03 Apr Ant Conversation – Change Management Return on Investment
This report documents the information gathered at the Afro Ant Conversation held on the 3rd of April 2014 on the topic of Change Management Return on Investment (ROI). The conversation included 24 professionals who work in the field of Change Management or work closely with Change Managers.
Change management is a framework for managing the effect of new business processes, systems, structures or cultural changes to achieve a required business outcome. At a highlevel, the ultimate goal of organisational change management is to assist an organisation in realising the benefits of the system (in the broad sense of the word), being changed. For the purpose of this report, the focus of discussion is on directed change*.
As directed change is implemented within constraints, decisions need to be made on what the most important activities are for supporting project success and realising benefits. It is important that the underlying objectives and scope of the change are understood and what the expected benefits of the implementation are, in order to be able to determine whether we are doing the right things and doing them well. In addition, a mechanism for measuring the effectiveness is needed.
What is directed change?
Directed change is change precipitated by projects: it is the change in business and operational practices required to ensure the sustained realisation of project outcomes. It is implemented within constraints (i.e. time or monetary constraints) as these constraints are characteristic of projects (as opposed to the ongoing development of an organisation).
In this report we will highlight the benefits of effective change management as well as some of the typical outcomes that can occur if there is insufficient or no change management, or if change management is not implemented properly. Each section outlines some of the key highlights identified during the Ant Conversation.
Benefits of Implementing Change Management
A structured approach to change
One of the starting points for a change management team is to work with the project team to plan the change efforts. In implementing a structured approach, there will be planned, rather than ad hoc, change delivery and it will allow for more proactive management of issues. As highlighted in the introduction, it is important to determine what the most essential change activities are and by planning for these activities, the individual responsible for managing the change would be able to ensure that the necessary activities had taken place. This would improve the likelihood of the change being successful.
Benefit realisation / Alignment to business goals
As mentioned previously, change management assists with managing the transition, so that the required benefits or outcomes can be achieved for the business. Many benefits (e.g. increased efficiency) are reliant on the adoption of the new way of working by the people, therefore if the change is not managed effectively, many of the benefits may not be realised.
Related to the structured approach to change outlined above, is the ability to provide clear and consistent communication so that individuals involved in, or impacted by, the change know what they need to know, when they need to know and are able to work towards adopting the change.
Communication also refers to the opening of channels between the project team and the stakeholders impacted, so that areas of concern, risks, and issues are identified earlier and the project team has a more accurate view of the progress of the implementation. Open communication channels assist in removing the assumption that everything is proceeding as planned.
- Supports the growth of the vocabulary required in the new system;
- Simplifies the complexity of the change;
- Provides clarity and shared understanding;
- Positions the impacts;
- Allows for a shift in perception.
Formal communication goes a long way to provide a view of what is actually happening, rather than what is allegedly happening.
One of the ways to minimise confusion and to maximise performance both during and after a project is to ensure that there is role clarity. Change managers work with the project team and the leadership team to confirm roles, responsibilities and guidelines so that stakeholders understand what is expected of them, and when.
Sustainable change (Making change “stick”)
When an organisation changes something, they do so because there is a desired future state that is different to their current state. Many implementations go through all the motions of implementing a new way of being and fall short at project conclusion because the change doesn’t stick. Structured management of change supports working with stakeholders to make sure that the change is sustainable and that it lasts.
One of the key elements of this is the transition of ownership from the project team to the stakeholders, including knowledge transfer and equipping them with any skills that they may need to be able to maintain the change going forward.
For benefits to betruly realised the change needs to “stick”.
Stakeholder involvement and impacts
Change is not something that should be done to people, but rather it is something that should be done with people. By ensuring that there is a component of the project team focussing on the people, it gives the people being impacted a voice and makes them part of the change initiative.
Related to the need for effective communication highlighted above, change management assists in simplifying the change so that stakeholders understand what needs to be changed, and how. This is also related to the adoption of the new way of being, which is explained below. If stakeholders understand where they need to be involved and how this change will impact them, it affords them the opportunity to prepare for the change.
Deciding on or announcing a change is not the same as implementing the change.
In addition, stakeholder buy-in and leadership engagement in driving the change has been identified as a common driver for project success.
Change Management improves stakeholder engagement, which also assists in keeping up morale. By opening the channels of engagement and communication, the individuals impacted by the change have the space to raise issues and identify gaps earlier on, which assists with achieving a competent and confident user group.
