify project managers worldwide. Therefore, the authors find it safe to claim that the findings are relevant when discussing project management practices.

Originality/value – The value of this paper lies in the enrichment of the understanding of project stakeholder management by applying concepts from general stakeholder theory and sustainable development research.

Keywords Project management, Sustainable development, International standards, Project management standards, Project stakeholder management

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1753-8378.htm

This article is part of a research project Rethink!PSM, Rethinking Project Stakeholder Management, which is partly funded by PMI and in which the two authors are principal researchers. The authors wish to acknowledge the financial support of PMI. Further, they wish to acknowledge inputs from participants in the Nordic Academy of Management (NFF), Stockholm, August 2011, where an early version of the article was presented. Finally they thank the anonymous reviewers and the two editors of this special issue for valuable guidance.

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International Journal of Managing Projects in Business Vol. 6 No. 1, 2013 pp. 36-50 q Emerald Group Publishing Limited 1753-8378 DOI 10.1108/17538371311291017

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Introduction Stakeholder management has been seen as a core activity for creating project success since Cleland’s work (1985) on the topic 25 years ago, and it has since then gained considerable attention in project management research and practice (Aaltonen, 2010; Jepsen and Eskerod, 2009; Karlsen, 2002; Littau et al., 2010; Vaagaasar et al., 2011). Project stakeholders are defined as “the people and groups affected by the project or in a position to influence it” (Andersen, 2008, p. 81, building on Freeman, 1984) regardless of whether they have an official role in the project or not (Loch and Kavadias, 2011). Project management is concerned with meeting or exceeding stakeholder needs and expectations, i.e. identified and unidentified requirements, and to balance these among stakeholders if the requirements are competing (PMI, 2008).

In spite of overwhelming pieces of advice available on how to do project stakeholder management, a steady stream of project failures related to unsatisfied stakeholders is reported (Dalcher, 2009). It is observed that projects frequently fail due to “unarticulated – and thus unresolved – tensions and/or trade-offs among the project stakeholders” (Loch and Kavadias, 2011, p. 225). In addition, project management researchers express a concern for whether “past [project management] research has failed to identify the factors that truly determine project success” (Besner and Hobbs, 2006, p. 38). This made us consider whether the current understandings of stakeholder management within the project management community are helpful in meeting or exceeding stakeholder needs and expectations, and whether developments within other fields, e.g. general management can provide fruitful contributions to the project management field.

When aiming at understanding how a community of practitioners understands a given subject it is a good idea to look into the practices. The concept “practice” covers elements like shared routines of behavior, models, guidelines, and policies (Whittington, 2006; Hällgren and Söderholm, 2010, 2011). Practices may exist at multiple levels (Klein et al., 1999). They may be specific to an organization and embodied this organization’s specific operating procedures and cultures (Nelson and Winter, 1982) or even related to specific practitioners (Hällgren and Söderholm, 2010). At another level, the practices may also be derived from “the larger social fields or systems in which a particular organization is embedded” (Whittington, 2006, p. 620), i.e. a societal level for practices.

For this research we were interested in practices for stakeholder management when executing a project. Internationally used standards, e.g. the Project Management Body of Knowledge (PMBOK) (PMI, 2008), influence the practices of the project management community (Morris, 2011; Hodgson and Muzio, 2011). Most of these standards are developed by practitioners who have agreed on best or at least common practices based on their experiences across organizations and industries (Garcia, 2005; Ahlemann et al., 2009). They serve as basis for certification of project managers worldwide and reflect due to their strong normative character (Morris, 2011) a widely shared understanding of what a project manager ought to do regarding project stakeholder management. Even though they are criticized and questioned by researchers (Hodgson and Cicmil, 2007) the standards have come to represent an institutionalized collective identity of project managers (Hällgren and Söderholm, 2010). Most research on practices within project management focuses on the micro level, i.e. how the work is carried out, e.g. in meetings and when interacting on a personal level (Hällgren and Söderholm, 2011). Based on

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the worldwide influence of project stakeholder management standards, we find it important to investigate the understandings represented in these standards.

