Paper Number 35 June 2001 Interest Groups and Organizations as Stakeholders Robert R. Bianchi Sherrie A. Kossoudji Social Development Papers Paper Number 35 June 2001 Interest Groups and Organizations as Stakeholders Robert R. Bianchi Sherrie A. Kossoudji First printing: June 2001 This publication was developed and produced by the Social Development Family of the World Bank. The Environment, Rural Development, and Social Development Families are part of the Environmentally and Socially Sustainable Development (ESSD) Network. The Social Development Family is made up of World Bank staff working on social issues. Papers in the Social Development series are not formal publications of the World Bank. They are published informally and circulated to encourage discussion and comment within the development community. Copies of this paper are available from: Social Development Department The World Bank 1818 H Street, N.W., MSN MC5-507 Washington, D.C. 20433 USA Fax: 202-522-3247 E-mail: sdpublications@worldbank.org Contents Contributors iv Preface v 1. Introduction to the Issues 1 2. Organized Interests as Social Development Partners: Concepts and Techniques 3 Robert R. Bianchi 3. Strategies of Stakeholder Analysis to Improve Participation and Project Performance: Concepts and Field Techniques 17 Sherrie A. Kossoudji iii Contributors Robert R. Bianchi International attorney 555 West Madison St., Ste. 3010 Chicago, IL 60661 Tel: (312) 775-5988 Fax: (312) 902-3617 E-mail: Beyazomar@aol.com Sherrie A. Kossoudji Associate Professor/School of Social Work Adjunct Associate Professor/Economics Department The University of Michigan 2788 SSW Building 1080 S. University Ave. Ann Arbor, MI 48109-1106 Tel: (734) 763-6320 Fax: (734) 763-3372 E-mail: Kossoudj@umich.edu iv Preface This publication is a collaboration between The next step has been to convene a team of members of the Social Development Family in Bank staff to collate and refine techniques as the World Bank and academicians outside the they are applied to particular Bank instru- Bank. It part of a project by Social Develop- ments, thereby developing a unified yet flexible ment staff to develop and refine methods of protocol for social analysis. The team will social analysis to help address the new chal- continue to seek feedback via its website from lenges faced by the Bank. The key components Social Development staff who apply these and of this program are the Social Analysis similar methods in the field. The Social Devel- Operational Policy, the development of opment Family will return to stakeholder participatory methods for social analysis analysis once it has taken full stock of organiza- (including stakeholder, organizational, and tional and institutional analysis. institutional analysis), the Quality Assurance This publication was made possible in part Group process, and the collection of case by the Danish Trust Fund, which has supported studies. the Social Development Family in the develop- The first step in this process has been to take ment of tools and techniques for social assess- stock of existing useful material both within ments. We gratefully acknowledge the valuable and outside the Bank. The two chapters in this comments provided by David Marsden, Anis volume are an outcome of this stocktaking. Dani, and Judith Edstrom. Alicia Hetzner They combine thought inside the Bank and in edited the volume, and it was desktopped by academia on stakeholder analysis. Gaudencio Dizon. v 1. Introduction to the Issues Any development intervention that seeks to In the first chapter of this volume, Robert change the rules of the game will produce Bianchi explains the process by which interest winners and losers. Existing stakeholders with groups gain a stranglehold over a weak state. entrenched interests in the previous system will He argues that professional groups are first have major interests in determining how captured by bureaucracy and then themselves attempts at institutional change will affect their recapture bureaucracy. The state aims to power and interests. Thus, the task manager's provide stability among contentious groups ability to understand and engage or neutralize by incorporating them in its own structure. stakeholder interests during project design and The groups are given organizational forms, implementation is essential for the success of rights, and resources to perform certain interventions posited on changing conditions corporate tasks. Many of these corporatist on the ground. groups were formed in the period during Traditionally, World Bank staff have used which the state was seen as the natural agent stakeholder analysis at the level of the indi- of development. Because they were incorpo- viduals affected by interventions. However, it rated in the state, they developed a strong is the analysis of groups and organizations-- interest in perpetuating the state-led devel- both inside and outside government--as opment model. These groups can become stakeholders to processes and outcomes that is points of pressure on the state that organized critical to the success of any policy reform. It is them, using their official status to exert influ- through stakeholders within government that ence in pursuit of their political, social, and any reform will be mediated. Groups of stake- economic goals. holders, both within and outside government, The proliferation of interest groups with mediate access to resources and power and tentacles in the old state prevents strategic produce forms of stratification and obstacles to prioritization by the government and stalls empowerment. reform. The politics of lobbying may help to The shift from a state that owned enterprises explain why projects are not finished within toward a regulatory state, and from a state- time and cost estimates, or not finished at all. based toward a private-sector-based model of Thus, it cannot be assumed that all civil society development, has radically altered the socio- organizations are potential partners for the political map. Stakeholders who previously Bank. Often they are closely aligned with the had acted as checks and balances to one governments that created them, with en- another's power have been thrown into a trenched interests in preserving existing insti- different set of relationships with one another tutions and resisting policy change. Their and with the state. Organizations within interests may not be aligned with the goal of government, and interest groups developed in poverty reduction. close collaboration with government are likely Bianchi's analysis has implications for the to be threatened by change. design and implementation of operations. 1 Interest Groups and Organizations as Stakeholders During design, the task team needs to evaluate be adversely affected and must be compen- carefully why a particular project is needed to sated? Which groups, especially poor and ensure that it does not merely flow from an unorganized groups, are likely to benefit from entrenched interest. Task team members must an intervention but do not realize it? Which examine the rationale for the project in theory groups could benefit but will not be able to and on the ground to ensure that the goals of defend the benefits in case of resistance by the project reflect the interests of the poor. The more powerful groups? What, then, are the best task team also should make sure that imple- strategies for persuading or isolating groups? mentation and design arrangements prevent These two chapters are part of an ongoing capture of project benefits by local elites or effort by the Social Development Family to international stakeholders, such as consultants develop further its methodologies in stake- and international firms. During implementa- holder, organizational, and institutional analy- tion, the task team should constantly keep in ses. Stakeholder analysis has been recognized view the medium- and long-term goals to as a key vehicle for tailoring World Bank prevent short-term accommodations to interest operations to a country context.1 It is also a groups from hampering the accomplishment of useful tool to analyze the dynamics of owner- pro-poor goals. ship within government organizations, and to In the chapter, Sherrie Kossoudji formulates identify groups in order to provide a basis for a range of critical questions that the task team systems of monitoring. needs to ask when planning and implementing an intervention. Which individuals or groups Note are essential to success and need to be won over? Which individuals or groups are likely to 1. "Reinventing Adjustment Lending: Retrospec- resist and need to be isolated? Who is likely to tive and Strategy," OPS November 10, 2000. 2 2. Organized Interests as Social Development Partners: Concepts and Techniques Robert R. Bianchi World Bank task managers will face many hard American Medical Association, and the Inter- choices as they try to enlist interest groups as national Brotherhood of Teamsters. social allies. Most interest groups are notori- The problem is worse in partial democracies ously biased spokespersons for the broad and authoritarian regimes in which the state constituencies they claim to represent. Even in often represses and manipulates most types of the mature democracies of the United States associations. In many developing countries, the and Western Europe, group leaders often speak largest organizations, such as chambers of only for themselves and a small fraction of commerce, bar associations, guilds, and labor their most privileged and assertive followers. unions, have had long histories of serving the Nominal members, interested nonmembers, government and the ruling party instead of and the public at large may have little or no their members (Bianchi 1989, Schmitter 1971). influence over powerful groups whose actions Frequently, the oldest and most important directly affect the daily lives and futures of economic and professional groups originated millions of people. as monopolies that were created and funded by For generations, Americans were regarded as the state. By law, membership was compulsory, masters of the "art of association" because of and no competing organization was permitted. their penchant for joining countless types of Usually, the government controlled the selec- voluntary groups. However, during the last tion of group leaders and kept them in power. three decades, North American participation in Because of their questionable origins, many group life has atrophied as disillusioned people still view such groups as the creatures citizens realize that group life is dominated not of a discredited authoritarian past rather than by grassroots movements and public interest as natural outgrowths of a free society. organizations, but by entrenched lobbies that If, in both old and new democracies, so have acquired a stranglehold over critical areas many interest groups tend to distort the repre- of public policy and economic activity (Putnam sentation of public opinion and to corrupt the 2000). In the world of interest group politics, policymaking process, why should task manag- effective power flows not from public opinion ers pay them any heed? Should not the World and the will of the majority, but from the Bank ignore them instead of trying to work organizational skills and financial resources of through them? If some groups seem too power- small yet determined minorities. Hence, public ful to ignore, would it not be better to work advocacy groups such as the Sierra Club and with their competitors or to oppose them head Common Cause commonly are overshadowed on instead of co-opting them or giving in to by the special interests of fewer people repre- their demands? Since even the most powerful sented by the National Rifle Association, the interest groups frequently enjoy little legitimacy 3 Robert R. Bianchi or public respect, should not task managers be regular intervals. Examples of pluralist groups free to encourage the creation of new associa- are charitable foundations, sporting clubs, tions for prospective beneficiaries and allies community improvement associations, volun- who do not yet possess their own organiza- tary labor unions and professional syndicates, tions? veterans' committees, women's groups, and ethnic societies. Concepts In theory, corporatist systems are composed of groups that possess opposing characteristics Pluralist and Corporatist Systems on all of these dimensions. Corporatist groups of Interest Representation are public bodies that are created by statute, supervised by a parent ministry, and financed One of the most popular paradigms for study- with state funds. Their fields of activity are ing interest groups is the distinction between stipulated in law and may not exceed those pluralist and corporatist systems of representa- boundaries. They operate as official monopo- tion. As ideal types, pluralism and corporatism lies in their designated sectors--no rival are useful starting points for classifying and groups are permitted. Membership is compul- comparing interest group systems, but they are sory for everyone who belongs to a legally no more than intellectual abstractions. In the designated social or economic category. The real world, there are no "pure types" of either government retains the right to screen, appoint, pluralist or corporatist political systems. and dismiss organizational officers. Examples Instead, all systems are hybrids that mix both of corporatist groups are associations that are pluralist and corporatist structures in different licensed and funded by the state, unions with proportions. Furthermore, even in the same "closed-shop" contracts, and any group that country, the relative balance between these two legally requires people to become members as a types of group organization often changes condition to working in a particular job or dramatically from time to time and from sector enterprise. to sector. The hallmark of corporatism is a lop-sided The crux of the model is the fundamental bargain between interest group leaders and the dichotomy between groups that serve their state. The state agrees to grant favored groups members and groups that serve the state. Social a degree of power, money, and status. In return, scientists usually distinguish the two halves of group leaders agree to