This week, a colleague and I were asked to provide an hour overview of change management including what it is and how it can create value for an organization. Here's how we structured our presentation:
What is Change Management?
Change Management is a term that has many definitions and is used in many ways. Simply, it's how you enable people to move from how they work now to how they need to work to achieve better results. Prosci's definition says it best.
How does Change Management Enable Business Results?
There are three main ways that change support increases the success of an organizational change:
- Speed of adoption: How quickly people take on new approaches (minimizing resistance)
- Utilization: The percentage of people using them (40 percent is the tipping point)
- Productivity: Performance created by using them (and not reverting back to old ways of working)
There is a lot of evidence supporting change management's value to an organization. Two studies are cited the most: A Towers Watson Change and Communication ROI study concluded that companies highly effective at change management are three-and-a-half times more likely to financially outperform their industry peers and a McKinsey study estimated the return on investment of a big change project is 143 percent when an excellent change program was used and 35 percent when there was a poor or no program.
Comparing Unsupported and Supported Change Projects
Ehraman's comment about Murphy's Law holds true for organizational change: "Things get worse before they get better." As soon as change is announced, instability and risk are introduced. As people speculate about what the change means for them, distraction increases and productivity decreases. "Maybe we shouldn't continue this initiative if everything will soon change," I have heard many employees say. If not proactively managed, people become confused, fearful, competitive and lose focus.
When the change is implemented, productivity dips as people get accustomed to new roles, processes and behaviours. The objective of Change Management is to minimize the duration and depth of the productivity dip during the transition period and accelerate performance through communication, ownership and support.
Why Change Initiatives Fail
Most change initiatives do not fully deliver their promised benefits, nor do they meet their timelines and budget. Multiple studies—McKinsey, Bain, IBM, Towers Watson, Panorama—have estimated that between 65 to 75 percent of projects are not successful.
Understanding why these projects fail is a key input into creating an effective change management plan. The top two reasons are:
- Lack of visible and active executive sponsorship
- Failure to anticipate and effectively manage cultural change
How to Manage Change so it is Successfully Adopted
The last topic is how to manage change successfully. This includes how to plan, manage and reinforce the change. Although every change has its circumstances, there are approaches, practices and tools that work on all of them. Developing the plan involves selecting the ones that best enable people to move from how they work now to how they need to work to achieve better results.
Throughout the presentation we shared stories about projects we had worked on. Interestingly, everyone had experienced similar situations. It struck me that most people are well-experienced in change—they have seen both good and bad examples of how to adopt change. Harvesting that knowledge through active participation in the change is another way of demonstrating how change management can create value for an organization.