By allowing people to be part of the change, rather than a fall-out of the change, it improves active and higher quality participation and commitment.
The success of any implementation is reliant on the commitment of the people leading the change. Change Management focuses on ensuring that the change leaders are enabled and empowered to lead, and that they have an aligned vision for the future and are working towards a common goal. This is also ties in with sustainability of change, discussed above, as the leaders need to drive the change in the future.
Managing the change brings about faster, more visible adoption of the new way of working and user proficiency in this new way of working.
A well-managed change initiative is one that is a non-event in the lives of stakeholders.
Impact on productivity
Change Management aims to minimise the impact on stakeholders and the disruption to daily operations. The benefit of implementing change management is that there is less “noise” and individuals can focus on the tasks that are essential, thereby reducing productivity loss.
Negative effects of insufficient Change Management
Employee retention levels may drop
During times of change, especially when the people component is being neglected, this may bring about the loss of key staff. If something is being changed in an organisation and the people are not being heard, or equipped to manage the change, people may choose to move onto another environment where they are heard or have more clarity on the ways of working.
When changes are being implemented, you need to ensure you are not losing all your best employees.
Insufficient focus on managing the impact of the change on people
The objective of Change management is to minimise the impacts of a project to support the realisation of benefits and to embed the change. In addressing these impacts the people aspects of the change are managed. Without sufficient change management, this focus on people is often neglected and therefore all benefits relating to or reliant on people will not be realised. This was outlined in the benefits of change above, but there are some specific negative effects that need to be outlined that can occur if change is not managed properly.
Risks may not be highlighted
One of the roles of a Change Manager is to highlight any risks that are identified, especially with regard to risks that would be caused by, or would impact on, people. Without this aspect in place, risks are not highlighted which leaves room for unpleasant or unexpected surprises.
Connected to the lack of risk management highlighted above, is the impact on project timelines. Not including change management and the people required to achieve benefits can result in project delays and loss of momentum. If issues arise that were not expected, it can result in time and money being wasted to address the issues as they arise, rather than mitigating them before the risks become issues.
Drop in customer service
If stakeholders who are going through a change are experiencing a productivity dip, inability to use the new system, or any other negative side effects of change – it will have an effect on the customers they deal with. This includes internal and external customers and can result in loss of customers and damage to an organisations’ reputation.
Increased resistance to change
One of the key negative effects that Change Management aims to address is resistance to change. It can be argued that resistance to change can be viewed as a positive identifier because people are engaging in some way, rather than ignoring or avoiding the change completely – however resistance needs to be managed or it can derail change initiatives. People who are not involved in the change process and are having change forced upon them, often show signs on active resistance and even anger. This is evident in:
- high levels of stress;
- unhappy teams;
- despondent employees (once again affecting performance);
- loss of trust and confidence.
Often just by engaging with employees and allowing them the space to raise and address concerns, can provide a platform for resolving their issues before they impact on project success. Following on from this, increased resistance may mean a greater likelihood of reduced adoption or adaption to change as outlined below.
Lower adoption or adaption to change
Change results in the need for people to adapt to the change or adopt new ways of working. Without managing the change properly there may be an increase in resistance and a greater likelihood of impacted staff not adopting a new system or way of working. Change Managers often play the role of a bridge between the solution and the users, and without this bridge there is often poor or no adoption. A key mistake that project teams make is assuming that stakeholders will embrace the new way of working, but often they fall back into old habits – thereby resulting in a post implementation decline and rendering the project less (or un-)successful.
Lack of ownership and shared vision
A project or change initiative is finite – it has an end date. This means that after the project completion, someone will need to own the change and ensure its sustainability going forward. During the course of the project it is essential that there is alignment and shared vision, with a clear picture of where we are going and why. When perceptions and visions aren’t aligned and there is no one taking ownership of the success of the implementation, the benefits will ultimately not be realised.
Negative impact on productivity
Productivity dips can be caused by a number of factors, such as lack of planning, duplication of effort, despondent employees, ill-equipped stakeholders, and business as usual vs. project responsibilities overlapping. By equipping the individuals with the knowledge, skills, and abilities they need to cope with the change, the dip in productivity (and potential resultant dip in morale) can be minimised.