help implement govern- the dichotomy by listing several ways in which ment policy, to soften their demands and pluralist and corporatist groups stand apart criticisms, and to control their members. The from each other--sometimes as polar opposites exchange gives interest group leaders numer- and sometimes as different ends of a con- ous privileges that they would not enjoy if they tinuum. headed private, voluntary associations, includ- In theory, pluralist systems are composed of ing guaranteed access to top decisionmakers groups that have the following characteristics. and virtual immunity from potential rivals and Pluralist groups are spontaneous creations of dissatisfied members. For its part, the state their leaders and members--they come into acquires a small stable of pliable partners who being without the need for prior approval from are strong enough to deliver on their agree- the government. They freely define their own ments but too weak to drive hard bargains or fields of activity according to their subjective impose their own preferences. preferences. There is no limit to the number of Corporatism is popular with many govern- groups that can operate in any field. Multiple ments that wish to mask their discriminatory groups can compete for the same members, treatment of social and economic groups. and individuals can belong to multiple groups Because corporatist organizations exercise at the same time. Membership is voluntary, and tenuous privileges instead of inherent rights, members retain the right to resign. Members governments enjoy enormous discretion in are free to select and remove their leaders at manipulating the system to promote favored 4 Organized Interests as Social Development Partners interests and to demote potential troublemak- spokespersons can insist that vast sectors of ers. Groups that appear to share common legal society are weak not because they are bullied and structural characteristics will still have from above but because they are divided radically different power relations with the from within. Developing country rulers state and with one another. Even in the most frequently try to pass off what might be repressive dictatorships in which all of society called "debilitating" pluralism as an inevi- seems to be at the mercy of the rifle butt, table aspect of nascent democracy. They hope certain groups will fare much better or much that foreign donors and human rights advo- worse than the rest. Some may barely bow, cates will view the persistent disorganization some may have to kneel, and others may be of civil society as the lingering effect of forced to choose between crawling and stand- collective action problems instead of the ing up to fight. result of deliberate government policies. This Although corporatist arrangements usually allows them to take credit for adopting the place the state firmly in the driver's seat, they window dressing of democracy without having also allow wide freedom of maneuver to group to share power with autonomous groups and leaders who understand the rules of the game equal partners. and who learn to bend them to their advantage. On the other hand, many democracies The fate of group leaders can quickly diverge encourage the development of corporatist from the fate of their supposed constituents. It interest groups to compensate for the perceived is very common for members to experience inadequacies of pluralism and multiparty shrinking benefits and tightening regulations at competition. In most of Western Europe, a the same time that group leaders are expanding small circle of interest group cartels holds their bureaucratic fiefdoms, patronage net- regular summit meetings with government works, and personal fortunes. planners to negotiate economic agreements for Many people assume that pluralist groups the entire country. Both right-wing and left- typify democratic systems whereas corporatist wing governments regularly resort to this sort groups typify authoritarian systems. In fact, of elite bargaining in the belief that rational pluralist groups are slightly more common in economic policies are more likely to emerge democratic systems, and corporatist groups are from a roomful of secluded technocrats than a slightly more common in authoritarian sys- parliament of grandstanding politicians. tems. However, there is no simple, absolute The steady shift of power from elected correspondence between interest group struc- legislatures to collusive committees of interest tures and political systems. groups and bureaucrats has sparked popular Most authoritarian regimes find it extremely protests in nearly all industrialized democra- useful to preserve prominent enclaves of cies. Corporatist bargaining processes have pluralism, particularly in sectors in which they produced "social pacts" and "incomes policies" want to promote fragmentation and weakness that tried to tone down social tensions while instead of coherence and unity. By encouraging boosting productivity and exports. However, the proliferation of small and competing the cost and pain of these agreements have groups, pluralism can serve as an excellent fallen mostly on millions of citizens who were means to "divide and rule." At low doses, the not represented at the bargaining table and right of association can have perverse and who were never invited to participate. Thus, in disorganizing effects. Pluralism can provide many developed countries, taxpayers, environ- just enough freedom for squabbling groups to mentalists, small producers, and shopkeepers nullify one another's efforts at building a may well mount revolts. Their hope is not only popular and effective political force. to dramatize the unequal benefits of corporatist Consequently, ruling elites can have the best bargaining but also to push policymaking back of both worlds--they can weaken social and into the public arena of electoral competition so economic groups while claiming that the that they and ordinary voters can rejoin the groups' problems are self-inflicted. Government debate. 5 Robert R. Bianchi How Representative Are Interest Groups? failure caused by imperfect information, entry barriers, and transaction costs. Given The systematic distortion of public opinion and enough time and tutoring, most groups can member preferences is a common weakness of acquire the means to mobilize an effective interest groups, whether they are pluralist, countervailing force that will enable them to corporatist, or the more common admixture of demand the same sort of access and influence those ideal types. The most important distinc- that more privileged groups take for granted. tions among organized groups are not their With repetition, the learning period should categorizations in law or social science theory, decline, allowing even latecomers to catch up but the kinds of biases that they create in in short order by following the examples of political life and the prospects for overcoming successful predecessors. those biases. The study of interest group By contrast, pessimistic writers argue that politics amounts to an ongoing conversation group systems become so entrenched and that is dominated by two questions: "Why do sclerotic that reform is impossible without mature groups tend to become fixed and frozen shocks and pressures from outside the groups even if they originally appeared to be free and themselves. Moderate pessimists usually think fluid?" and "What forces can correct or reverse that a major national crisis can provide a this ossification?" Social scientists give conflict- sufficient jolt to crack open an oligarchy of ing answers to these questions, running the complacent groups (Schmitter 1974, Lowi gamut from extreme optimism to extreme 1971). New actors could enter the system to pessimism. help manage an emergency that the old order Optimistic writers argue that corrective can no longer control: a severe recession, a measures are likely to come from within the series of escalating riots, or an electoral upset interest group system itself. Extreme optimists that deposes a long-dominant party. Interest contend that democracy alone is sufficient to group "cartels," unaccustomed to bargaining ensure that most groups remain open, competi- with either rivals or partners, would be forced tive, and responsive even if some of the stron- to seek out new blood to save themselves from ger actors occasionally manage to corner parts their own unwillingness to share power. of the market (Truman 1953, Dahl 1961). As For extreme pessimists, however, entrenched long as a society preserves the freedom of groups are so resistant to change that real association, group life will be virtually self- reform can follow only a full-blown catastro- equilibrating. Inequities will be mild and phe that wipes the slate clean (Olson 1982, temporary not systematic and self-sustaining. Bachrach 1967). Innovative coalitions cannot be However, moderate optimists recognize that grafted onto existing ones; they can be created many people lack the resources and skills only out of their ashes. This view notes that a necessary for translating formal rights into democratic and economic renaissance often effective power (Bendix 1964, Hardin 1982). appears in precisely those countries in which a Drawing a distinction between the "right of national disaster has swept away hegemonic association" and the "art of association," they interest groups that seemed invincible to note that even the freest democracies are domestic opponents. Thus, many kinds of divided by social and economic gaps that tragedy--from depression and civil war to create corresponding disparities in the ability military defeat and foreign occupation--may of different groups to exercise their nominally prove to be blessings in disguise, if they finally equal liberties. break the back of an old guard determined to Nonetheless, moderate optimists believe that cling to power at all costs. many disadvantaged groups can eventually Although each of these competing argu- overcome these obstacles through a process of ments has made a lasting contribution to the political learning and self-empowerment. study of interest group politics, most analysts Inequalities in group organization and power tend to agree on two key conclusions. Earlier are viewed as common symptoms of market portrayals of interest groups as natural agents 6 Organized Interests as Social Development Partners of democracy and development have given interest of all who value greater human free- way to a host of more critical and skeptical dom and well-being (Sen 1999). International views. Instead of assuming that an "invisible actors seeking local partners for economic and hand" will somehow balance contending social development usually discover that they interests, most social scientists are asking hard must also become part of transnational alli- questions about how groups operate in the real ances for political change. Implementing even world: "Who created them and why?" "What the most orthodox economic policies may kinds of people do they include and exclude?" require adopting some unconventional political "Does their role in policymaking promote or practices such as intentionally altering the prevent equity and efficiency?" "Who pays the imbalance of power among organized groups. price for a particular system of group activity, and who reaps the benefits?" Lobbying and Other Interactions The empirical evidence has convinced more with the Government and more social scientists that interest groups obstruct democracy and development at least as The most influential interest groups are those much as they encourage them. In this sense, it is that have established continuous and mutually fair to say that today's students of interest beneficial relationships with a small circle of group politics are both more pessimistic and bureaucrats and lawmakers who control more realistic than their predecessors. How- specific areas of public policy. The most suc- ever, they are also becoming increasingly cessful lobbies rely not on bribery and arm- confident about the prospects for reforming twisting but on providing unique information interest group systems through various combi- and expertise that help decisionmakers accom- nations of internal and external pressures. plish their goals and advance their careers. Many field workers and theorists have tried Effective lobbies do not buy or extort influence; to specify the conditions under which under- they usually receive it as a tacit reward for their represented social sectors are likely to organize, willingness to share the daily chores and form effective coalitions, and reshape interest responsibilities of governing (McConnell 1967). group systems that have been the historical The drift of public power into private hands preserves of privileged minorities. Having takes many forms. In the most extreme cases, discovered the hurdles to collective action, governments and interest groups exchange not social scientists are also beginning to realize just knowledge and advice, but leaders as well. that the hurdles are not as insurmountable as It is common to meet cabinet ministers and they once appeared (Olson 1965). Thus, most parliamentary chairpersons who are former social scientists have abandoned the myth that directors of associations in the very profes- an "invisible hand" will somehow permit sional or economic sectors that they are sup- interest groups to correct their own abuses. posed to be regulating in the public interest. Instead, they are examining a number of Similarly, many interest group leaders are "helping hands" that can actively intervene to retired civil servants and politicians who are alleviate the biases that regularly accumulate in now lobbying the same government officials mature systems of group politics. who were once their colleagues. With increasing frequency, some of the most When an interest group is itself a quasi- important helping hands are coming from the public agency, the line between the regulators international community, including the World and the regulated becomes virtually nonexist- Bank. Donor democracies, human rights ent. Many business and professional associa- advocates, and foreign investors realize more tions originated as government agencies that than ever that they have a direct