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September 2010
The ROI of Change Management
By Kathleen Kraft

     Dilbert, the uncannily accurate business cartoon, may have said it best. The scene is a meeting where a small group of employees are talking about a change in the organization. The woman notes that she feels the urge to get sick. “That’s what change management feels like!” says the leader.

     Change is a part of our lives. Every day we make thousands of small changes. And every day businesses make changes: reorganizations, launching new products, changing current products, changing processes, moving to new buildings and locations.

     So what’s the big deal about change? Why is it so hard and why does it affect us so much? Well, change is about people and emotions. And those are typically “unbusiness-like” areas relegated to HR.

     Many a CEO has mistakenly brushed change management off as warm and fuzzy HR stuff. Change Management (the planning and managing of people change within an organization) is actually the critical link to successful business changes. Because really, organizations don’t change; people change.

 

 

Protecting Business Assets

     Since people are one of an organization’s most expensive and most valuable assets, it’s a smart business move to protect those assets by planning and managing changes with a structured approach. For a business that means:

• Dedicating one or more experienced and trained Change Management professionals to the project; better yet, create a permanent Change Management office

• Identifying and analyzing the people and processes impacted by the change

• Creating plans and actions to drive a successful implementation of the change (communications, coaching, training, leadership development)

• Aligning the change within the organization to ensure long term sustainability

The overall objective of Change Management is to reduce business risk, increase stakeholder acceptance and support successful integration of a change by all levels of stakeholders and business areas.

 

ROI: What’s Holding Businesses Back?

     So if Change Management makes such good sense, why isn’t everyone doing it? Typically, organizations still look at Change Management as a “nice to have” extra which is funded after other critical activities. It takes time and money to include Change Management in your project.

     In reality, effective Change Management has a direct correlation to the bottom line. Change Management programs support organizational change in one or more of the following manners:

• How fast: the speed of change adoption by employees

     »Increases the ability for companies to achieve improved cash flow from projected cost savings and/or new revenue

• How many: the number of employees adopting the changes

     »How many employees “opt out” of a change impacts an organization’s ability to achieve projected revenue goals

• How effective: the proficiency of employees at the changes

     »Proficiency in a new skill set or changed process increases efficiency and has a positive increase on revenue and cost levels

•How much: reducing the impact of failure

     »As Change Management reduces implementation timelines, organizations increase cash flow by spending less on non-compliance costs, dual system support, training and service

     For example, many utility organizations were recently required to comply with regulations limiting the work hours of their employees in critical business units, including nuclear plants. Compliance meant educating employees, including managers and timekeepers, as well as the actual workers.

     In addition, new timekeeping systems had to be deployed and many different kinds of employees had to be educated on using the system, complying with the regulations and compliance reporting. Non-compliance was a huge risk for the organization with potential fines of hundreds of thousands of dollars and the potential of shutting down operations until compliance could be achieve successfully.

     Rather than just create a technology project to buy and implement a new system, this utility chose to develop a project team with Change Management resources from the beginning of the project. The team developed a comprehensive Change Management plan and engaged Change Management specialists to work with plant change leads and timekeepers to develop a training and communications program to educate the end users and timekeepers.

     The results were measured in a 2010 employee survey which ranked the following as key project success factors in order of importance: 97 percent of the impacted employees understood the expectations in managing work hour compliance and 96 percent understood the consequences of non-compliance. In other words, employees clearly understood what was in it for them, why and what they needed to do.

     Depending upon your business objectives, Change Management programs can be a preventative mechanism, increase projected new revenues or help an organization achieve success factors such as Key Performance Indicators (KPI.)

     Change does not need to feel bad; Change Management programs can enable change to improve an organization and their most valuable asset: people.

     Content contributed by NouvEON, a management consulting firm. For a white paper on Change Management in regulated markets, visit www.nouveon.com/CMRegulatedMarkets. To contact NouvEON’s Change Management expert, e-mail her at kkraft@nouveon.com.

Senior Managing Consultant and Organizational Change Management Knowledge Domain Leader for the U.S. IT Services Division.
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