April 17, 2022
projects
Stakeholders have a high degree of influence over project and business success. They affect outcomes and can determine whether or not a project progresses as intended. That’s why differentiating between primary and secondary stakeholders is a good starting point when managing your project. This will help you tailor your approach to each group and meet their needs.
Defining primary vs secondary stakeholders
Businesses have a responsibility to all of the stakeholders who support their organization. There are two types of stakeholders: primary and secondary. Primary stakeholders are investors in your business, such as your employees, customers, suppliers, and creditors. Secondary stakeholders include consumers (who may or may not purchase from you), government agencies, and unions.
Let’s take a look at each type separately to better understand their role.
Primary stakeholders
Primary stakeholders directly participate in the operations of a business. This includes owners, employees, customers, suppliers, and vendors. All of these people have a direct financial interest in the success or failure of the company through their investment in the business itself.
In other words, primary stakeholders are groups that have an actual stake in how a company is run, and they must be considered when making business decisions.
Primary stakeholders are your bread and butter. They hold significant power when it comes to influencing the direction of a business or project. As such, they are often the key decision-makers in any change program.
Without these people, a company cannot exist or function well.
Examples of primary stakeholders include:
- Customers are those who purchase goods and services from the business.
- Employees work for the business.
- Owners have a financial stake in the business.
- Suppliers provide goods and services to the business.
- Vendors are businesses that provide goods and services to the business.
In business and project economy, primary stakeholders are also the first to be impacted by a change – for better or for worse.
Secondary stakeholders
Secondary stakeholders are not directly involved in the day-to-day operations of a business. In fact, they are usually more passive than primary stakeholders. However, that doesn’t mean they’re any less important. The secondary stakeholder category is a broad one that includes government agencies and local laws, activist groups, and other organizations who may not have a direct relationship with the business but have an interest in it. You might think of them as your audience.
Secondary stakeholders may or may not have a vested interest in the company’s success or failures, but by default, their opinions about it can influence its reputation. Even if you don’t care what secondary stakeholders think about your business (though you probably should), remember that their thoughts and feelings can be contagious and spread to others, particularly to those within your target market.
Examples of secondary stakeholders include:
- Consumers: while these people don’t directly engage with an organization’s product or service, they are still potential customers and their opinion matters
- Competitors: while you may see them as adversaries (and sometimes that leads to some pretty competitive behavior), they have a stake in what you’re doing because it impacts their livelihood as well
- Communities: while they aren’t directly involved with your company, they still live and work within the community that you do and could be affected by how it’s run
- Special interest groups: these represent interests outside of direct engagement, ownership or employment. For example: environmental groups for sustainability practices; political groups for election campaigns; charity associations for social responsibility initiatives etc.
An example of primary vs secondary stakeholders
To add, the primary stakeholders of a project are the ones who will be most impacted by a successful (or unsuccessful) outcome. These are the people who have the most to lose or gain.
For example, the primary stakeholders in a construction project would be the building owners and those who will occupy it. If the project is a school building, then perhaps parents and teachers are also primary stakeholders.
The secondary stakeholders of a project are those who have an interest in the outcome, but not so much that they stand to gain or lose anything significant.
Secondary stakeholders in our construction example might include local residents and politicians who have little to do with the building itself but may be interested in how long it takes to build or how much money is spent on it.
Both groups have their own place in the project management process. Ultimately, your success as a project manager depends on your ability to identify and fulfill the needs of both primary and secondary stakeholders. Nonetheless, there are important differences between these two groups which contribute to defining them as primary or secondary stakeholders. It’s important that you’re aware of these distinctions if you want your design to succeed. With practice and an understanding of how to manage stakeholders, you may just be able to produce an innovative and successful product or service.
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Iryna ViterAdministrator
Editor-in-Chief and Founder of PM Column. Iryna doesn't imagine her life without eating tomatoes and writing project management articles. She has raised two project management blogs from scratch and written for Epicflow, TechRadar, and Project Manager Today.