stake in were designed to discipline modern economic building more open and flexible systems of sectors in much the same way that traditional representation. Associational life is no longer guilds controlled crafts and trades. Gradually, seen as the exclusive concern of domestic elites these new groups also acquired representative and national sovereigns, but as a universal functions and overtly advanced their members' 7 Robert R. Bianchi demands, but they never lost the official status policy "family." It may be impossible to work and authority that they possessed as agents of with top government bureaucrats unless one is the state bureaucracy. In continental Europe also prepared to deal with the associations and and in much of the developing world, this has politicians who make up their support groups. been the typical pattern for middle-class Likewise, outsiders may approach an interest organizations such as chambers of commerce, group because it enjoys a popular reputation exporters' clubs, manufacturing societies, bar for dictating policy in its sphere of influence associations, engineers' syndicates, and agricul- only to discover that it is merely a link in a tural cooperatives. long chain of mutually dependent actors that Many private interest groups that did not stretches deep into the state and the political enjoy this sort of privileged access at their system. inception nonetheless have succeeded in As with any family, dealing with a policy penetrating government bodies both nationally triangle can be a joy or a nightmare depending and locally. For example, in the United States on its internal dynamics. A harmonious and and the United Kingdom, most case studies of cooperative triangular network can open doors interest group activity focus on private associa- in many directions, paving the way for far- tions that gradually "colonize" and "capture" reaching innovation in fields and institutions executive agencies and legislative committees. that initially seemed unrelated. However, a American audiences, in particular, have always squabbling network can produce prolonged tended to regard this blurring of public and deadlock in which personal and organizational private power as scandalous or semi-criminal. resentments defeat even modest initiatives that Even today, when accounts of group politics appear to serve the objective interests of all of usually come from the pens of historians and the major actors. When the members of a policy social scientists instead of muckraking journal- triangle are locked in battle, a foreign donor or ists, many of them still read like exposes advisor may not be able to accomplish more chronicling the pervasive corruption of public than brokering a truce that enables existing officials by special interests. programs to continue without major disrup- In practice, the exercise of group influence tions. Divided policy networks are very un- tends to assume common forms regardless of likely to adopt new proposals, particularly if whether an association originated in the public one member believes that its rivals will control or private realm. In either instance, the key lucrative benefits that can alter the balance of relationship typically revolves around a "sym- power among them. biotic triangle" that joins an interest group, a specialized administrative agency, and a Patterns of Organization by Sector parliamentary committee. Each party supplies a set of vital ingredients to the partnership. The Although any social and economic sector can interest group contributes inside information, contain many different types of associations, assistance in implementing government poli- there are some very common organizational cies, and political support for the official tendencies among private business groups and decisionmakers. The agency provides author- labor unions. At early stages of economic ity, enforcement, funding, and coordination development, business interests often cluster in with other branches of government. The a small number of undifferentiated structures committee adds formal oversight, appropria- that are sponsored and supervised by govern- tions, and defense against public criticism. ment ministries. However, as the private sector The prevalence of these symbiotic triangles grows and diversifies, many entrepreneurs across so many policy arenas means that begin to prefer more specialized groups that outsiders who seek to influence decision- can represent their diverging and often contra- making may find themselves enmeshed in dictory demands. New voluntary associations delicate negotiations with a wide range of such as bankers' clubs usually spring up potentially conflicting personalities, in effect, a alongside the older guild-like chambers of 8 Organized Interests as Social Development Partners commerce. Eventually, the private sector country to formulate a stable macroeconomic becomes populated by a host of corporatist and policy or to shape the broad electoral alliances pluralist organizations that compete for the necessary for stable government. When rival same members and that lobby the same gov- business groups are able to wage their battles ernment bodies. inside of coalition governments and economic In time, the public face of private business ministries, the result is usually a series of sharp can change dramatically. What appears to be a policy reversals in trade, investment, money monopolistic and hierarchical block often supply, and taxation--reversals that virtually develops into one of the most fragmented and guarantee fiscal crisis and developmental competitive arenas in the political system. blockage. Rhetorical references to one collective "busi- In many developing countries, private-sector ness" interest give way to multiple collisions divisions contribute to a prolonged economic among increasingly hostile factions--exporters and political stalemate that threatens social versus importers, manufacturers versus trad- order and, in some cases, the very survival of ers, lenders versus borrowers, large conglomer- the nation. Politicians aligned with rival busi- ates versus small firms, developed growth ness groups frequently try to broaden their poles versus the hinterlands. electoral support by linking economic conflicts The proliferation of specialized business with more explosive grievances based on groups often creates a private sector that is not regional, ethnic, and religious divisions. Be- only multi-vocal but also highly polarized. The cause the most disadvantaged districts are profusion of conflicts over specific policies often also the homelands of alienated minori- becomes eclipsed by a single overriding cleav- ties, clashes of material interest can quickly age. This is the division between the small degenerate into bloody confrontations of races number of internationally competitive enter- and cultures. The ensuing social and political prises with access to foreign finance and turmoil jeopardizes not only the hard-won markets versus the multitude of weaker firms gains of the private sector but also the legiti- that depend primarily on domestic resources macy and viability of the nation-state it hopes and customers. to lead. In a developing economy, bitter inter- Whereas private-sector development encour- business quarreling frequently spills over to the ages business groups to become more frag- government and the political party system. The mented and competitive, it spurs labor unions effects can be particularly onerous for the major to become more unified and coordinated. The economic ministries and the largest right-wing increasing dynamism of private business parties. Rival business groups are often instru- threatens different segments of the union mental in breaking a moderately conservative movement in different ways, but the common mass party into a collection of weak splinter thread is the perception that greater political parties that espouse conflicting economic activism is necessary to compensate for labor's programs. Smaller entrepreneurs are particu- economic weaknesses. The preferred type of larly likely to adopt more independent and political action will vary from union to union aggressive political strategies, hoping that their depending on its degree of leverage in the larger numbers can partially compensate for labor market and its prospects for forging their weakness in the marketplace. New coali- alliances with the major political parties. tions of business groups and splinter parties Among union leaders in the developing usually criticize liberal models of the market, world, three patterns of political-economic demanding more government intervention in orientations are particularly popular: the economy to protect less competitive enter- prises against the pressures of monopolization 1. A conservative unionism tries to preserve and globalization. the vestiges of paternalism in the state sector. A deeply divided business community can 2. A militant unionism confronts the rising make it nearly impossible for a developing power of private employers. 9 Robert R. Bianchi activity. Rival labor leaders usually denounce Box 1. Common Strategies of Labor Unions this approach as a kind of "company union- Conservative. Lobby state managers and ism" that does the bidding of the state. ruling parties to fend off privatization and cost Unions in large privately owned enterprises cutting. confront cost-conscious employers who are not Militant. Confront large private and foreign subject to the kinds of direct political meddling employers and ally with leftist parties that are that public-sector managers learn to take for willing to strengthen collective bargaining re- granted. The bargaining power of private- gimes. Social democratic. Mediate factional conflicts sector unions depends not on political patron- in the labor movement and build multi-class age but on the conditions of the labor market electoral alliances. and the system of industrial relations. These unions can rely on economic strategies only when the supply of labor is scarce in a particu- 3. A social democratic unionism tries to bridge lar field and when the law promotes collective the gap between the two extremes (box 1). bargaining and the right to strike. Although such favorable conditions arise Each orientation tends to become identified from time to time, they are rare and ephemeral. with a separate faction of the labor movement Hence, private-sector labor leaders commonly that is composed of clusters of unions facing try to form a stable political alliance with left- similar problems. As unionization grows, the of-center parties that are willing to strengthen struggle to control the labor movement as a the rights of unionization and collective bar- whole often narrows down to a stable rivalry gaining and to defend them against constant among these three factions. Sometimes they threats from authoritarian opponents. Private- will set up separate confederations; at other sector manufacturing often spawns the most times, they will maneuver for dominance militant labor leaders, especially when the within in a single confederation until the employers are powerful multinational corpora- internal strains reach the breaking point and a tions with deep pockets and poor public new round of competition and coalescence relations skills. begins. Unions in small and struggling enterprises Unions in large state-owned enterprises usually form an intermediate group in between adopt a defensive posture, trying to protect the conservative faction that relies on political past gains against pressures for cost cutting patronage and the militant faction that tries to and privatization. These are usually the most strengthen its economic muscles. The common pragmatic and opportunistic parts of the labor problem connecting this group of unions is that movement. Some senior union leaders may most of their employers are barely able to nurse a lingering nostalgia for a former ruling survive even with low labor costs. Weak firms party that treated public-sector workers as a in labor-intensive manufacturing and cash- privileged constituency, but the ideological strapped municipal governments depend on drag of this old guard becomes increasingly sympathetic union leaders to help them stay embarrassing to their younger and more afloat. Many times, the two sides even have to pliable colleagues. agree to shed some workers to avoid sending Most state-sector unions eagerly court the them all into unemployment. government of the day regardless of its parti- Dismal economic prospects push this faction san and ideological complexion. They focus on toward political activism, but not toward class quietly lobbying ruling party leaders and warfare. In fact, they often seek alliances with a company managers, pledging to prevent work variety of middle-class associations represent- stoppages in return for job security and mini- ing businesses and professionals who feel mal benefits. Sometimes they espouse a passive threatened by the growing power of the biggest style of unionism that claims to pursue exclu- and most modern firms. Forced to live by their sively economic goals while avoiding partisan political wits, these labor leaders frequently 10 Organized Interests as Social Development Partners become the "diplomats" of the union move- Typically, these alliances take shape in three ment. They are constantly trying to smooth way: as coalitions supporting reforms from conflicts among the other union factions and to above, below, and within. In reform from build multi-class electoral coalitions with left- above, weak government agencies seek exter- of-center parties and moderate-income voters. nal assistance in overcoming resistance from Although both business groups and labor domestic interest groups. In reform from below, unions become more sophisticated and asser- the Bank tries to deal directly with groups of tive political actors, they tend to develop very intended beneficiaries to bypass an incompe- different styles. Increasingly confident business tent or recalcitrant government. In reform from groups break away from multifunctional within, task managers face a divided state as organizations to press their special demands well as a divided society in which both state with greater independence. Increasingly actors and private