Calculating the value of change management is a challenge for executives and leaders who need to quantify their investments in this area. How do they know they are getting a true return on investment? Even some of the largest change teams, where there are high levels of change maturity and awareness, are constantly scrutinised to provide tangible visibility and metrics.
The greatest fear is to invest in key initiatives that do not provide the expected benefits. This could be a $1B enterprise-wide Transformation program where the new structure and processes are not understood or adopted, or could be a $1M Technology project where staff then do not use the newly implemented system.
What is the ‘opportunity cost’ of not getting it right, and not getting it right the very first time? There is obviously a huge financial saving to an organisation when they do get it right, and that financial number will depend on the scale of the initiative.
Success over Failure
In my last article titled Strategy Execution Trends for 2017, I summarised the current top trends that executives are driving to improve organisational performance and execute strategy ‘better’. A key trend was the investment in change management:
‘Taking a proactive and integrated change management approach to business transformation and project delivery is providing savings and an increased return on investment (ROI). Change management effort and output is being quantified by measurement of these savings, and also the ‘opportunity cost’ of failed delivery directly resulting from a lack of change management investment.’
Change management expertise is critical to the success of organisational programs, projects, and initiatives. Investment in change management has increased as a direct result of executive acceptance that this is now proven and can be evidenced. Change management expertise provides a higher likelihood of change adoption and benefits realisation.
Measuring Change Management
Change management has in the past been measured through soft or qualifiable methods and key indicators rather than quantifiable methods and hard numbers. Change management is not a one-size-fits-all approach and can be scaled to fit different organisations. There is also not one standard benchmark formula that provides a hard value measurement on Change Management.
Typically the measurement has been linked to key outcomes. For example: a project was delivered on time and within budget, 10 key strategic benefits were realised, productivity increased by 20%, there was an 85% employee uptake, project waste or re-work was reduced by $500,000.
Some industry approaches to measuring change management include:
- Measuring the productivity of the workforce before and after a change was implemented.
- Measuring progress and adoption rates.
- Surveying engagement levels.
- Developing tools that assess the effectiveness of specific change management activities and measure the outcome of a change initiative.
- Building scorecards for change and creating a set of metrics to gauge effectiveness.
- Quantitative measurement linked to reaching key goals.
According to Prosci – the world’s leading change management research company:
‘The top trend identified in our global benchmarking studies was a greater recognition of the value of change management.’
‘A discipline focused on enabling and encouraging employees to embrace, adopt and utilise change required by a project or initiative will directly contribute to higher return on organisational investment through faster adoption, greater utilisation and higher proficiency. Change management directly contributes to ROI.’
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