Stakeholder theory is a central part of the strategic management discourse (Freeman, 1984; Mitchell etal., 1997; Wheeler and Sillanpää, 1998; Whittington, 2006; Freeman etal., 2007, 2010). Despite of the intense research efforts concerning stakeholder theory within general management, the project management community has not sought much inspiration in these developments. As we see it, project management scholars and practitioners tend to create their own discourses which are either unrelated to other fields or building on non-updated concepts, models, and theories from other fields. The HR knowledge area in the PMBOK is, e.g. based on HR theories of the 1960s and 1970s (Huemann, 2012). Therefore, the aim of this paper is to investigate whether contemporary stakeholder theory can offer new insights to the development of the project stakeholder management understanding. As a project can be seen as an organization even though a temporary one (Lundin and Söderholm, 1995), we find it reasonable to draw on theories developed for other types of organizations. The implications of managing stakeholders in projects instead of in permanent organizations are outside the scope of this paper.

Stakeholder management is in the general management literature increasingly considered in the context of sustainable development ( Jensen and Sandström, 2011; Porter and Kramer, 2011). Likewise sustainable development nowadays represents a contemporary context of any business activity (Elkington, 1997). We, therefore, claim that in order for projects to meet or exceed stakeholder needs and expectations in the future, project management must be done in the context of sustainable development.

Based on the above, we argue that existence of project stakeholder problems reported in empirical studies may relate to a lack of inclusion of developments within general stakeholder management and sustainable development consideration. This leads to the research question:

RQ1. How are general stakeholder theory and a sustainable development perspective reflected in project stakeholder management practices documented in project management standards?

Outline of the paper: first, we develop an analytical framework based on literature studies of general stakeholder theory and on sustainability research. Second, we present the research design. Third, we present our findings from analyzing project management standards. Fourth, we discuss implications for project stakeholder management. Finally, we conclude on the research, point to limitations and suggest future research.

A sustainability perspective: sustainable development as an important context The roots of sustainable development can at least be traced back to beginning of the eighteenth century, when von Carlowitz (1713/Reprinted 2009) defined sustainable yield in his forestry principles. He was a German tax accountant and mining administrator. He perceived the forest management from a long-term intergenerational perspective to better allow balancing between resource consumption and reproduction of wood, as wood is a slow growing resource (Morgenstern, 2007). In contemporary times, wider attention to the topic of sustainable development was not raised until the Brundtland Report by the World Commission for Environment and Development

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(WCED, 1987, p. 46), in which sustainable development was defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. This is a rather generic definition, emphasizing especially the long-term perspective of sustainable development as well as values such as fairness and solidarity between generations. Original theories of sustainable development focused on ecological issues related to protection of the environment and the natural resources, however, recent literature emphasizes the need for a holistic approach that integrates ecological, economic, and social dimensions when making decisions in organizations and societies (Arnold, 2001; Lafferty and Hovden, 2003; Steurer and Martinuzzi, 2005). Economic considerations are necessary in order to ensure among other things efficiency and economic stability; while social considerations are necessary to ensure fulfillment of goals like security, social justice, education of the work force, equal opportunities (Arnold, 2001). The ecological, economic, and social dimensions (in short planet, profit, and people) are interrelated and influence each other (Meadows et al., 1972). While a significant number of definitions of the term sustainable development exist in literature (Redclift, 2005), most definitions are rather content related and list issues like clean energy, public health, and social inclusion. In contrast, Hopwood et al. (2005) and Fergus and Rowney (2005) offer a set of principles that highlight the procedural aspects of sustainable development, including spatial and temporal scale. When looking for clues for examining the current understanding of project stakeholder management we find it highly relevant not only to consider content related issues but instead consider guiding principles of sustainable development, as proposed by Wagner (2007) who suggests that sustainability principles need to be integrated into the business processes of a company to receive performance benefits. This is in line with Gareis et al. (2013) who outline the following sustainable development principles relevant for project management: economic, ecologic and social orientation; short-, medium- and long-term orientation; local, regional and global orientation; as well as value orientation.

Insights from general stakeholder theory: management “of” versus “for” stakeholders Freeman’s (1984) book Strategic Management: A Stakeholder Approach can be seen as the starting point for the academic interests in stakeholder theory even though Freeman (1984) himself gave credit to others, including Abrams (1954), Cyert and March (1963), Ansoff (1965), Rhenman (1968) and Ackoff (1974). Freeman (1984, p. 49) pointed to the need for an inclusive stakeholder definition in strategic management and proposed that: “stakeholders [are] those groups who can affect or are affected by the achievement of the organization’s purpose”. Since then numerous stakeholder definitions have been offered. No consensus exists and Miles (2011) has identified hundreds of different definitions in the literature.