groups line up on either side defensive labor leaders try to overcome organi- of the battle. zational fragmentation by forming stable union Several of the most successful Bank projects factions and broader social alliances. Business demonstrate that task managers can operate quietly targets the bureaucrats who direct effectively in all of these situations (box 2). For specialized state agencies whereas labor clam- example, they led consensus coalitions in ors to mobilize public opinion and ordinary voters. Sensing its growing power, the private sector prefers autonomy to artificial unity. Box 2. Patterns of Coalitions in World Sensing its greater vulnerability, labor looks in Bank Projects all directions for potential partners who are also too weak to act alone. Consensus coalition. China's Ministry of Health decided to decentralize its deteriorating system of Interest Groups as Potential Partners rural health care, allowing Bank teams to organize broad community participation by villagers, in Development Projects medical professionals, and women's groups. Task managers' relationships with interest Reform from above. A handful of Indonesian groups, including business associations and cabinet ministers turned their common love for labor unions, will depend on the specific underwater diving into a campaign to protect coral coalitions of state and private actors that the reefs from the ravages of commercial fishing and World Bank needs to build. Task managers industrial pollution. They joined the Bank in organizing local groups of "reef watchers" who should learn to view both government agencies pressured the government to prevent over-fishing and interest groups as potential allies as well as and to build new oil refineries in other areas. potential adversaries. Bank officials will regu- larly become partners in four different patterns Reform from below. In Brazil the Bank was able of coalition, and each will require a distinct to bypass corrupt state governments by directly approach to interest group politics. funding thousands of community associations that When a unified government and a dominant drew up and administered their own development programs. The benefits reached the poorest set of organized interests clearly approve of a groups in rural society, helping them become a World Bank program, the core of a tacit consen- new force in state and regional politics. sus coalition already exists. In this instance, task managers can operate more as facilitators Reform from within. In India the Bank helped and cheerleaders than as power brokers and the central government to launch an important deal-makers. However, in virtually every other land reclamation project despite strong opposition situation, Bank officials will have to actively from irrigation officials and local landowners. By giving small farmers title to the new lands and organize and participate in a reform alliance organizing them in Water User Groups, the Bank that is willing to stand up to well-entrenched constructed a powerful public-private alliance that opposition. overcame entrenched interests. 11 Robert R. Bianchi China, India, Rwanda, and Swaziland, where system that had long been crippled by delay governments acknowledged the need to orga- and corruption. In India, task managers had to nize underprivileged groups to improve the overcome the resistance of irrigation directors delivery of services. In each case, World Bank- and local elites to make the saline land held by sponsored association building was instrumen- former laborers more productive. They did so tal in mobilizing popular participation in rural by aiding individuals willing to reclaim the health care, female education, refugee resettle- land through their own labor. In addition they ment, and land reform. helped central bureaucrats establish indepen- Task managers aided embattled government dent associations for the new titleholders and officials in building coalitions for reform from water users, and they created a public-private above in Brazil, India, and Indonesia. In these alliance that outflanked the combined opposi- countries, external support helped to tip the tion of vested interests in the capital city and in balance in favor of state agencies that were the states. willing to take on formidable vested interests: public-sector unions resisting pension reform, Types of Coalitions farmers and consumers clinging to subsidized electricity, and petroleum companies and Although coalition building is an integral part fisheries endangering a fragile marine environ- of nearly every task manager's efforts, some ment. Bank officials joined these government coalitions will be tactical and transitory while campaigns against these sacred cows by help- others will have more political implications. ing to educate the public and by strengthening Project-oriented coalitions. When interest citizens' groups that were willing to champion group leaders believe that the stakes are mod- poorly represented public interests. est, they are likely to view alliances as a series Reform from below is a risky strategy for any of discrete decisions with no long-term conse- international organization that wants to pre- quences for the balance of power. Joining a serve harmonious relationships with sovereign particular World Bank coalition today will have states. Nonetheless, task managers have little influence on whether a given group followed this path to good effect in several decides to oppose the same task manager in a countries in which government authority is different coalition tomorrow. particularly weak, as in Bosnia and Palestine; This sort of project-oriented coalition is most in which it is overwhelmed, as in Bangladesh common in efforts to expand infrastructure and and Gabon; or in which it is notoriously cor- to deliver social services. Interest group leaders rupt, as in rural Brazil. In these cases, Bank usually perceive these distributive programs as officials were able to bypass formal authority welcome opportunities for horse trading and and to establish direct links with beneficiaries logrolling.1 Although some groups stand to even if the latter had no preexisting organiza- gain more than others, most believe they can tions of their own. Some task managers had to gain something, and all can try to improve build new groups from scratch; some adapted their position in the next round of negotiations. informal groups to new purposes; and some Thus, even if the bargaining is occasionally helped bigger groups to spawn smaller ones-- intense, it seldom produces either lasting allies all with little or no state involvement. or lasting enemies. Reform from within is the most challenging Policy-oriented coalitions. However, interest strategy because it requires task managers to group leaders will be much more demanding join one mixed alliance of state and private partners when the proposed coalition concerns actors against another. The best examples of structural adjustment or interrelated projects success through this path are the judiciary that add up to sweeping economic, administra- reforms in Venezuela and land reclamation tive, or political reform. "Economic liberaliza- programs in India. In Venezuela, Bank officials tion," "decentralization," and "democratization" shaped a coalition of reformist judges and civic are abstract slogans that will have little attrac- associations to shepherd the overhaul of a court tion to interest group leaders unless they have 12 Organized Interests as Social Development Partners a clear view of whether the new blueprints will political upheaval unless they can learn to deal enhance their power or threaten it. Many group with one another. Although such psychological leaders are seasoned in-fighters who excel at factors are usually beyond task managers' quickly sizing up potential shifts in the balance control, they should not be beyond their of power. Those with experience in authoritar- knowledge. A political coalition's behavior is ian political systems are particularly accus- often a reflection of how its members view the tomed to looking beyond vague expressions stakes involved. Even the most intractable such as "deregulation," "privatization," and conflicts and jealousies tend to lose their edge "empowerment" to ask blunt questions about when the stakes are not simply a particular who will prosper from such changes and who program or policy package but the survival of will suffer from them. an entire regime. Interest group leaders are likely to view broad policy-oriented coalitions as long-term Techniques commitments that carry both higher risks and higher rewards than the fluid alliances sur- Identifying and working with interest groups is rounding most distributive projects. Because not difficult, but it does require a willingness to these coalitions support major social transfor- do some preliminary homework and to build a mations, they are bound to generate conflict wide net of contacts in diverse social circles. A and polarization among the most powerful large part of interest group studies is merely interest groups. In this situation, group leaders reputation analysis: canvassing well-informed will be flexible in negotiating the details of people to learn which groups they regard as individual programs as long as they are con- the most influential players in a particular vinced that the total package of reforms will arena and in the country as a whole. The most help them to consolidate influence over their knowledgeable sources are usually journalists, constituents and in society at large. However, politicians, senior civil servants, university they are likely to become uncooperative if they professors, economists, and experienced sense that other coalition partners are reaping expatriates. Invariably, however, the very best greater gains that can undermine their own authorities are interest group leaders them- power in relative terms even while improving selves. They are their own best critics, and they it absolutely. can become invaluable teachers to any investi- Consequently, task managers will find that gator who makes the effort to earn their confi- policy-oriented coalitions are far more difficult dence and pick their brains. to construct and maintain than project-oriented Task managers should cultivate two special coalitions even if the two types of alliance skills for dealing with organized interest frequently involve the same partners. Task groups: (1) "interviewing" the regulations that managers might find it useful to view some govern interest group activity, and (2) "read- project-oriented coalitions as dress rehearsals ing" interest group leaders to size them up as for policy-oriented coalitions, allowing unfa- allies or adversaries. miliar or competing partners the opportunity to develop mutual trust and to discover con- How to "Interview" a Statute verging interests. Conversely, if a troubled policy-oriented coalition appears to be in Most countries have about a dozen laws that danger of breaking down, task managers might control the structure and operation of all of the be able to shore it up by offering aggrieved major interest groups. Usually, one omnibus members more privileged positions in other statute covers the multitude of small voluntary project-oriented coalitions. associations and clubs that make up the major- In many countries, the most important ity of organized groups. This code--commonly incentive for preserving broad policy-oriented known as the "Law of Associations"--is the coalitions will be the members' subjective fears best starting point for assessing the overall that they may have to deal with social and state of the freedom of association. In addition, 13 Robert R. Bianchi separate specialized laws generally exist for strength or weakness clearly reflects its relative each of the larger and politically influential status in a formal, legal hierarchy that is occupational groups such as chambers of intentionally skewed to its advantage or commerce and industry, labor unions, profes- disadvantage. sional syndicates, and agricultural coopera- However, nearly every country contains tives. some striking anomalies. These include power- Much of this legislation is extremely de- ful groups that have acquired their clout tailed, spelling out every aspect of the group's independently instead of through government authority, membership, internal hierarchy, largesse as well as marginal groups that have financial operations, electoral procedures, and squandered official privileges that their disfa- permitted activities. Frequently, the laws vored rivals could never hope to enjoy. Task explicitly list the kinds of political behavior managers might find that these anomalies are that are allowed and forbidden for each group, helpful clues to discover examples of both including contacts with civil servants, legisla- particularly skilled and particularly incompe- tors, political parties, and foreigners. Task tent group leaders. managers who "ask" a group's statute a struc- tured list of questions on these topics will How to "Read" an Interest Group Leader acquire an enormous amount of "inside" information about an organization even before Interest group leaders come from all walks of meeting its leaders (box 3). life and exhibit all shades of personality. Most By comparing the statutes of several groups, of them have extremely strong egos and enjoy task managers can quickly grasp some of the using their interpersonal skills to win over built-in biases that make certain organizations people whom they regard as influential. No privileged players while handicapping others. matter how busy their schedules, they are Understanding the systematic inequities of usually flattered by requests for face-to-face group structure can serve as a useful "reality meetings with journalists, researchers, and check" against informants' subjective and representatives of international organizations. anecdotal reports about reputed political Most often, they are eager to share their knowl- influence. Often, a particular group's reputed edge and insight, particularly if visitors make it clear that they are well informed and that they are also communicating with the group's major Box 3. Questions to "Ask" a Regulation competitors and critics. on Interest Groups An initial meeting with an interest group leader is much more than an opportunity to 1. Can groups form spontaneously or do they obtain firsthand information. It also can be the require prior approval from the government? beginning of a unique personal relationship that blossoms into a working partnership and 2. Is membership voluntary or compulsory? opens countless doors to other potential allies. 