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Why change management?

For many change practitioners, there is no doubt that change management must be used on projects that impact how people do their jobs. A great solution and a well managed project are not enough to ensure success. Written another way:

    Myth:  A great solution + Effective project management = Project success

The missing piece of the equation above is change management. Managing the human side of change is key to meeting objectives. Although the answer may be obvious to you, you might be tasked with answering "why change management?" for some people in your organization. This tutorial arms you with approaches and arguments to make the case for "why change management" in your organization.


Why change management?

Below is a table that outlines some of the most common implications of either effective or ineffective change management. These come from study participants, client experiences and input from hundreds of training participants. This is an interactive tutorial, so you can add your comments to the list based on your own experience (we will update the tables accordingly). Check back in a few days to see what others in the change management community have to say in answering these two critical questions:


What can happen if change is NOT managed?

What can happen if change is EFFECTIVELY managed?

  • Productivity declines as people become more consumed with the change being introduced.
  • Passive resistance festers.
  • Active resistance emerges and sabotages the change.
  • Valued employees leave the organization, a very costly proposition in terms of the lost contribution and the cost to replace them.
  • Employees become disinterested in the current state and the future state.
  • Employees begin arguing about change and the direction of the company.
  • People are left to wonder why the change is happening.
  • More people begin taking sick days or not showing up for work.
  • People find work-arounds to avoid implementing the new way of doing things.
  • Employees revert back to the old way of doing things.
  • Changes are not fully implemented.
  • Changes are scrapped and cancelled due to the lack of support throughout the organization.
  • Divides are created in the organization between 'us' and 'them'.
  • The organization builds a history of failed and painful changes.
  • Many types of risk are created - risk to the project, to the organization, to the employees involved and to the individuals supporting or chartering the change.
  • Employees have a solid understanding of why change is happening.
  • Employees engage in both the solution and the change.
  • Training is used to build knowledge after employees have made the personal decision to support the change.
  • Resistance is identified and dealt with early in the process.
  • Senior leaders demonstrate their own and the organization's commitment to the change.
  • Communications are segmented and customized for different audiences, answering the questions that they care about.
  • Momentum is built throughout different areas and levels within the organization.
  • Changes are less painful to the organization and to the employees.
  • A coalition of support among senior leaders and managers creates momentum throughout the organization.
  • Probability of meeting project objectives is increased.
  • The organization begins to build a history of successful change, creating a better 'backdrop' for the next change initiative.


Feedback from the change management community: Add your comments

What can happen if change is NOT managed?

What can happen if change is EFFECTIVELY managed?

"Failure to meet financial objectives of the project and to failure to realize non-financial business benefits (e.g. best practice processes, full utilization of IT capability being delivered, internal operational excellence)." - Gail

"A context is created for future change failure. People may stop believing in the success of change projects." - Koen

"The change results fail to be sustainable in the absence of change management." - Debasis

"It will become very difficult for anyone to sign up for the next process improvement project." - Stephen

"Sensitivity is created to change which results in a cycle of increased resistance to smaller and smaller changes." - Amy

"Failure to understand the 'purpose' will definitely cause resistance and lack of commitment." - Ashiru

"If change is not well managed an organisation will loose its goodwill, because as production decline due to employee poor performance customers' need may not be met. Thus dissatisfied customers will move to the competitors." - Lawrence

"Employees are 'dug in' and accustomed to their way." - Joe

"Cut off teams or "cliques" are formed between employees thus creating divisions within the organization." - Joe

"There will be a lack of confidence in management's capabilities and decisions that may lead non-compliance and dis-loyalty among employees." - Ahmed

"When people do not understand why a change is required, they may accept it, but they do not make a personal decision to support it. As a result, some change may be realized, however the full potential of the change, including feedback on how to leverage the change for further positive changes is not likely to be realized." - Fern

"If change is not properly managed and sponsored well by the senior management level; then a lot of resources waste is a resulting in a forced change at a latter stage which would be too costly then." - Anwar


Share your thoughts

"I think something about the positive aspect of a process being used would be a plus." - Frank

"Subject matter experts and those with the ability to influence are better able to execute and not be consumed with concerns about resistance." - Michelle

"As the process of change progresses and the anticipated results start showing up, the employees' interest and the level of motivation rises, which further speeds up the process of change." - Shyam

"Increases the odds of successfully developing the continuous improvement component of the various quality certifications. Lurkers on the sidelines will be more inclined to get on the next working team. Sponsors will be more than happy to lend their support to an initiative that is likely to succeed. Resources are more apt to feel appreciated. People will want to come to work." - Stephen

"Once change is properly managed, productivity will boom and organization's culture standard will also boom up." - Ahmed

"The practice of change management brings the certainty that the enterprise cares about its personnel, building better perception of company's initiatives. Communication strategy is a key issue to achieve this." - Enrique

"A change that achieved quick wins and sustained results is more likely to enjoy continued executive sponsorship and fresh investment of resources from senior management" - Ho Pui Chan

"Leadership commitment, participation and interaction to the change process will motivate employees to support the process. There won't be 'us' and 'them' situation." - Kele

"The earlier business calls on its valuable resources to participate in the change process; the higher the probability of success in change management." - Anwar


Share your thoughts


What about the financial implications?

The implications listed above drive at the qualitative justification for using change management - the impacts that you can see and feel as you walk around a changing organization. However, some in your organization - senior leaders and those who are financially minded - may be looking for hard numbers justify the use of change management. Below are two approaches to illustrate the financial impact of managing change effectively.

