Selecting key performance indicators (KPIs) continues to be a hot topic for organizational initiatives, from learning & development to large scale transformations: how do you measure the benefits of this type of investment?
There are many ways to do this incorrectly, such as measuring things that:
- aren't directly connected to the initiative, e.g. an office relocation measured by website traffic levels;
- are influenced by multiple factors, e.g. leadership training measured by net profit gains;
- can't be measured with data, e.g. goodwill;
- leaders do not care about;
- no one is responsible for measuring;
- are not reviewed with leaders after they are measured; or
- claim to calculate return on investment (ROI) without stating how.
Measuring change in this way is challenging, if not impossible, because the numbers are typically based on subjective estimates. For example, I heard someone proclaim that sales training resulted in 25 percent of his company's annual sales increase. Based on what? Usually these estimates are guesses based on impressions, or wishful thinking, versus facts, which negates the significance and accuracy they are intended to establish.
Here are some suggestions on how to measure change management success:
- Set expectations that change management (or any organizational initiative) is a contributor to hard results, not the only contributor.
- Pick a few strong KPIs versus a long list of them―it focuses the evaluation exercise and reduces resource requirements.
- Focus on the metrics that leaders value―others may help you but they will be viewed by the organization as irrelevant.
- Gain agreement on what data will be tracked by whom at the beginning of an initiative―the data and the resources to collect it may not exist.
- Include tracking responsibilities in people's goals―it will increase the likelihood they will be tracked well and people will be rewarded for doing so.
- Be clear on how long KPIs will be measured―most benefits are realized months or a year past implementation.
- Gain leaders' commitment to review results for the duration―what gets reviewed by leaders gets measured.
- Gather anecdotal feedback from people who are working with the changes―verbatim comments help describe benefits and lessons learned.
- Use tracked results to support business cases for future initiatives―this is often a missed opportunity.
- Communicate results to the entire business―it increases engagement and invites people to celebrate wins and learn from mistakes.
Great blog!!! It is very important post about Change management which you have mentioned. Thanks for sharing us. Change Management Training Program In IndiaReplyDelete
Thank you Eshan. I am delighted you found my post helpful.ReplyDelete
Thanks for sharing wonderful article,.ReplyDelete
When you say KPIs, are you referring to business KPIs? Or change management KPIs? If change management, I'm interested in knowing what KPIs you typically measure and how you measure them.ReplyDelete
Hello Mrs Wallace. Change Management KPIs are a subset of the business KPIs that the Leadership Team members (or sponsor of the change) routinely follow. With the help of the project team, they decide which ones will accurately measure the initiative's impact on performance.ReplyDelete
Change Management KPIs are defined at the beginning of the initiative and reviewed by the leadership team throughout (and after) the project.
The success or failure of an organization depends on how effective the management is. The management team of a company is responsible for propelling the future growth in the right direction. It also responsible for administering and controlling the business activities and accounting for the results. An ineffective management at the top results in failure of the company. Such is the importance of management.ReplyDelete
Hi Shadhin, thank you for your comment. An effective management team is essential for sustainable future growth.ReplyDelete
Hi Phil, for a business that for the most part lacks a change management strategy, how do you quantify the benefits of implementing such a strategy to seek buy in?ReplyDelete
Hi Luis, thank you for your question. There are two ways to approach quantifying benefits of a change management strategy: stating the benefits that similar companies have gained and quantifying the costs incurred by your organization from not having one. The latter approach is far more effective because leaders have context for the data (I was there) and the costs are easily validated. For example, "since we didn't have a change management strategy, the new customer management system was delayed by three months, which resulted in $100,000 supplier cost overrun. Also, two of our major customers used the disrupted customer support they experienced to negotiate better annual contracts, which cost $300,000 in revenue and $30,000 in profit. we could have lost the customers. If we had, the cost of a new customer acquisition is $25,000."Delete
Another example is "since we didn't have a change management strategy, we lost two key directors when the merger was announced. Cost of rehiring these specialists was $50,000 and six months lost productivity -- their billable time for six months was $100,000 and we didn't have the capabilities to deliver this work. Also, their departure caused some customers to hold off on orders. Year-to-year sales dropped by $150,000. We only made up $75,000 later in the year (we lost $75,000 in sales). This scenario is a real one that happened to a business last year.
Luis, I hope my suggestions are of help. All the best.