3. Can more than one group operate in the Such relationships always depend on a myste- same area of activity? rious combination of personal chemistry and hard-nosed calculations of mutual advantage. 4. Is there a "parent" ministry that supervises Nonetheless, task mangers can use the follow- group operations, finances, and leadership ing five field-tested techniques to keep the selection? process on track: 5. Is the group strictly private or does it perform duties that are usually reserved for 1. During the initial meeting with the group government bodies such as revenue collection, leader, ask if you can also arrange to have adjudication, rulemaking, and professional conversations with his or her top aides and discipline? lieutenants. This will accomplish many goals simultaneously. You will convince the group 14 Organized Interests as Social Development Partners that your interest is sincere and ongoing. You authority within their own organizations will acquire much more information from and their wide-ranging influence with other diverse sources while making minimal groups. Give them the satisfaction of know- demands on either your schedule or theirs. ing that you know that they possess power You will quickly become attuned to the key and that they have chosen to use it for your debates and factional rivalries within the benefit. Most likely, they will be pleased to group. discover that you are a fast learner. Like 2. As you develop a circle of contacts within most political actors, interest group leaders the group, ask them to invite you to one of enjoy displaying their power to outsiders at their private meetings, particularly to a least as much as they enjoy acquiring it in decisionmaking session during which the first place. Astute task managers who important business will be on the table. This appreciate the use of power in small ways will provide an invaluable view of interper- can improve their future chances of seeing sonal relations among the top leaders. Their that power used in even more important interpersonal dynamics may confirm or ways. contradict your understanding of the formal chain of command and the conclusions you Task Managers Can Promote Improvements have drawn from one-on-one encounters. in Group Behavior Either way, you will learn a great deal about the group's ability to act as an effective and The inherent biases and weaknesses of interest reliable partner. groups give World Bank officials a wide range 3. Tell the organization's leaders that you also of options in selecting social allies and manag- want to meet the directors of other interest ing partnerships for development. Task manag- groups. Ask them to suggest a list of new ers can exploit this freedom of maneuver to contacts and to provide personal introduc- adopt flexible coalition-building strategies that tions. If the group leaders are friends, ask suit each country's political environment and your current contact to set up the initial serve the special needs of particular projects. appointment on the spot. No strategy will work in all countries or for all 4. Frequently, you will find clusters of interest projects. At times, it may even be necessary to groups that share close working relationships apply different strategies to the same group if with one another, regardless of whether they its leaders support Bank objectives in one area are formally affiliated through a federation or while trying to defeat them in another. confederation. Such clusters are, in effect, With the aid of knowledgeable informants, readymade coalitions of interest groups that task managers can readily identify the interest can be mobilized in unison. When task manag- groups that are most critical to their projects. ers discover a group cluster that is worth Moreover, by interviewing group leaders, task exploring, it is best to let the groups them- managers can confidently assess each organiza- selves handle the advance work and early tion's political strength and determine which coordination. Ask the leader of the most are most likely to act as a supporters, oppo- influential group to designate a member of his nents, or bystanders. Although this back- or her staff to serve as your liaison. Let the ground information is indispensable for liaison arrange a schedule of interviews with developing a political strategy, it will not leaders of the other groups. Let the liaison act dictate a self-evident course of action. Every as your guide and chief informant. Meet with task manager still must make difficult choices the liaison regularly to review your progress about selecting and managing coalition part- and to check your interpretations of your ners based on a unique combination of hard observations. data and personal intuition. 5. Always remember to go back to the group There are many sound reasons for granting leaders that originally chose your liaison. task managers a wide degree of discretion in Acknowledge and confirm those leaders' shaping their relations with interest groups. 15 Robert R. Bianchi Usually, they will be the most competent organizations. However, when task managers' judges of the reliability of local data sources objectives coincide with the interests of the and informants. Because coalition building weak instead of the strong, they should realize depends on cultivating face-to-face relation- that the skillful manipulation and alteration of ships that are based on mutual trust, task the existing system is an indispensable part of managers will have the clearest insight into their jobs. whether prospective partners have the ability and intention to fulfill their commitments. Notes Finally, the success of any political strategy will depend on the task managers' belief in its 1. "Logrolling" is the "you-scratch-my-back-and- wisdom and their willingness to take personal I'll-scratch-yours" logic of legislative deals around interest in its implementation. Assuming that the world. half-hearted approaches are seldom worth the effort, it is important for managers to feel that References they are nurturing alliances and relationships that reflect their personal values and sympa- Bachrach, P. 1967. The Theory of Democratic Elitism. thies. Boston: Little Brown. Task managers should make a serious effort Bendix, R. 1964. Nation-Building and Citizenship. New to understand the realities of interest group York: Wiley. politics, but they should not assume that these Bevin, D. L., and others. 1999. Nigeria and Indonesia: realities are given or unalterable. No system of The Political Economy of Poverty, Equity, and Growth. Washington, D. C.: World Bank. organized interests is natural or inevitable. On Bianchi, R. 1989. Unruly Corporatism. New York: the contrary, all group systems are made by Oxford University Press. human beings, contrived, and deeply flawed. _____. 1984. Interest Groups and Political Development They are products of historical accident and in Turkey. Princeton, N. J.: Princeton University political convenience. Hence, their structures Press. and activities are open to constant debate, Dahl, R. 1961. Who Governs? New Haven, Conn.: reform, and renegotiation. Informed and Yale University Press. prudent task managers can promote improve- Hardin, R. 1982. Collective Action. Baltimore, Md.: Johns Hopkins University Press. ments in group behavior that are just as impor- Lowi, T. 1971. The Politics of Disorder. New York: tant and effective as the changes they sponsor Basic Books. in any other field of development. Maddison, A., and others. 1992. Brazil and Mexico: Task managers must be aware of the existing The Political Economy of Poverty, Equity, and distribution of group power, but they should Growth. Washington, D. C.: World Bank. not credit it with a degree of legitimacy and McConnell, G. 1967. Private Power and American respect that it does not possess or deserve. The Democracy. New York: Knopf. balance of power among interest groups Olson, M. 1982. The Rise and Decline of Nations. New Haven, Conn.: Yale University Press. usually has nothing to do with democracy, _____. 1965. The Logic of Collective Action. Cambridge, merit, or justice. More often, it simply reflects Mass.: Harvard University Press. and reinforces long-standing patterns of elit- Putnam, R. 2000. Bowling Alone. New York: Simon ism, cronyism, and exclusion. Interest groups and Schuster. will not necessarily be valuable allies merely Schattschneider, E. E. 1997. The Semi-Sovereign People, because they are strong and well organized. rev. New York: Harcourt, Brace, Jovanovich. Nor will they be unworthy partners simply Schmitter, P. 1974. "Still the Century of Corporatism?" because they are still weak and voiceless. Review of Politics 36 (January). _____. 1971. Interest Conflict and Political Change in When existing disparities of group power Brazil. Stanford, Cal.: Stanford University Press. favor the effective implementation of a parti- Sen, A. 1991. Development as Freedom. New York: cular project, task managers should take Knopf. advantage of the windfall by collaborating Truman, D. 1953. The Governmental Process. New with sympathetic and well-entrenched York: Knopf. 16 3. Strategies of Stakeholder Analysis to Improve Participation and Project Performance: Concepts and Field Techniques Sherrie A. Kossoudji The success and sustainability of World Bank Improving Project Performance operations are closely linked to the active participation of affected individuals, groups, There is little in this chapter that will be com- and organizations in their design, implemen- pletely new to task managers. Indeed, it serves tation, and monitoring. Stakeholder analysis to formally organize activities that are often an is essential to the design of participatory informal part of project preparation. It is strategies. productive to consider stakeholder analysis as Conducting stakeholder analysis in the field, another tool to improve project performance however, is difficult, and few concise docu- rather than as a new technique. However, the ments exist to help task managers do the job. direct goal of stakeholder analysis encompasses This chapter summarizes the methods used by more than identifying the individuals, groups, the World Bank, the Department for Interna- and organizations who will become net eco- tional Development (DFID) (formerly the nomic beneficiaries or losers as a result of the Overseas Development Administration, or project's activities. More importantly, stake- ODA), and the United Nations Development holder analysis attempts to identify potential Programme (UNDP). It outlines simple and allies or enemies and calculate policy resis- creative techniques to implementation stake- tance. It will help predict which political or holder analysis, discusses the benefits and costs economic actions stakeholders may take to of different approaches, and puts forth strategic promote or sabotage a project. decision options geared to improve project As the Overseas Development Administra- performance. Here, stakeholder analysis is tion (now DFID) defines it (1995:2), stakeholder explored as a precursor to, and a preparation analysis is "the identification of a project's key for, full stakeholder participation throughout stakeholders, an assessment of their interests, the life of the project, which is not detailed in and the ways in which those interests affect this chapter. project riskiness and viability." Unfortunately, 17 Sherrie A. Kossoudji no single design or methodology tells develop- 1. To improve the accuracy of the assessment of ment practitioners how to do this. The tech- the project environment and to minimize fundamen- niques and tools vary within and between the tal misunderstandings of the local context. One business community and the advocacy commu- could view coherent stakeholder analysis as nity (see, for example, Kluyver 2000). insurance against political or economic disas- For the Bank, stakeholder analysis will be a ter. Strategic mistakes can torpedo current blunt tool designed to achieve several subtle projects. Furthermore, costly externalities are outcomes: generated by misguided projects. Adverse reactions to current activities will almost · To work successfully within a new participa- certainly magnify the work necessary for future tory development context projects, and increase their cost. · To enhance the Bank's ability to manage its relationships and maintain its credibility 2. To enhance the Bank's negotiating position by with those influenced by its projects and acquiring early knowledge of potential obstacles and loans support. By identifying people, groups, and · To optimize a project's performance. institutions with interests in the project, stake- holder analysis provides an early warning of The lack of a fixed methodology for stake- potential problems. Similarly, stakeholder holder analysis gives it the flexibility necessary analysis identifies potential allies and ways in for it to function as a strategic tool under many which they may support the project. Negotia- field conditions. tion is improved because of the increased The approaches used in this chapter are information flows generated by stakeholder straightforward: analysis, which enable a faster and more accurate response to potential opportunities · To identify stakeholders and conflicts. · To learn about and learn from stakeholders · To make strategic participation and project 3. To improve go-ahead decisionmaking, promote development decisions on the basis of that project sustainability, and improve project perfor- learning. mance. Stakeholder analysis will minimize the risk of financial losses after a project has begun. Six Good Reasons to Conduct Furthermore, early assessments of conflicts of a Stakeholder Analysis interest among stakeholders will enable task managers to assess a project's riskiness before Stakeholders' agendas now dominate discus- funds are committed (ODA 1995). "Tradition- sions in both the public and