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How to prove the value of change management

By November 19, 2018Change Initiatives

Thanks to the growing frequency and magnitude of organizational changes the change management profession have been undergoing growth.  However, some organizations are still struggling with understanding the value of change management.  Subsequently, some change practitioners are still challenged to prove ‘their worth’.

Those working in the projects organization will be familiar with the scenario of being involved towards later stage of project delivery when things are starting to go wrong, or when it may be too late to put in effective change interventions.  For those working within business units, common experiences may be difficulty influencing stakeholders on the importance of change management.  Senior stakeholders focused on top line and bottom line challenges may not be convinced of the value that change tactics may bring.  With the focus of senior leaders to meet financial goals and other ‘tangible’ business measures, change management practices may often be seen as a nice to have rather than a must-have.

What is a change practitioner to do in these situations?

ROI approach

One approach to proving the value is to use the return of investment calculation.  In this approach, the dollars spent on change management is used, compared to the expected project benefits.  Within this, it proportions the part of the benefits that are dependent on adoption and usage.  For a great example refer here.

Whilst this is a good way to examine the return on investment, the problem is that the focus is on a project context.  It does not take into consideration the value of change management from an overall business capability improvement perspective.  It also does not call out the tangible and measurable parts of change management in adding business value.

Many organizations only realize the value of change management with experience of failed change attempts, and from this start to realize the risk of not having effective change management.

 

Here are 2 other ways to tangibly prove the value of change management

1) Planning and sequencing benefits

With quantitative data of change impacts on the business, this allows the change practitioner to work with the organization to better plan for change roll out.  With one view of change impacts across different parts of the business, it is clearer to see when, what and how change is happening.

This data enables the identification of potential risks of having too much change in the plan.  With historical data it is possible to see what happened to business performance last time it experienced a particular level of change.  With this analysis, better sequencing and prioritization based on change impact may be made.  It is important to call out that this process requires taking into account a range of business factors and not just change data.  Critical factors to take into consideration include resourcing, customer or work volumes, and business performance indicators such as customer satisfaction scores, service response times, sales volume, etc.

It is easy to collect data on the negative impacts of having too much change on the business from these business indicators compared with other times where there is less change volume.  For example, the business could have suffered negative work performance as a result of change magnitude that is not optimal.  Anecdotally managers may understand the impact of having too much change on the business.  However, the collective totality of all the business indicators can paint a convincing picture of what happens when effective change planning is absent.

2) Impacts of change on business performance

In previous examples, we’ve illustrated the impacts of too much change. For example, regulatory changes could mandate additional processes and customer communication content that could slow down service provision.  However, sometimes the impact of change can also be positive (assuming there isn’t an overwhelming amount of change).  For example, implementing technology automation and improved user interface on systems can improve user performance and customer satisfaction.

Correlations may be made between quantitative change impact data and business performance indicators.  With a forward view of change impact data, it is then possible to predict the impact on business indicators.  This is possibly the ultimate in proving the worth of change management.  Senior business stakeholders will absolutely pay attention when the clear link between change and business performance is put on the table.

The same can also be said for change impacts on customers.  With the right data, the change practitioner can provide a definitive analysis of what are the changes impacting a segment of customers at any given time, whether there could be too many changes, and whether the changes may be perceived as having positive or negative impacts.  An increasing number of organizations are jumping on the bandwagon of customer centricity and customer experience.  This is another way to prove the value of change management.

We at The Change Compass are working on incorporating machine learning and artificial intelligence so that change impact data may be used to predict business performance.  This means that you are able to inform the business the likely scenario of business performance trends given the forecasted picture of changes.  We anticipate the launch of this portion of the tool in early 2019.  Stay tuned.

 

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Join the discussion One Comment

  • Eduardo Muniz says:

    Euan Wu. Great article thanks. .
    Certainly KPIS and Readiness Assessment Results in Planning phase will provide you the means to tangibly measured results of Change Management.

    Measuring Progress during and at the end of deployment will tell you if Change is being implemented as expected (KPIS/Readiness Assessment Reaults) and if it is still going in the right direction to become sustainable

    Thank you for sharing

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