Besides pointing to the need of inclusiveness in the stakeholder definition, the general stakeholder theory offers a distinction of two approaches, i.e. a management-of-stakeholders (or managing stakeholders) approach and a management-for-stakeholders approach (Freeman et al., 2007, 2010). The management-of-stakeholders approach builds on the resource-based view of an organization offered by Pfeffer and Salancik (1978). In this approach stakeholders are seen as providers of resources. As stakeholders have a free will (Barnard, 1938) each stakeholder can decide whether to provide the organization with

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resources, also called contributions, or not. Every organization needs contributions from at least some of its stakeholders. Building on Freeman (1984) and Savage et al. (1991) suggest that the organization should assess the stakeholders on their help potential and harm potential. Stakeholders with high harm and/or high help potential should be given more attention than other stakeholders. This represents an instrumental approach to stakeholder management which is characteristic for many stakeholder management theories (of which Mitchell etal. (1997) may be the most wellknown). Stakeholders are seen as means to specific aims in the organization, and managers must figure out how to influence the stakeholders to procure resources for the benefits of the organization (Donaldson and Preston, 1995). If conflicting interests among the stakeholders exist, trade-offs must be made based on the needs of the organization. The management-of-stakeholders approach has been critizes for being too manipulative, and for being without any ethical approach to these of the stakeholders that are not considered to be very important for the organization (Donaldson and Preston, 1995; Freeman et al., 2007).

In contrast, the management-for-stakeholders approach (Freeman et al., 2007, 2010) takes the point of departure that all stakeholders have the right and legitimacy to recieve management attention ( Julian et al., 2008). Stakeholders are not means to specific aims in the organization but valuable in their own rights. In this approach stakeholders are:

[. . .] persons or groups with legitimate interests in procedural and/or substantive aspects of corporate activity. [They] are identified by their interests in the corporation, whether the corporation has any corresponding functional interest in them (Donaldson and Preston, 1995, p. 67, bolding in the original text).

This means that the stakeholders’ help or harm potentials – or other assessments – should not form the basis of how they are treated. Instead, they should be embraced by the organization and win-win situations should be sought. As the management-of-stakeholder approach, this approach also has received critiques, e.g. that the strive for a win-win situation risks leading to conflict-free solutions that are not very ambitious (Hahn et al., 2010).

Stakeholder management and sustainable development In some recent studies, stakeholder management has been explicitly or implicitly set in the context of sustainable development. Jensen and Sandström (2011) argue for a stakeholder theory that is more sensitive to globalization, which they find expressed in new power relations and new dimensions of responsibility of business for environment and society. Porter and Kramer (2011) indicate the potential for business of creating shared value with the stakeholders and suggest the principle of shared value creation, “which involves creating economic value in a way that also creates value for society by addressing its needs and challenges” (Porter and Kramer, 2011, p. 64). To be able to address the needs and challenges of society as well as other stakeholders we would argue that the needs of the stakeholder must be identified and accordingly managed.

As we are interested in project stakeholder management in the context of sustainable development we conceptualize a sustainable development perspective related to project stakeholder management. A sustainable development perspective is applied in managing project stakeholders if the following principles are considered (Gareis et al., 2013):

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. to consider underpinning values for decisions, e.g. a strive for transparency, fairness, participation;

. considering and balancing the project stakeholders’ economic, ecologic, and social interests;

. broadening of the temporal scale to consider not only short-, medium-, but also a long-term perspectives, including considerations of future stakeholders; and

. broadening of spatial scale to consider local, regional as well as global project stakeholders who are even further away from the project.

Relating the two stakeholder management approaches presented in the former section to the sustainable development principles it becomes clear that the management-for- stakeholder approach fits the principles better due to the underpinning values, e.g. a strive for fairness and participating of all stakeholders.

Analyses of selected PM standards In order to determine how general stakeholder theory and a sustainable development perspective are reflected in current project stakeholder management practices as outlined in project management standards, we have applied the analytical concepts drawn from the literature reviews on project stakeholder management practices proposed in three bodies of knowledge that are used worldwide as basis for certification of project managers:

(1) the Guide to the Project Management Body of Knowledge (PMBOK) (PMI, 2008);

(2) the International Competence Baseline (IPMA, 2006); and

(3) PRINCE2 (OGC, 2009).

As a first element, we have identified and analyzed the definition of a project stakeholder in each standard. Further, we have examined the comprehensiveness of stakeholder management in the standards, i.e. whether stakeholder management is mentioned as part of one or a few elements within project management, e.g. communications or risk management. In addition, we have identified activities and tools/techniques for stakeholder management proposed by each standard. Based on the findings from the mentioned elements, we have assessed the dominance of the management-of-stakeholders approach versus the management-for-stakeholders approach. Finally, we have determined the explicit consideration of sustainable development principles.

