How Change Management drives business results

How Change Management Drives Business Results

For 30 years, countless global studies have told us what we see every day - organisations have a high failure rate with change and a major cause is failure to effectively manage the people side of change. And that active and visible Sponsorship is the number one success factor for change.

Here’s the good news. A growing number of organisations globally have realised that Change Management is a capability they can - and must - build to survive and thrive.

Building Change Management capability is not free. It requires an investment of funds, time and resources, just like building project management or any other capability.

The return on investment is consistent benefit realisation from BAU and project changes - instead of unpredictable “hits and misses”.

Visions, strategies, transformations, business plans, restructures, mergers successfully implemented. Delighted Boards of Directors and Ministers. Engaged employees. Less change fatigue and resistance. And a workforce that is change ready, willing and able for what the future brings.

Think of Change Management as benefits realisation insurance - not a project cost.

And the big pay off is that change-agility is potentially a source of competitive advantage - a rare find in the 21st century - hard for competitors to imitate. All outsiders can see is change after change successfully implemented and the financial, customer and employee scoreboards pointing up.

The purpose of organisational change is to improve performance.

A percentage of that improvement comes from simply installing the solution - for example, go-live with a new IT system or work processes or relocating to new premises.

But a percentage of the expected benefits depends on people changing how they do their jobs - adopting and using the new ways of working. Prosci’s CMROI model calls this the “adoption contribution” of the project: the percentage of a project benefits that depend on people changing how they do their jobs.

For some projects with a major behavioural change component, the “adoption contribution” of benefits is typically 80% - 100%. In other words, if people DON’T adopt and use the solution, the project will achieve little or no benefit.

The purpose of Change Management is to help people adopt the change in how they do their jobs, which leads to the organisation capturing the people-dependent portion of the project’s Return on Investment.

Think about a change you are familiar with. What do you estimate as the “adoption contribution” of the benefits? Does this match the level of investment in the Change Management component of the project?

Numerous global benchmarking studies have clearly demonstrated that effective Change Management is positively correlated with achieving project success, benefits and outcomes.

  • Projects with effective Change Management are 6 times more likely to meet objectives than those with poor Change Management. They also more likely to stay on schedule and on budget. Prosci 2016 Best Practices in Change Management Report.
  • Companies that achieved the highest returns from change projects also had the best Change Management capabilities. Source: Helping Employees Embrace Change by Jennifer A. LaClair and Ravi P. Rao, McKinsey Quarterly November 2002.
  • The top 20% of organisations identified as having excellent Change Management capabilities, reported at least 75% of their projects are a complete success. Source: Making Change Work… While the Work Keeps Changing. IBM GlobaL Business Services Executive Report, August 2014.
  • Organisations reporting higher-than-average success rates for projects also report higher-than-average adoption of organisational Change Management practices. PMI Pulse of the Profession Report, 2012.