private sectors. A ally, good projects have been identified by recent conference on ethical accounting high- looking at the return on investment. Net lighted the importance of stakeholders for present values are often used to rank projects realizing a company's potential: "In the future, for success. The outcome evaluations used it is difficult to imagine a company creating today, however, have a different focus. They real trust in its relationships, without a clearly incorporate techniques such as distributive described, audited, and verified stakeholder analysis, which attempts to link the net benefits dialogue process" (Copenhagen 1999: 1). It is or losses of a project to the groups who end up now clear that the same is true for international being net beneficiaries or net losers (Jenkins donor organizations. The social audits devel- 1998: 3)." These detailed analyses require task oped in the private sector are now being managers to have an understanding of the applied through the development audit, the stakeholders affected by their projects and how social audit, and score cards. What, though, are the project affects them. some concrete, field-level reasons for conduct- ing formal stakeholder analyses as a precursor 4. To minimize the Bank's reputational risk. to participatory decisionmaking? Effective stakeholder analysis (and the 18 Strategies of Stakeholder Analysis to Improve Participation and Project Performance management of stakeholder expectations that follows) reduces public relations disasters like Box 1. Stakeholder Analysis Summary the debacle over the antipoverty loan to China, Keys to success for stakeholder analysis whose proposal included the resettlement of Han Chinese to traditionally Tibetan lands ü Iterate, iterate, reiterate (The New York Times 1999; Kahn 2000). ü Allow information to flow 5. To lay the groundwork for participatory ü Master the art of listening development. Participatory decisionmaking ü Learn from what is heard and not heard:read between the lines cannot occur without good stakeholder analy- sis. Even if participatory decisionmaking is not The process within the scope of a particular project's plan, stakeholder analysis minimizes the probability Phase I. Identify, map, profile, and communicate of unexpected stakeholder activities that can with stakeholders subvert the project. Step 1 · Identify and map stakeholders and stakeholder 6. To enhance poverty reduction strategies of groups empowerment, security, and opportunity. "The · Anticipate needs of newly created stakeholder poor" are unorganized and have little or no groups voice in public policy. Yet groups of the poor · Profile stakeholders are often organized on one level or another--a fact that is all too often forgotten in the plan- Step 2 ning phases of large projects. There exist · Consult with potential stakeholders · Listen to stakeholders distinct stakeholders within the "poor"-- organized or unorganized groups--with Step 3 differing interests who can effectively identify, · Revise project concept help pursue, and participate in a specific component of an overall poverty reduction Phase II. Identify the participation of appropriate project. Stakeholder analysis can also contrib- stakeholders ute to poverty reduction by identifying the · Prioritize stakeholders stakeholders who will capture the benefit of · Conduct Strengths, Weaknesses, Opportuni- social protection programs intended to increase ties, and Threats (SWOT) analysis security for the poor. Sufficient forethought to the needs and pos- list: clients, suppliers, investors, employees, sible actions of stakeholders will improve debtors, and the government. The Bank's specific project performance and create a diversified working environments preclude participatory, collaborative environment that creating a similarly simple checklist (see table 1 can spill over to other Bank financed projects for an example of the kind of list a Bank project and activities. Box 1 outlines a successful strategy. might use). The Bank's Participation Sourcebook describes typical identification strategies as follows: Phase 1. Identify, Map, Profile, and Communicate with Stakeholders Bank task managers have collaborated with government to identify relevant Step 1. Identify and Map Stakeholders stakeholders by asking questions and and Stakeholder Groups seeking answers from both in-country and Bank sources. Often the objective itself has Corporate officials who must identify stake- defined the relevant actors. Sometimes, holders usually draw from a relatively simple firsthand observation was used to identify 19 Sherrie A. Kossoudji Table 1. Potential Stakeholders for World Bank-Financed Projects National authorities National government Political figures Political party organizations Military Central ministry officials Federal or central bureaucrats National unions Regional or local authorities Local ministry officials Mayors and city councils Local party officials Township or province administrators Local union representatives Local law enforcement Educational institutions Regional or local organizations Community-based organizations Rural or other cooperatives Water use groups Mass organizations Labor or craft groups Agricultural extension services Peasant unions Nongovernmental organizations Advocacy NGOs Operational (or partner) NGOs Line agency representatives Local and regional non-profits International non-profits Environmental groups (water, agricultural, or land use projects) Women's advocacy groups Religious organizations Priests, clerics, imams Lay organizations Church-based charities Religious institutions Traditional groups Tribal leaders Indigenous leaders or organizations Interpreters and intermediaries Traditional healers (health projects) Ethnic group organizations Commercial and business groups Local credit cooperatives Bank officials International bank representatives Business organizations Civic clubs of business people or chambers of commerce Groups defined by beneficiary status, The poor social analysis, rural appraisals, or gender The landless analysis The displaced Women/men The elderly Youth Agricultural workers Tenants' groups Groups created by the project Downstream communities (water projects) Clients of created enterprises Service-user groups The displaced The press Local press National press International press Other governments Governments in exile Governments of other interested countries World Bank Task managers Country offices Board of Directors 20 Strategies of Stakeholder Analysis to Improve Participation and Project Performance appropriate stakeholders. In other cases, important reasons for supporting or opposing disseminating information about the a project. Acquiring support or neutralizing proposed activity enabled interested opposition from such groups speeds the stakeholders to show up by themselves. project's progress and their interests are ig- (The World Bank Participation nored at the project's peril. Interviewing Sourcebook 1996, III:1) specific individuals in ministries or areas that are directly involved often will help the task The task manager's first job is to identify all manager to seek out groups and factions in potential stakeholders and define their charac- other ministries or agencies who may have a teristics relevant to the project. Identification is direct or indirect economic or political interest necessarily iterative because to identify stake- in the project. Overlapping interests are com- holders, one needs a clear idea of their relevant mon, so it is likely that these groups of people interests; and to define their relevant interests, have encountered such situations before. one needs a clear idea of the identity of the Territorial negotiation up front is preferable to stakeholders. Identifying all of the relevant a situation in which omitted government stakeholders is an anticipatory exercise that groups covertly sabotage a project's potential. attempts to see all possibilities for a project, not A scan of the institutional environment will just the expected outcome. A simple roundtable help to identify these stakeholders. The task with people who are already involved in manager needs to look carefully at groups at project planning and/or who are familiar with different hierarchical levels of the government the local environment facilitates the exercise. as well. While projects often start with negotia- Who is expected to gain or lose as a result of tions with national government officials, it is the project's success? Who could gain or lose if the regional and local agencies and ministries the project is initiated, but fails? Who could that typically are responsible for project imple- gain or lose if the project is never begun? Are mentation. In addition it is their representatives there possible economic spillovers or externali- who are most cognizant of potential opportuni- ties of the project that will benefit or harm ties and pitfalls for the project. Whenever people who are not intended to be directly possible, the strongest relationships should be affected by the project? built at these implementation levels. The Mali The easiest groups to identify, especially in Pilot Participation Project demonstrated that more strictly authoritarian regimes, are govern- the project's success depended on having a full- mental groups or organizations that are likely time contact point in the Bank's country office to support or oppose the project. Identifying to reinforce participatory partnerships ("Find- government departments, ministries, agencies, ings" 1997). and groups that will be actively involved with An important strategy for identifying stake- the project is usually easy. These groups are holders is to recognize the limits of the local important stakeholders, as are individuals and national contexts. Some civil society within them. There may exist groupings within stakeholders operate across local and national a government along factional or ideological boundaries. Furthermore, it is important to lines as well as ministries, which compose the recognize that the extent to which stakeholder "deep structures" of society. More often than groups are organized will vary. not, these are people with whom the Bank is The search for stakeholders requires suffi- already communicating or working. It is never cient information about the ways in which the too early to try to identify people who will national regime allows the organization of become effective allies to participation enter- outside groups and whether and how it con- prises as well as contributors to stakeholder trols access to those groups (see Bianchi chap- consultations. ter in this volume). Government officials and There may be hidden structures of disincen- bureaucrats may not assist or may even resist tives. Groups and factions in ministries not the adequate identification of nongovernmen- directly involved with the project may have tal interest groups. Mapping stakeholder 21 Sherrie A. Kossoudji interests will require a working knowledge of previously unknown groups--sometimes the government's organizational and institu- simply people with an identifiable common tional structures--its deep structures and the interest, meeting place, or goal--can emerge as informal rules of the game. Since working with effective stakeholders in poverty reduction the national government is a requirement, task projects. Examples could be women who sell at managers may have to adopt (when possible) the Saturday market, women who meet at the creative strategies to identify and communicate stand pipe, or members of a favela council or with nongovernmental groups. A systematic squatters' group. Similarly, local contacts will appraisal of known organizations and groups be effective in identifying people with common initiates the task. When possible, task managers needs, common goals, and common abilities. should then embark on "snowball identifica- This group identity may not be associated with tion" techniques. Snowball sampling is used poverty itself but coincident with it. Even when locating respondents would be difficult people who live in poverty, are unorganized, or cost prohibitive. It relies on referrals from and have no official voice participate in institu- initial subjects to generate additional subjects. tions that represent vehicles for communication Following the tenets of snowball sampling, and stakeholder consultation. The Matruh snowball identification creates chains of refer- Natural Resources Management Project makes rals from quickly found stakeholders (such as good use of the local lineage group (Participa- government officials) to those who are more tion Sourcebook, appendix II: 4). The key is to difficult to find. identify well-defined groups. Snowball identification can be especially Other techniques for identification of stake- useful to identify groups whose organizational holders include "scanning the environment" to capacity is limited and who may not be known identify the political environment, key people, in many government circles. The problem with hot spots, and support systems. These tech- snowball identification is that it is an inevitably niques will help produce a "map" of the top-down process because Bank staff almost different stakeholder groups. certainly will work on a project concept with the national or central government. In conjunc- Anticipate the Needs of Newly Created tion with snowball identification (when pos- Stakeholder Groups sible), the task manager must devise bottom-up strategies of identification. The Bank's involvement has already changed The task manager must be sufficiently alignments in stakeholder groups. In addition, locally aware to ensure that the benefits and each Bank-financed project inevitably will costs of identification and participation are create new stakeholder groups. Potential based on the realities of the community rather clients, beneficiaries, and people harmed by the than on what Bank staff know about the techni- project are unlikely to be constituted in identifi- calities of a project. Local advisors and consult- able organizations. These groups, whose lack of ants are key personnel for identification. organization may make full participation Furthermore, early use of local consultants and unlikely, nonetheless will have interest