  1. ROI of Change Management Model
  2. Correlation of change management and meeting objectives


1. ROI of Change Management Model

Prosci's ROI of Change Management Model was presented in a previous tutorial. The model shows the three human factors that limit or contribute to the ROI a project can realize:
  • Speed of adoption - 'how quickly' do people being doing their job the new way, whether it is a new process, system, tool or job role
  • Ultimate utilization - 'how many' of the entire group participate in the change
  • Proficiency - 'how effective' are each and every employee at doing their job the new way

The ROI of Change Management tutorial provides a complete description of the model as well as some exercises you can complete to apply the model to changes you are working on.

The impact of the three factors can be shows in a graph of a project's expected cash flow. The images on the right show how the three factors influence a projected cash flow.

  • The top image shows where the three factors appear in a cash flow diagram. Looking at an expected cash flow, the speed of adoption forms the slope of the graph while proficiency and utilization impact the 'height of the lines', or the expected benefit.
  • The bottom image shows three different cash flow projections - an expected cash flow (purple), a cash flow when change is poorly managed (red) and a cash flow when change is well managed (green).

You can calculate the implication of change management by looking at the cumulative net cash flows in the three scenarios. Simple scenario analysis on your own cash flow projections can show the dollars you are putting at risk by not managing the people side of change.

Even if you are not necessarily financially minded, our experience shows that these graphs have tremendous impact on senior leaders and project members who think in terms of financials and cash flow. Email a Prosci analyst if you would like to discuss the graphs in more detail.



2. Correlation of change management and project success

There are numerous studies that demonstrate the correlation between effective change management and meeting project objectives. A McKinsey study published in 2002 looked at 40 major projects. The study focused on the expected ROI, the realized ROI and the effectiveness of change management. The results show that projects that effectively managed change realized well over 100% of the ROI that was expected, while projects that did not effectively manage change saw ROI at less than 50% of what was expected. Find out more in the McKinsey Quarterly article "Helping Employees Embrace Change" by LaClair and Rao.

Prosci has also examined benchmarking data and found a strong correlation between change management effectiveness and meeting project objectives. The graph below shows that over 90% of the projects with very effective or extremely effective change management achieved objectives, while only slightly over 10% of the projects with ineffective change management met objectives.


Why change management now?

Change management as a discipline has grown tremendously over the last five years. Between the 2003 benchmarking study and the 2005 benchmarking study, the percentage of participants using a structured approach to manage change grew from 34% to 55%. Below are several reasons change management has become so important to organizations in recent years.

  • More and frequent changes - Change is occurring at an incredible pace in organizations today. The sheer quantity of changes is increasing, and changes are happening more frequently and faster than ever before. With such large amounts of change happening, organizations need a better and more structured way to manage the individuals in the organization impacted by all of these changes.

  • Value system of empowerment - Over the last fifty years, value systems have shifted in many organizations. Old values of control and predictability have been replaced by new values to push decision making, authority and responsibility down into the organization. While this shift has delivered many benefits, it has also made top-down changes more difficult and increased the resistance they face. Organizations with empowered workforces need to manage the human side of change more effectively than they did in the very hierarchical structure of the past.

  • Competitive advantage - Many sources of competitive advantage have eroded as information moves more quickly and across the globe in seconds. In upcoming years, speed and agility will be a central differentiator in the market place. And organizations that do not use change management cannot build their internal competency to quickly and effectively implement change. Strong change management competencies within an organization are a key source of competitive advantage in coming years.



Share your experiences and thoughts

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Want to learn more? Become certified in change management by attending Prosci's 3-day training program in the Colorado Rocky Mountains. If you are looking for a reference guide, Prosci has several products you can use to apply a structured approach to managing change:

Email a Prosci analyst or call 970-203-9332 for more information.


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Ask a Prosci analyst - find out about best practices and how you can use the checklist in your organization
Order online - secure server Order the Change Management Toolkit or Change Management Pilot for complete change management assessments, templates, guidelines and plans



Tools for applying change management:

  • Change management certification ($2800)- 3-day program where you bring a project you are working on and apply all of the assessments and tools as you learn them - taught by former Fortune 500 executives at locations across the U.S.
  • Best Practices in Change Management benchmarking report ($289) - journal-style report with lessons learned and best practices from 650 participants, presented in an easy-to-use format - reads as a checklist of what to do and what not to do
  • Change Management Toolkit ($389) - hardcopy 3-ring binder presenting Prosci's change management methodology, includes templates, checklists and assessments for managing the people side of change (includes USB drive)
  • Change Management Guide for Managers and Supervisors ($189) - tools to help supervisors engage and coach their direct reports through change (includes 4 copies of the Employee's Survival Guide)
  • Change Management Pilot ($449) - online tool including Prosci's change management methodology, eLearning modules and downloadable templates, assessments, presentations and checklists
  • Change Management Pilot Professional ($559) - the content of the Change Management Pilot plus additional benchmarking data and an online version of the Change Management Guide for Managers and Supervisors
  • Change Management: the people side of change ($18.95) - a primer for anyone involved in organizational change that addresses why manage change, individual change management and organizational change management
  • Employee's Survival Guide to Change (14.95) - a handbook to help employees survive and thrive during change, answers frequently asked questions and empowers employees to take charge of change


*** Prosci also offers leadership packages - groupings of products at discounts that offer you some of the most helpful and common combinations of Prosci change management resources


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Email a Prosci analyst or call 970-203-9332 with questions about the methodology, its application, or finding the right resources to support your change management activities.




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