Related to this is the issue of role uncertainty – which can negatively impact the individuals within the project team and the stakeholders involved in the project. When people don’t know what they are supposed to be doing, they can swing from either doing nothing or doing too much of the wrong thing – which wastes time and money.
Impact on future change initiatives
The success of an implementation can have a direct impact on the likelihood of another implementation succeeding, because individuals who have participated in a failed change are more likely to be disengaged or suffering from change fatigue or burnout. This essentially becomes a self-reinforcing cycle, where individuals don’t believe change will occur / work, and the change isn’t managed properly, so it doesn’t work, which reaffirms their beliefs.
Barriers to the Successful Implementation of Change
Some common barriers to the successful implementation of change, include the following:
- Lack of shared vision and understanding of what needs to be accomplished;
- Change fatigue;
- Esoteric change ideas;
- Lack of Leadership alignment or leadership support;
- Sustainability of the project;
- What is happening outside and in parallel to the change;
- Not enough understanding of how to measure the value of a benefit.
Measuring Return on Investment (ROI) of Change Management
One of the key points raised in this discussion is that the Return on Investment can only be measured in relative terms. This effectively means that the most accurate ways to measure Change Management ROI depend on each individual change situation. Therefore, the suggestions provided below are not a comprehensive list but rather a starting point of ideas for anyone looking to measure ROI.
With any measurement, it is impossible to show whether something has improved or worsened without a baseline to measure against. Therefore, for many of the tangible measures it is suggested that a measure be taken before the change so that you have something to compare against.
One of the concerns raised by the group was how it can be difficult to directly attribute improvements achieved to Change Management practices. We discussed the use of ‘signpost indicators’. If these changes occur then we are likely to achieve our overall outcomes. The most common indicators used by the group were assessments of adoption and engagement but some felt these were still rather subjective. It’s thus important that these engagement indicators evaluate changes in behaviours not just how people claim they ‘feel’ about the change.
Adoption / Usage rate
If your change project involves the implementation of a new or modified system, the success of the implementation can be assessed by evaluating the levels of adoption – i.e. how many people are using the new system or following the new process and to what degree. This could include:
- How quickly have people adapted or adopted?
- How widely is the new way of working being adopted?
- To what extent have people adapted?
- How much are people using the new system or process?
Customer service feedback
As outlined in a previous section, customer service can be impacted by a change. Ultimately, organisations would be aiming for an increase or improvement in customer service, so measuring customer satisfaction could be a way to measure the success of an implementation. Customer service levels could be measured before the change is initiated, after implementation and after some time has passed.
Assessing the productivity
Employee productivity could be measured before, during, and after the change to assess the impact on productivity or service levels. For example, employee A used to be able to process 3 invoices in 30 minutes before the implementation. During the implementation this was reduced to 3 invoices every hour, and now that the change period is over, this has improved to 3 invoices every 10 minutes.
Feedback from affected parties
Surveying stakeholders before, during, and after the implementation can provide insights into readiness for change, and feedback on the likelihood of success of the change.
Staff retention and sick rates
Compare the staff retention / attrition rates before, during, and after the implementation. If you pick up that more key staff are leaving during the implementation this may highlight an issue which needs to be addressed before it escalates. A certain amount of churn is part of the daily life of organisations, but increased churn and the loss of key individuals needs to be avoided.
The amount of sick leave people are taking is often a good indicator of levels of unhappiness in an organisation and a tangible measure that can be compared to another point in time.
Unsurprisingly, given the make-up of the audience in the room, there was not a single person who did not passionately believe in the value of change management and could give examples of how effective change management had made a real difference to the delivery of successful projects in their organisations and the return in project investment. That said – there remained concerns. Too many change professionals focus on the people stuff, the “fluffy” stuff. It’s not always clear where responsibilities lie and who is really accountable for what? How far does the change management role extend?
What is clear from the debates is that the benefits of Change Management and how this is demonstrated remains critical to the continued development of the Change Management profession.
We hope this debate has helped in formulating and clarifying ideas back in you business and look forward meeting you again at future Afro Ant discussions.
Appendix A: Format of the Ant Conversation
There were 4 tables of between 5 and 6 people. There were 3 rounds of formal questions for group discussion, with feedback time between the discussions. The following questions were asked:
- Part 1: List and prioritise the positive effects of implementing change management
- Part 2: What typically goes wrong when change is not applied?
- What indicators would you use to show the success of Change Management?