Presentation on theme: "The case for change management"— Presentation transcript:
1 The case for change management Please readRight to use this content is governed by the licensing terms and conditions for this online tool. Reproduction and distribution are not permitted under a single-user license without express permission from Prosci. For permission to reproduce or distribute content, contact Prosci at All trademarks and copyright notices must be retained.
2 Agenda for presentation Connecting change mgmt to business resultsP-P-P-P exerciseStates of changeThe need for change managementQualitative argumentQuantitative argument
3 Connecting change management to business results P-P-P-P exercise
4 Connecting CM to business results P-P-P-P exercise Start with 4 columns
5 The first column heading is “Project name” What is the project we are thinking about?Examples: Supply Chain Optimization, Global ERP, ACME 2015, eBenefits 2.5
6 Next, add the heading “Purpose” Project NamePurposeWhat are the goals or outcomes the project is trying to achieve?Examples: Reduce cost, increase revenue, improve margin, introduce new product, reallocate inventory, streamline business processes, merge parts of the organization, implement unified data source for entire organization, implement common business practices
7 Third, add the heading “Particulars” Project NamePurposeParticularsWhat is actually being changed?Specific changes that will be made to business processes, systems, tools, job roles, organization structures – what is actually being changed?
8 Finally, add the heading “People” Project NamePurposeParticularsPeopleWho has to do their jobs differently?With the new processes, systems, tools, job roles, organization structures – whose day-to-day work will be impacted?
9 We now have a context for the project why, what and who is changing Project NamePurposeParticularsPeopleWhy we are changingWhat we are changingWho will be changing
10 How ‘fuzzy’ is each column? Project NamePurposeParticularsPeopleWhich columns were the easiest to fill out?Which were the most difficult?
11 Connecting the ‘people side’ back to project and organizational success Project NamePurposeParticularsPeopleIf people don’t change how they do their job, then it doesn’t matter what specific changes are implementedIf people don’t change how they do their job, then we ultimately won’t achieve what we set out to from the beginning
12 Example: reallocating inventory across the supply chain Project NamePurposeParticularsPeopleSCO – Supply Chain OptimizationReduce the amount of WIP (Work in Progress) InventoryMaintain service levelsDeliver products when customers demand themDocument inventory levels at each stage in the supply chainEvaluate order costs, holding costs and lead timesCalculate and optimize inventory levels across supply chainImplement processes and policies for placing orders in supply chainPurchasersCorporate BAW/in each business unitManufacturersAt each business unitForeman and employeesWarehouse staffWarehouse plannersEmployeesDistributionCorporate analystsSite representativesSalesFinanceSuppliers
13 Example: deploying a common approach to project management Project NamePurposeParticularsPeoplePMO 08Bring consistency to project management practices in the organization to meet objectives, deliver projects on time and on budgetAvoid the ad hoc approach and the consequences of not applying solid PM practicesResearch and identify a project methodologyCollect data on existing PM practices in orgSource IP, training and tools as necessaryInventory projects and create steps to infuse PM methodologyCreate a Project Management OfficeProject managersProject team membersSupport functions – HR, OD, communication, training, etc.Business unit leaders introducing projectsFunctional leaders introducing projects, such as IT or HRCorporate governance and transformation groupsConsultants that support projects
14 Example: building organizational change management competency Project NamePurposeParticularsPeopleECM – Enterprise Change Management* Prosci has done research and development over the last two years in ECM, with “ECM” in the subject line to find out moreEncourage consistent application of change management principles and processesBuild ‘effectively managing change’ as a strategic capabilityBecome more flexible and durable as an organizationIdentify and adopt a common methodologyBuild individual skills in managing changeCreate a CM department or office that is well-positioned in the orgIncorporate CM into each new projectRetro-fit existing projects with CMProject teams – need to apply change management process on their projectsProject support groups – HR, OD, communication, training, etc.Change management specialists – need to adopt common approachExecutives and senior leaders – fulfilling role of ‘sponsor’ on each changeMiddle managers and supervisors – fulfilling role of ‘coach’ for their reports
15 The P-P-P-P exercise: conclusion The power of the exercise is that the audience makes the connection themselvesBetween the project, the objectives and the people who have to change how they do their job (their day-to-day activities)Helps them reach the ‘ah ha’ moment about the people column on their ownTry it!Who will be your likely audience?The exercise demonstrates the role of change management and how it connects to the project and its purpose (i.e. the business results)
16 Connecting change management to business results The states of change and the role of the individual
17 States of change Typically we take an organizational perspective CurrentTransitionFutureAd hoc processesDocumented and managed processesMultiple, legacy systemsOne integrated databaseGeneralists in the call centerSpecialists in the call centerNo web interface for suppliersSupplier website integrated into supply chainTwo different companiesMerged organization
18 How I will do my job after the change is implemented In reality, each impacted employee has their own current and future stateCurrentTransitionFutureOrganizationHow I do my job todayHow I will do my job after the change is implementedIndividual
19 The organization’s future state is actually the collection of many individual future states IndividualsOrganizationFutureDocumented and managed processesOne integrated databaseSpecialists in the call centerSupplier website integrated into supply chainMerged organization
20 States of change connection Business results are achieved when a project is successfully implemented, moving some part of the organization from a current state to a desired future stateThe future state is only achieved when individual contributors do their jobs differently – make their own transition from their current state to their future stateChange management is the tool for helping individuals make a personal transition from a current to a future state
21 The need for change management Quantitative arguments:Correlation analysis
22 Correlation analysisLooking at data that shows a correlation between effectively managing change and meeting objectives“Show me the numbers”Analysis from:Prosci’s 2009 Best Practices studyMcKinsey Quarterly articleYour own organizational experience?
