Why Stakeholder Management is so important

Effective Stakeholder Management is crucial to the success of any project or programme. This case study is a prime example of what can go wrong when stakeholders are not managed and Stakeholder Engagement is not adequately planned.

Stakeholder Management case study UK Passport Agency

Computerised processing system summer 1999
“Passport fiasco cost £13m, with a £16,000 bill for umbrellas plus 500 spoilt holidays”
The Independent, Wednesday, 27 October 1999.
In 1999 the UK passport Agency planned to introduce a new computerised processing system to replace an old system and provide more secure passports. They aimed to introduce the system in their Liverpool and Newport offices before the summer busy period.

The timeline was tight and the Agency failed to provide enough time for staff to learn and adapt to the new system. The introduction of the system had to be postponed and the Agency was unable to cope with the demand for new passports. Failure to adequately assess the time needed to implement the system and lack of a contingency plan in the event of a problem were compounded by a further failure to adequately manage the Agencies most important stakeholders – the media and the general public.
Poor Stakeholder Management - Thousands wait outside the Glasgow passport office
Thousands wait outside the Glasgow passport office

On 18 November 1998 the Agency, suspended the rollout of the computer system. In February 1999, applications began to increase and processing times rose. By March, the delays started to attract Parliamentary and media attention. The number of applications then rose steeply.
Passport applicant reading an article on the delays
Passport applicant reading an article on the delays
At this point the Agency should have been able to refer to its Stakeholder Communication Plan and put in measures to engage with the media and the public. Instead they withdrew some staff from the telephones and moved them to processing applications. According to the NAO report into the crisis (27 October 1999, pg 47) at peak periods in Liverpool the telephone service was virtually shut down.

At this point the Agency could have increased their channels of communication to engage with their key stakeholders (see 52 ways to engage with stakeholders). Instead they altered their recorded message to advise callers to write to the Agency and provided a fax number. The number of written queries quickly exceeded the Agency’s ability to cope

Without adequate information the feeling of panic increased and applicants were forced to join queues of thousands outside the passport offices. The Agency responded by buying umbrellas and luncheon vouchers.

By August 1999 compensation payments to the public totaled approximately £161,000 and were continuing to rise. The National Audit Office (NAO) estimated that the total cost to the Agency would be around £12.6 million. This estimate excluded £9 million in lost business borne by Siemens Business Services (another of the passport agency's 'key player' stakeholders).

When the NAO published their report the Agency were considering measures to cope with demand during busy periods including: expanding the telephone enquiry service; and improving the information it made available to the public through advertising and via the internet. Sounds like they started to write their Stakeholder Engagement Plan lets hope it got finished!

Other Stakeholder Management case studies

For more case studies see Business and Society: Ethics, Sustainability, and Stakeholder Management, By Archie Carroll and Ann Buchholtz. They provide 42 fully referenced case studies, including Wal-Mart and Body Shop.

References for the 'Importance of Stakeholder Management'

NAO, Report by the Comptroller and Auditor General: The Passport Delays of Summer 1999, 27 October 1999, https://www.nao.org.uk/

The Independent, Passport fiasco cost £13m, with a £16,000 bill for umbrellas plus 500 spoilt holidays, By Ian Burrell, Home Affairs Correspondent, https://www.independent.co.uk/travel/news-and-advice/passport-fiasco-cost-pound13m-with-a-pound16000-bill-for-umbrellas-plus-500-spoilt-holidays-739213.html

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