We have applied the analytical concepts to each standard and afterwards compared the findings across the standards.

Findings The findings from analyzing and comparing stakeholder management in the selected project management standards by applying the analytical framework developed above are shown in Table I.

PRINCE2 (OGC, 2009, p. 78) has no part of the text dedicated to project stakeholders, but refers to project stakeholders in the risk chapter and lists “involve stakeholders” as one of the risk management principles. Rather narrowly customers and suppliers are considered as important project stakeholders. Overall little reference to explicit

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Table I. Project management standards analyzed

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stakeholder management is provided. Mostly communication through reporting is advocated, but interestingly in the project organization the most relevant stakeholders like user committees are included. We conclude that the PRINCE2 advocates a rather limited approach of stakeholder management. Only very few stakeholders are considered and reporting is the means for interacting. But nevertheless some of the stakeholders are integrated into the project organization to better include their interests in the project and also to make them committed. For example, the standard suggests that the senior user is represented in the project organization. This integration of the most relevant project stakeholders into the project organization we find a strong means of taking the most important stakeholders seriously and integrating their interests into the project. Nevertheless, stakeholders are rather perceived through the lenses of risk and change, and no explicit evidence for the consideration of sustainability principles can be identified.

In the PMBOK (PMI, 2008) stakeholder management is included in the chapter on project communication management. The focus is on providing information to project stakeholders. The advice is to determine the project stakeholder information needs and define a communication approach. This approach goes into the direction of selling the project to the most important stakeholders rather than involving them and their interests into the creation of project objectives. It is recommended to concentrate on a limited number of stakeholders, including only those who are relevant for the project success. It is explicitly recommended to actively manage the expectations of the stakeholders to “increase the likelihood of project acceptance by negotiating and influencing their desires to achieve and maintain the project goals” (PMI, 2008, p. 261). We conclude that the PMBOK advocates an instrumental approach of managing of stakeholders, concentrating on a few and marketing the project interest than including stakeholder interests into the project. In the description of stakeholder management no evidence for the explicit consideration of sustainability principles can be identified.

The ICB (IPMA, 2006, pp. 42-3), an internationally used project management competence baseline, uses the ISO approved term for stakeholders and calls them “interested parties”. The ICB states to “include interested parties’ interests and expectations in the requirements, objectives, scope, deliverables schedule and costs of the project plan” (p. 42). This can be considered as some evidence that stakeholders are considered seriously and their needs and expectations are included into the project interests. We may speak of an internalization of external interests, which can be identified in the IPMA Project Excellence Model (IPMA, 1997) which is based on the ICB (IPMA, 2006). The later even advocates values like inclusion, participation, and transparency.

In all the examined project management standards we find stakeholder management included, but in different approaches. While PRINCE2 has a very limited focus on project stakeholder management, focusing on a narrow group of stakeholders such as customer and suppliers, PMBOK as well as ICB propose a broader approach and consider stakeholder management as more central for managing the project. However, all standards recommend to actively interact with only a limited number of project stakeholders, i.e. the most important project stakeholders in terms of their harm and help potentials. While a diversity of stakeholder management activities are listed in the PMBOK and the ICB, most of them refer to analysis and communication. The standards rather concentrate on communication with the stakeholders in the notion of “selling” the project, PRINCE2 as an extreme is very narrowly concentrating on a one way communication of reporting on the one hand, but on the other hand strongly

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recommends the integration of carefully selected project stakeholders (e.g. user group) into the project organization, which indicates that some interests are internalized into the project. While PRINCE2 proposes a rather mixed strategy, the ICB shows evidence of internalization of project stakeholders’ interests into the project.

Discussion Based on numerous reports in empirical studies and the media of dissatisfied project stakeholders, the aim of our analysis was to find out how contemporary developments within general stakeholder theory and a sustainable development perspective are reflected in project management standards. In this section we discuss how our findings can contribute to a refined understanding of project stakeholder management.

Contemporary general stakeholder theory includes a sustainable development perspective, i.e. among other things including and balancing the stakeholders’ economic, ecologic, and social interests. In our analysis of project management standards we did not find explicit consideration of sustainable development principles. This is in line with other research findings which show that only few companies (yet) consider sustainability in their projects or project management (Eid, 2009; Gareis et al., 2013; Silvius et al., 2012). Based on the estimate that one-third of the worldwide gross domestic product (GDP) in society is initiated by projects (Turner et al., 2010), we expect projects to be seen in the future as an important social system for integrating sustainable development principles, including doing sustainability related considerations of the investor(s), partners, suppliers, and other stakeholders such as communities (Gareis et al., 2013).

