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:
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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.
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- 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.
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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.
- ROI of Change Management Model
- 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. |
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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.
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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.
Tools for applying change management:
- Change
management certification ($2100) - 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
Email this page to a friend
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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