in and participants (who may be elders, professionals influence on the project's success. Their actions from the community, or religious leaders) later will be especially important if the project's brings critical stakeholders into the project activities require that they make tradeoffs (if early and can help relieve the Bank of the onus they are beneficiaries) or if they can organize of an expert-driven experience. Communities enough to engage other, more powerful stake- may feel that if the Bank cedes some power holders to protect them from being harmed. early on (in identification, for example), it will also do so in its negotiations with stakeholders. Profile Stakeholders As mentioned, snowball identification can be thought of as a top-down identification tech- It has already been noted that stakeholder nique. Nevertheless, its capriciousness (who identification is an anticipatory exercise. So is knows who will lead to whom?) means that stakeholder profiling. Local ministry officials 22 Strategies of Stakeholder Analysis to Improve Participation and Project Performance and bureaucrats may not know that they will women at the stand pipe could elicit informa- have an interest in training and support for tion about their children's health needs (inter- participatory processes (and that without ests), their willingness to coalesce around a that support, participation and the project health initiative (commitment), and their may be doomed), but the project staff can relationships with the existing (if it does exist) anticipate it. medical community (relationships with other In business management, the most common stakeholders). Several such discussions around stakeholder table is the interest/influence table, several stand pipes will build the stake- which outlines the interests and influence of holder profile and engage the stakeholders different stakeholders, then separates stake- in consultation. holders into four groups: high interest/low The Chad Education V task manager notes influence, high interest/high influence, low that stakeholder meetings revealed what Bank interest/low influence, and low interest/high staff never would have known: parents were influence (Ernst & Young and others 1999). very highly involved with their children's Managers focus on the needs of the high education, but felt they needed help in learning interest/high influence group, while other how to run schools. This critical success factor groups are monitored for changing circum- became part of the project (Participation stances. Sourcebook, chapter II: 35-38). DFID and UNDP each have adopted a These critical success factors may also form version of the interest/influence table. The the basis of stakeholder monitoring systems. goals of a development agency differ from The project may not be able to achieve every those of a commercial enterprise, and the critical success factor during its design or analysis used also will necessarily differ, implementation, but the Bank will be able to especially if participation activities are an report to the stakeholders which factors were integral part of project development. The table met and which were not. This reporting presented in this chapter is more extensive than acknowledges that the Bank is obliged not just the commercial model because it explicitly to take information from stakeholders but also assumes that the stakeholder profiling docu- to give it back. For key stakeholders to partici- ment is a dynamic blueprint for participatory pate, it is important that at least some critical planning and facilitation. success factors be met, but it is usually not The stakeholder profile form (table 1) re- necessary that all of them are met for every quires the analyst to match any given charac- stakeholder. Participation lends itself to an teristic ("profile element") with any associated acknowledgement of the realities of tradeoffs critical success factors. Critical success factors and compromise. are key demands or requirements of the stake- holders that are related to the project and that Steps to Complete a Stakeholder Profile can be managed, measured, and communicated to them. 1. Detail each stakeholder's interests and indicate Although this chapter describes profiling ways in which they agree or conflict with the and consulting with stakeholders as separate project's goals. What are the stakeholder's steps, they are necessarily intertwined and will interests in the problems that the project is take place together. Eliciting the information trying to address? What will be the stake- about these critical success factors will evolve holder's interest in the outcomes that the along with stakeholder consulting and involve- project is designed to achieve? What are each ment. Creative use of traditional methods of stakeholder's goals, demands, expectations, communication and information exchange are and values? required, through the use of techniques such as Analysis of stakeholder interests may not be Q-sorts, scenario analysis, and participant straightforward. The ODA (1995) notes that observation as well as informal discussions. For many interests are covert, and agendas may not example, an informal discussion among a local be articulated publicly. This is especially likely elder, a female Bank project representative, and under more authoritarian regimes. Of course, 23 Sherrie A. Kossoudji this is exactly the situation in which uncover- unsanctioned organizations may have a re- ing such agendas is costly to the Bank, and stricted ability to participate or in which their potentially dangerous to the stakeholders. participation may have unintended conse- Bank country office personnel, in conjunction quences. As the UNDP (1999: 7) points out, with intermediary individuals or groups, may "participation can be a destabilizing force in help uncover hidden interests. If the political that it can unbalance existing socio-political situation is not too sensitive, information about relationships and threaten the continuity of stakeholders can be sought from representa- development work." tives of other stakeholder groups or organiza- tions. Several techniques can help identify 4. Detail the stakeholder's capacity for participa- interests, such as Q-sort, scenario analysis and tion activities. What are the stakeholder's observational methods. Caution is warranted. organizational resources; the number and Simple political insight may suggest that, dedication of its members; and its traditional unless the project's prospects rely significantly knowledge, expertise, and representativeness? on a particular group, communication at face Detailing this will be context specific: a farm- value, along with a few judicious assumptions, ers' cooperative will have different capacity is "good enough." assessments for an irrigation project than for a rural credit program. 2. Articulate each stakeholder's ability to influ- ence the project's development and ultimate success. 5. Determine the stakeholder's commitment to the Influence will come from many sources. What project and/or the project's objectives. Participation are this stakeholder's resources, legal authority, cannot be effective without significant commit- moral authority, and access to the public? Is this ment. While an organization's resources may a stakeholder with significant legal or moral be large, they are of no use to the project if no authority that coercive or persuasive tactics can one is willing to commit them. World Bank significantly affect the project's implementation toolkits to determine political commitment and prospects? Does the stakeholder control may be useful here. significant resources that the project needs? Does the stakeholder have important skills or 6. Explore how each stakeholder is related to other knowledge critical to the project's develop- stakeholders. Are there histories of conflict or ment? Can the stakeholder reach large numbers cooperation? Are there natural alliance possi- of people or influential people? bilities because of overlapping interests? Are there conflicts that could be created by the 3. Assess the stakeholder's position in the com- project (such as conflicts between men and munity or country, and what impact participation women over birth control or reproductive may have on the stakeholder or on the behavior of health projects)? other stakeholders. Participation by a particular The table above can be varied according to stakeholder could bring about adverse reac- the proposed project's features, the national tions by authorities that could damage the political and social environments, and the local project's potential. Is the stakeholder a govern- or regional needs and capacities. For example, mental agency, nongovernmental organization, based on the priority that the ODA gives to sanctioned, unsanctioned, formally or infor- satisfying stakeholders' needs or interests, ODA mally organized, or not organized at all (such (1995) suggests putting stakeholder importance as many beneficiary groups)? At what level in the table. Instead, the stakeholder profile does it operate (local, regional, national, inter- approach assumes that importance is a strategic national)? What is its place on the organiza- decision based on the stakeholder analysis tional and institutional map? This profile (discussed later). Technical projects, in particu- element may not be necessary in many national lar, may best be served by having expertise, contexts, but it serves as a useful reminder in organizational strength, or traditional knowl- countries in which competing interests and edge as a specific profile element. 24 Strategies of Stakeholder Analysis to Improve Participation and Project Performance Table 1. Stakeholder Profile Form Stakeholder: Profile Element Critical Success Factors Interests Influence Status and constituency Capacity Commitment Relationships with other stakeholders Strengths as a participant Weaknesses as a participant WARNING: Know when to back off from what other groups need or will bring to the comprehensive stakeholder analyses. In project. Joint meetings also will facilitate the some environments, stakeholder profiles development of participatory project planning. could be viewed as the compilation of Furthermore, joint meetings tend to lessen the sensitive information for suspicious efforts needed to bring any particular group to purposes. While this chapter discusses the the stakeholder table. On the other hand, benefits of complete profiles, in such separate meetings help staff learn about differ- circumstances profiling activities should ent groups' needs and commitment, but do be minimized. A simple prioritizing of key little to help stakeholders learn about the and secondary stakeholders along with project's whole environment--a critical feature their influence characteristics (especially of participatory success. those that are negative for the project) The myriad ways to consult and communi- may be more diplomatic. cate with stakeholders will depend on the local and national environments of the proposed Step 2. Consult with Potential Stakeholders project. Workshops, round tables, public meetings, focus groups, Q-sorts, appreciative When possible, stakeholder groups should be inquiry, and surveys all are ways to initiate consulted both separately and together. Meet- communications with stakeholders. Inevitably, ings facilitate each group's understanding of effective communication will take place in the 25 Sherrie A. Kossoudji field. Both Beneficiary Assessment (BA), which generate revisions to the project that coalesce is an assessment of the perceptions of beneficia- effective support and diffuse opposition. ries, and Systematic Client Consultation (SCC), Active listening is a process of sensing, which sets up communication processes and interpreting, and checking in order to under- uses client feedback in project development, stand stakeholders' needs and demands and to are commonly used in Bank-financed projects facilitate the development of an effective (Participation Sourcebook 1996). Creative project relationship. workers will accept the idea that Western What kind of information is sought in these concepts of "meetings," "focus groups," and stakeholder consultations? Stakeholder con- "negotiation" are only one way of meeting, sulting is concerned with learning about the discussing needs, and working through prob- participation needs, expectations, and capaci- lems. Some cultural competency is critical ties of stakeholder groups. It is also focused on when devising stakeholder consulting strate- learning how to make a project more respon- gies. What are traditional styles of communica- sive to the needs of stakeholders. The tion, traditional meeting places, traditional Bangladesh Health and Population Program taboos on what is said or who says it? Bringing provides a best-practice example. Stakeholder in local consultants or advisors to the consulta- meetings revealed that money costs, time, and tive process as early as possible significantly male doctors' attitudes toward women all improves a project's performance. imposed costs on health care. The project Do all stakeholders need to be consulted? created a Behavior Change Communication For some, such as secondary stakeholders with Institute, and stakeholder committees have little capacity for organization, consultation been established to monitor the health system may not be necessary. For others, it will not be (World Bank internal documents). feasible. But project staff must not dismiss the Consultation should place particular impor- public relations generated by consulting and tance on group dynamics that influence partici- reporting activities. Some stakeholders will pation possibilities. Even unorganized groups remain outside the purview of communication. have participation potential if their interests are Although the international press may play a consistent and their attention is focused. The critical spoiler role, communication is not often list in box 2 adapted from Weaver and Farrell feasible or useful. Local press (where it exists), (1999: 133), reveals the topics of importance to however, may support or oppose a project and future participation. may bring issues to the attention of the interna- Adopting a coherent listening strategy is tional