We claim that seeing project stakeholder management in the context of sustainable development is a necessity in the future and that this will place new demands on project stakeholder management. Sustainable development is a normative concept, and to consider and balance ecologic and social issues (e.g. the intergenerational justice of production and consumption) on top of economic interests requires specific underpinning values of the attitude and behavior of the project manager and project team members when doing stakeholder management, like for example a strive for transparency and traceability, fairness, trust, and participation. Therefore, we propose:

P1. A societal request for considering sustainable development as a context for projects, places new demands on project stakeholder management, especially when it comes to underpinning values.

Our analysis showed that a management-of-stakeholders approach was dominating in the project management standards, even though we also identified elements of a management-for-stakeholders approach. As the latter approach argues that all stakeholders have the right to attention regardless of their potential to influence the organization, this approach fits sustainable development considerations better. On the other hand, too much focus on a management-for-stakeholders approach may lead to conflict-free solutions that are not very ambitious (Hahn et al., 2010) as well as it may hamper project progress and thereby delay benefits for all stakeholders (Eskerod and Huemann, 2011). Therefore, we propose:

P2. In order to enhance project stakeholder satisfaction, i.e. to meet or exceed project stakeholder needs and expectations, project stakeholder management must integrate a management-of-stakeholders approach and a management-for-stakeholders approach.

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Our analysis showed that the inclusiveness of stakeholders in the stakeholder definition varied across the three project management standards. This is in line with findings in the general management literature (Miles, 2011) and the project management literature (Aalonen, 2010). As definitions of concepts have big influence on the “mental models” (Morris, 2011) and thereby the perception of the stakeholder management task, it is important to consider in the future the pros and cons of a project stakeholder definition that is inclusive, i.e. includes many stakeholders regardless their power to influence the project process or project results, versus a project stakeholder definition that is focusing on few stakeholders, i.e. the ones with the highest influence potential, in order to enhance the project progress as the time and resources for project stakeholder management are limited. This balance becomes especially relevant to discuss as a focus on sustainable development leads to consideration of more interests (economic, ecologic, and social) and to a broadening of temporal scales (short, medium, long) and spatial scales (local, regional, global), while at the same time there is a risk of getting paralyzed by the increasing complexity of project stakeholder analysis and management when including many stakeholders simultaneously ( Jepsen and Eskerod, 2009). Therefore, we propose:

P3. To integrate a management-for-stakeholders approach in project stakeholder management the project stakeholder definition must balance the need for inclusiveness and the need for focusing on few stakeholders.

Our analysis showed variations in comprehensiveness of stakeholder management, i.e. considering and incorporating stakeholders and their interests in more project management activities. Further, variations in stakeholder management tools/techniques existed, which is also seen in existing literature (Besner and Hobbs, 2006; Freeman et al., 2010). Even though we realize that the real difference is in attitude towards stakeholders, not in methods, we propose:

P4. To integrate a management-for-stakeholders approach the project stakeholder management must be more comprehensive, i.e. integrated in many project management activities, and many tools and techniques must be available.

Concluding remarks The paper enriches the current understanding of project stakeholder management by identifying and applying concepts from stakeholder theory within general management and strategic management. It reveals different understandings of project stakeholders and project stakeholder management in three internationally used project management standards, as well as it reveals a lack of focus on sustainability issues even though a societal request for sustainable development seems to make project stakeholder management more challenging in the future. The paper is of value to researchers on project stakeholder management, to project managers and other practitioners, and to the professional project management associations which develop bodies of knowledge that are used for certification worldwide.

A number of limitations in our research can be identified. First and foremost, the analysis is based on secondary data as the three project management standards chosen are used for document studies. We cannot be sure that they represent project management practices carried out in real life. However, the standards are used for certification of project managers all over the world. This means that many people spend a considerable amount of time on learning the concepts.

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Second, project stakeholder management practices may vary across project types, i.e. “one size does not fit all”, indicating that sustainability principles may be more visible in some project types than other types. As the standards insist on a generic project management approach, i.e. applicable for all project types, differences across project types have not been covered in our study.

We suggest that future research on the topic includes empirical studies in which actual practices in companies are identified and analyzed. Further, we propose more conceptual work in which the implications of both a management-of-stakeholders approach and a management-for-stakeholders approach are discussed. Research about how to integrate the two approaches would be very fruitful for the project management community. In addition, we would like to investigate in more details the implications of applying a sustainability perspective.

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