Change Management R.O.I.

We should shift our mindset from what we do to what we deliver. What we do is those activities that generate engagement. What we deliver is ROI and the ability to change as an organization”.

Tim Creasey, PROSCI’s Chief Innovation Officer.

Have you ever been challenged to justify Change Management value, either to senior leaders and/or project leaders? You certainly do. The most difficult part is that neither of you speak the same language (Creasy, 2014). Communication, coaching and training protocols are change managers’ daily bread. Benefit realization, financial outcomes, impact and risk management are primary concerns for senior leaders (Creasy, 2014; Creasy, PROSCI c). The same goes for project managers who usually emphasize project outcomes, on-time and on-budget delivery.

Solving the equation and driving engagement requires a shift in conversation (PROSCI b). It is first and foremost a matter of adding context to the definition of ROI (Creasy, 2014). In essence, CMROI is the % of project ROI that depends on adoption and usage of the solution. The more dependent a project’s benefits are on adoption and usage, i.e. on the people side of change, the higher the value of CM.

CMROI Calculator: starting the conversation.

Whatever it is that your organization is trying to achieve: relocation, technology installment, new process optimization, acquisition or merger, it should be made crystal clear. The problem boils down to defining the organizational benefits of the project and its specific objectives (Creasy, PROSCI c). Consider the case of a company implementing a new CRM software system (Customer Relationship Management). Organizational benefits range from increasing revenue and market shares to customer satisfaction issues, you name it. Objectives, on the other hand, are tangible and measurable outcomes leading to the aforementioned benefits. The new CRM is expected to first increase the participation rate in bids before boosting the bid rate by upping the quality of submitted proposals and finally driving the hit rate, i.e. the number of wins.

Gathering these data from senior leaders and project managers is the starting point to the CMROI analysis (PROSCI a). From there on, the conversion should revolve around quantifying how people dependent these objectives and benefits are (PROSCI b). The number of employees and locations impacted, the nature of the change itself, either disruptive or incremental, are significant elements to be factored in (PROSCI a).

In the case of the new CRM, we can ask to what extent its success depends on the people. It could well be as high as 70 to 80%. One pressing question for every salesman is “what’s in it for me”? Each of them will logically consider the extra administrative tasks to feed the new CRM and probably resist. Yet, with consistent efforts to catalyze the support of the people, transitioning does not have to be a rocky road to success.

Focal point: the null hypothesis.

Turning the previous question on its head, we can then ask “what if no one changes?” What if the implemented solution is ignored or rejected (Creasy, PROSCI c)? Because it challenges leaders and senior managers on the potential lack of adherence to the solution, such a scenario, also called the null hypothesis, greatly helps to shed light on the portion of benefits dependent on adoption and usage.

CMROI is calculated by breaking apart the expected benefits dependent on adoption and usage and those independent of the people. Strictly technical projects, i.e. increasing server storage vs. streamlining external communication practices, may get very high benefits straight from installment (Creasy, PROSCI c). Most projects, however, are highly dependent on how efficiently and diligently people change their routines and internalize the change. The figure below captures the rationale of CMROI and summarizes its main components.

Using the right language to convince leaders and managers of the value of CM is all it takes to get the project off to a great start. CMROI helps put the people-side contribution to change into perspective. CM value lies at the crossroads between the project outcomes and the rate/speed of adoption and proficiency of usage of the solution. Quantifying the dependency (PROSCI b) makes a compelling case for CM. So, be sure to reframe and tweak the conversation to get senior and project managers on board.

HOW TO INCREASE THE NET PROJECT BENEFIT: A STEP-BY-STEP-GUIDE.

Let’s go back to our CRM case. In order to increase the Net Project Benefit depending on adoption and usage, responses along the following lines are what you should expect from each and every person impacted by the change:

“I understand why I need to use the new CRM because I have understood the advantages of using it and the risks if we do not implement it. For me, it makes sense.” You have created ‘Awareness’.

“I have decided to use the new CRM because I have understood my personal interests in the utilization of the new CRM.” You have created ‘Desire’.

“I know how to use the new CRM thanks to efficient training.” You have created ‘Knowledge’. 

“I am able to use the new CRM because I have a performing computer and access to a cloud system allowing me to fill in data wherever I am. I can easily rely on specialists for any questions.” You have created ‘Ability’.

“I will continue to use the new CRM because what I was told regarding proficiency and accessibility related issues is now perfectly clear to me and because my managers have recognized my efforts to switch to the new CRM.” You have created ‘Reinforcement’.

Awareness Desire Knowledge Ability Reinforcement = ADKAR Change Management methodology.

*Results of PROSCi studies show that you have six times more chances of reaching your objectives if you implement an efficient Change Management strategy.  

​References.

PROSCI (a), ROI of Change Management [online] https://www.prosci.com/change-management/thought-leadership-library/roi-of-change-management

PROSCI (b), ROI of Change Management, Connecting to Project Benefits [online] https://www.prosci.com/change-management/thought-leadership-library/roi-of-change-management-connecting-to-project-benefits

Creasy, T & PROSCI (c), Five Questions to Ask to Get Buy In For Change Management [online] http://blog.prosci.com/blog/5-questions-to-ask-to-get-buy-in-for-change-management

Creasy (2014), Adoption and usage, the ROI of Change Management, PROSCI Conference Board 2014 [online] https://vimeo.com/100937395