press. Communication brings the interest especially important when consulting with and influence of the press to bear on the those who traditionally have little voice. project's development. In general it is critical that a range of stakeholders be consulted. Listen to Stakeholders Box 2. Listening and Participation Active listening promotes: Whichever communication strategies are used, there are two simple listening frameworks: · Interpretation of what the group wants what is heard and what is not heard. A lack of · Acquiring clear signals that give insights to communication on the part of a group may how a group is working · Awareness of the dynamics that affect a indicate a group's suspicions, not its lack of group's productivity and interdependence interest or influence. Listening to stakeholders · Knowledge of how well a communication is a learning activity. For the task manager's process is going purposes, its goal is the ability to produce more · Information about the changes occurring complete stakeholder profiles that anticipate within the group. threats and opportunities for the project and that 26 Strategies of Stakeholder Analysis to Improve Participation and Project Performance Step 3 Interest/Influence Ranking Schemes Revise Step 1. Consulting with stakeholders How should one prioritize stakeholders for will bring out information about other stake- participation? While there is no single method- holders. Similarly, it will clarify stakeholder ology, most stakeholder techniques rank profile elements. potential stakeholders by some criteria. The interest/influence matrix and the importance/ Revise project concept. Identifying, profiling, influence matrix are the most straightforward consulting with, and listening to stakeholders (see table 3). Stakeholders are given numerical are only useful if these activities lead to infor- ranks on these elements individually. Inclusion mation that can help the project staff assess the is decided by considering their joint ranks. costs and benefits of different participatory There are many different ranking scales (for options and/or improve project performance. example, 1 to 3, 1 to 5, 1 to 10). If a scale of 1 to 3 is adopted, the stakeholders would be scored Phase 2: Strategic Decisions to Identify in the following way: "Are this stakeholder's Appropriate Participation interests high priority (1) to the project's success, some priority (2), or low priority (3)? Is Prioritize Stakeholders this stakeholder's influence over the project's outcome significant (1), scattered (2), or weak The identification and profiling of stakeholders (3)?" Stakeholders with priority scores of 2 are information gathering activities that are (1+1) are critical for participation, as may be 3s. undertaken in order to aid decision-making. Strategic decisions to manage other stakehold- The ultimate decision is how to prioritize ers may be taken if, for example, a stakeholder stakeholders and design a strategy for their is scored with a 1 for influence and a 3 for involvement so that the project's performance is interests because his or her interests are anti- optimized for the relevant context and risk is thetical to the project's success). managed. Budget and time constraints will A more complex matrix can use the indi- limit the number of stakeholders who can be vidual element-joint element ranking. In this engaged in participation activities. Key stake- case, the elements are sorted by priority to the holders are those directly affected by the project project's success, then each element is sorted by while secondary stakeholders are not directly stakeholder ranking. Stakeholders are priori- affected but may play an intermediary role. tized by high rankings on the most important The World Bank has the capacity to help elements and jointly high rankings on several organize entirely new interest groups--the elements. landless, the disabled, widows, ethnic minori- Numeric rankings are relatively easy to ties, social castes, and children (Narayan 2000). implement and help sort stakeholders into Task managers must make strategic choices identifiable priority groups. They are useful about the extent to which they wish to involve when first working with stakeholder analysis. previously unorganized groups. However, ranking schemes have two unavoid- Table 3. Importance/Influence Matrix Importance of stakeholder Influence of stakeholder High priority Some priority High importance Weak influence Civil society Local government The poor organizations (CSOs) Scattered influence Donors Significant influence National government Representative assemblies 27 Sherrie A. Kossoudji able problems. First, simple scales do little to before participation will be effective? Is the articulate differences across stakeholders. For stakeholder's capacity a strength or a weak- instance, what if a stakeholder has a level of ness? Can this stakeholder group mobilize its influence that is between middling and strong? members? Does the stakeholder have particular What if many stakeholders are scored with 2, organizational resources, alliances, or coopera- and constraints do not allow for participation tive arrangements with other groups who may by all? Second, complicated scales can be themselves be critical stakeholders? difficult to combine and analyze meaningfully. Stakeholders who are directly affected by the As an example, is there a meaningful difference project (such as beneficiaries or the displaced) between a score of 77.8 and 78.1? necessarily are key stakeholders who must play a role in project development (even if full Strengths, Weaknesses, Opportunities participation is not possible). Beneficiaries, for and Threats Analysis example, are not typically involved with identifiable groups or organizations. What An alternative to ranking schemes is the strengths can be identified for such stakehold- analysis of strengths, weaknesses, opportuni- ers? What are their weaknesses and what ties and threats (SWOT). SWOT analysis is a amount of resources will it take to overcome helpful tool for generating a summary of a those weaknesses? Stakeholders who are strategic situation (Kluyver 2000). The SWOT indirectly affected by the project must be made analysis for participatory projects differs from a allies or have their opposition muted. typical organization's SWOT analysis. To successfully evaluate a stakeholder's In the case of a World Bank operation, the participation strengths and weaknesses, con- persons conducting the SWOT analysis exam- sider the stakeholder characteristics in box 3. ine the individual elements of each stakeholder It will be important that this analysis of profile. Then, making judgments about the strengths and weakness be considered under group's participation possibilities, they evalu- several possible scenarios. Will an election ate the strengths and weaknesses of each change a government ministry's influence? Is stakeholder as a participant. Added to this is there a change in policy that could influence a the summary of the environment, which stakeholder's ability to commit certain re- accesses the gathered information about all of sources? Analyzing the stakeholder groups the stakeholders to assess the opportunities for under alternative conditions can help to iden- participation and the threats to participation tify groups who may not initially be chosen to posed by the external environment. (Remember participate, but who should remain on a that both the Bank and the government are considered stakeholders.) A SWOT analysis is more holistic than a ranking scheme and more Box 3. Foundations for Participation explicitly reveals the judgments of the people Evaluation conducting the analysis. It is a normative interpretation of a stakeholder's capacity · Cultural context and indigenous forms of communication and will for participation, and an assessment · Commitment of the benefits and costs to the project of this · Community involvement stakeholder's participation under alternative · Concern about problems or the project's conditions. goals The bottom of the stakeholder profile articu- · Collaboration potential lates these participation strengths and weak- · Conflict potential nesses for each stakeholder. What stands out · Crisis potential · Cooperation potential about each stakeholder? Is a group likely to · Capacity for consensus mobilize for or against the project? What kinds · Collective agendas of behavioral changes will have to take place 28 Strategies of Stakeholder Analysis to Improve Participation and Project Performance consultation list and can be brought in as allies The act of conducting an organized SWOT if circumstances change. often removes the need for a specific ranking of What will the project gain by having this stakeholders. The stakeholders who must be stakeholder participate? What will the project included should become obvious. They are lose? An extensive cost/benefit analysis may those whose interests are important to the not be necessary or possible for these purposes, project and for whom the benefit of participa- but a simple back-of-the-envelope calculation tion outweighs the cost. Similarly, stakeholders of the project's gains and/or losses from each who will not be included but who may pose a stakeholder group's participation anchors the threat to the project may be managed. Finally, participation decisions in project performance. some stakeholders will be tangential enough to It is critical to evaluate the possible changes in the project's goals and impacts that they need designs, goals, service users or clients, out- not be participants at all. comes, and the implementation cost. SWOT analysis can be useful for evaluating Self-assessments by the task manager, project the participatory capacities of stakeholder team, the Bank's country office, and other Bank groups when poverty reduction is the goal, but functionaries are a necessary part of this the tendency in SWOT is to focus on the more exercise. What are the Bank's strengths and powerful stakeholders who can sabotage a weaknesses for participation in this particular project. When SWOT is used to assess stake- environment and for this particular kind of holder strategies, a complimentary strategy, project? Are project staff members trained in like social analysis, gender analysis, or rapid participatory techniques? Will they be good rural assessment is advised. facilitators in the local environment? Will they make sure that participation is embedded in Summary project development activities? The information about all of the stakeholders Stakeholder analysis is one method to set up should be gathered in a summary that assesses participation strategies. Stakeholder analysis the opportunities for participation and the itself may be conducted in the expert or partici- threats to participation posed by the external patory framework. A critical benefit of stake- environment. It is useful to think about this holder analysis is that it can be maintained for part of the analysis as small-scale country risk the life of the project. As circumstances change, assessments. There are three critical issues to the changing risk to the project can be assessed consider during this summary. First, are there within a framework of local information-- any fatal threats to participation or to the shortening the time to deal adequately with the project itself? If so, a project (or participation) changing circumstances. When potential will not be viable. A fatal threat is a situation conflicts become real, an accurate background that would cause a project to be reconceived, or assessment has already suggested ways to deal its participation strategies reconsidered, in with them. order to remain viable. A government that refuses to cooperate in participatory endeavors References may be such a fatal threat. Second, are there any significant threats to Danish Ministry of Social Affairs and others.1999. the Bank's critical success factors? These threats "Building Stakeholder Relations. Third Interna- increase the risk of the project and, because the tional Conference on Social and Ethical Account- Bank and other stakeholders may be working ing, Auditing, and Reporting." November 14-16. at odds, mean that careful consideration ought Copenhagen, Denmark. http://www. stakeholder.dk/contact.htm. to be taken before the project moves forward. Ernst & Young LLP, KPMG, Pricewaterhouse- Third, are there strong possibilities for Coopers, and the House of Mandag Morgen. 1999. alliances of different stakeholder groups that "The Copenhagen Charter. A Management Guide could make participation activities cheaper and to Stakeholder Reporting." Copenhagen, Den- could improve project performance? mark: House of Mandag Morgen. 29 Sherrie A. Kossoudji "Findings." 1997. "Best Practice in Participation Overseas Development Administration. 1995. Planning and Development of the Mali Pilot "Guidance Note on How to Do Stakeholder Participation Project." Vol.18 (July). Africa Region, Analysis of Aid Projects and Programmes." World Bank, Washington, D. C. www.worldbank. http://www.oneworld.org/euforic/gb/stake1. org/afr/findings/infobeng/infob18.htm htm. United Kingdom. Friedheim, D. V. 2000. "Interest Groups as Stake- United Nations Development Programme. 1998. holders: Concepts and Field Techniques." Mimeo. "Empowering People: A Guide to Participation." Jenkins, G. 1998. "Evaluation of Stakeholder Impacts http://www.undp.org/csopp/CSO/NewFiles/ in Evaluation Analysis." Development Discussion docemppeople.html. Papers no. 631. Harvard Institute of International A CSOPP document: http://www.undp.org/csopp/ Development, Cambridge, Ma. CSO/NewFiles/documents.html Kahn, J. 2000. "World Bank Rejects China's Proposal Empowering People: A Guide to Participation to Resettle Farmers." The New York Times, Late UNDP, 1998 edition (East Coast), July 8. A.3 Weaver, R. G., and J. D. Farrell. 1999. Managers as Kluyver, C. A. 2000. Strategic Thinking: An Executive Facilitators. San Francisco Cal.: Barrett-Koehler Perspective. Upper Saddle River, N. J.: Prentice Publishers. Hall. World Bank. 1996. The World Bank Participation Source- The New York Times. 1999. "Loan for a Land Grab." book. Washington, D.C. www.worldbank.org/ (Editorial). June, 23, Late Edition (East Coast),A.18. wbi/sourcebook/sbhome.htm. 30