26 McKinsey correlation study Examined 40 projectsEvaluatedROI expectedROI deliveredLevel of change management effectivenessFactors evaluatedSenior managersMiddle managersFrontline staffResultsDirect correlation between change management effectiveness and gap between ROI expected and ROI deliveredr2 = 0.70Those that were above average on all three factors realized 143% of expected valueThose that were below on all three factors realized 35% of expected valueIn the article “Helping Employees Embrace Change” in the McKinsey Quarterly 2002 Number 4, by Jennifer A. LaClair and Ravi P. Rao
27 Correlation conclusion Bodies of data that support the contention:Better change management means better realization of benefitsCan you start collecting your own data?Measure for benefits realizedMeasure for change management effectiveness
28 The need for change management Quantitative arguments:ROI of change management model
29 Why does actual ROI differ from expected ROI? HighChanges that have no ‘people change’ have high certainty in the expected ROICertainty of expected ROI or benefit from changeChanges that are highly dependent on ‘people change’ have low certaintyLowLowHighAmount of change to how people do their jobs – ‘people change’
30 Change management and uncertainty Certainty of expected ROIEffective change management allows you to decrease the uncertainty associated with changes that impact how people do their jobs – improving the ROI of your projects that impact peopleAmount of change to how people do their jobs – ‘people change’
31 ROI of change management model For any given organizational change, there are three ‘human’ factors that impact the amount of expected improvement from a solution:Factor 1 – Speed of adoptionFactor 2 – Ultimate utilization (participation)Factor 3 – ProficiencyThese are realities of a project’s implementationThey define and constrain the value a project delivers
32 Factor 1 – Speed of adoption Expected (baseline)Based on explicit or implicit assumptionsProject implementation phase and planPhased roll out?ActualHow quickly people get on boardPassive resistanceActive resistanceThrough effective communication and project launch through sponsorship and coaching
33 Factor 2 – Ultimate utilization Expected (baseline)Perhaps implicitly assumed 100%May have done scenario analysisParticipationActualHow many people “opt out” of new wayCan result in any breakdown of ADKARReinforcement and resistance management play big role
34 Factor 3 – Proficiency Expected (baseline) Actual Assumed ongoing improvement from the solutionComes as a result of new processes, interactions with technology, behaviors, structures, etc.ActualDetermined by competence of each individual who is doing their job a new wayCan be reduced as a result of resistance
46 Review of ROI factorsSpeed of adoption How quickly do people get on board?What symptoms of poorly managed change impact speed of adoption?Ultimate utilization How many people are on board?What symptoms of poorly managed change impact ultimate utilization?Proficiency How much improvement occurs when people are on board?What symptoms of poorly managed change impact proficiency?
47 ROI of CM conclusionThe original business case and benefit expectations make assumptions about speed of adoption, ultimate utilization and proficiencyFinancial and scenario analysis can help us identity the potential impact of not managing the change – and help us calculate the value or benefit (i.e. the ROI) of applying change management
48 The need for change management Quantitative arguments:The consequences of poorly managing change
49 When we don’t manage change effectively, we can expect: Lower productivityPassive resistanceActive resistanceTurnover of valued employeesDisinterest in the current or future stateArguing about the need for changeMore people taking sick days or not showing upChanges not fully implementedPeople finding work-aroundsPeople revert to the old way of doing thingsThe change being totally scrappedDivides are created between ‘us’ and ‘them’
50 Prosci’s Flight Risk Model Mitigating negative consequences
51 With change, you can expect a decline in productivity and an increase in resistance.
52 The reality is that change creates instability and introduces risk to the organization.
53 Multiple changes within the organization aggravate and compound this risk.
54 The degree of adverse impact will vary by group and will depend on the effectiveness of your change management work.