Focus on a solution’s acceptance to calculate the ROI of change management.
As organizations mature in realizing the value of change management, estimating the ROI of change management has become less challenging than in the past. Still, there are organizations that need to understand what the contribution change management brings to the success of projects and how that ultimately translates into a return.
If you’re asked to calculate the ROI of change management, start by considering these four questions:
- What are the minimum results we need to be successful?
- What will it take to implement the best solution?
- What level of acceptance is required for this change to be successful?
- What support do we need to provide to those who are impacted?
By considering the type and degree of behavior change necessary for a project to be successful, conversations about the ROI can be reframed to consider the acceptance and adoption of the solution.
If a solid and trusted ROI calculation is necessary, incorporate the acceptance of a solution by being thoughtful as to how those impacted by the change are likely to react.
The 10 steps below can incorporate the benefits and value of acceptance into the change management ROI calculation.
Focus on acceptance
The results of a project go beyond the quality of the solution (whether a product, service or initiative). The degree to which the solution is accepted and adopted by people impacted is just as important as the solution itself.
R = Qs x A
Results = Quality of the Solution x Acceptance of the Solution
We use this equation as the foundation to determining the case for change management. If a solution depends on behavior change, then the acceptance component will likely be a major factor in achieving the desired results.
When acceptance is forgotten
Sometimes, projects are moved forward with only a focus on the solution itself. There is little to no consideration for what it takes to ensure the acceptance of change by those who were impacts.
In those cases, none of the critical milestones, events or tasks needed to support acceptance were included in the project plan or measured in any way. This is fundamentally the same as openly stating that those involved in the project believed that the solution was so good that everyone would completely accept it. By not intentionally focusing on the acceptance, we’re left guessing why a project didn’t produce at the expected level.
Determine the level of acceptable
Included in the art of forecasting results is to know the audience and complexity of the change and to be honest and transparent about the satisfactory level of acceptance.
Of course, mitigating resistance that hurts acceptance can be expensive if not managed well or ignored. Your job is to take all resistance seriously, identify the mitigation investment honestly and adjust the ROI calculation accordingly.
The more rigor you put into the ROI calculation, the more reliable the outcome. Most importantly, you must decide whether the investment in completing the proposed ten-step approach is value-added and answer the important question: Does your focus need to be more on ROI or results?
Calculating the ROI of change management
Consider these 10 steps to calculate the ROI of change management.
Step 1: Clearly define the desired state of the project or initiative.
Step 2: Define the level of acceptance and adoption required to make the project successful.
Step 3: Identify and document potential sources of change resistance among those affected by the change.
Step 4: Define the current level of acceptance and overall organizational readiness to change.
Step 5: Calculate the cost to develop and implement the project plan, including change management tasks.
Step 6: Calculate the cost to deploy communication, learning, reward and leadership support activities.
Step 7: Calculate the cost of installing or implementing the solution.
Step 8: Calculate the cost required to minimize the gap between current and targeted levels of acceptance.
Step 9: Calculate the cost of the transition on speed, quality and performance.
Step 10: Integrate the overall cost of acceptance into the ROI calculation.
The art and science behind each of these steps can be complex. Your goal should be to keep it simple and quick. Use honest forecasting whenever possible and emphasize current trends rather than the exact data when it comes to measuring the impact of resistance mitigation.
The complexity of the change and the urgency of implementation will guide you on how much time and effort should be invested in data collection and analysis. Even a minimal time investment will yield a solid return on your effort. With this information, your team can develop and define appropriate measures to mitigate specific resistance, get closer to the targeted level of acceptance and refine the calculation of ROI to proactively keep a pulse on the change as the project progresses.
Keep in mind that in the case of change management, no action is still action (just likely not what you’ve intended). Be intentional and focus on acceptance – and you’ll have more successful projects and clarity on where previous projects might have gone wrong.
If an ROI calculation is requested, use the opportunity to determine the level of acceptance required for success and what is necessary to achieve that level. The calculation requires some degree of information about the project, stakeholders and expected impacts of the change, so seeking out this information can contribute to an ROI calculation and effective change management. ■