If there is interest to define the ROI of change management, answer these four questions
The ROI of change management tends to be brought up at two stages within a project.
First, leaders may consider change management's value or returns when preparing to initiate or resource a new project. This conversation was more common years ago, when projects prioritized the hard costs and details of the solution itself.
Second, the ROI may be questioned when determining what is actually necessary to carry out effective change management during a project. When preparing or launching a project, leaders or employees may question how much investment or time is required for change management.
Calculating a definite ROI is becoming less important in change management. That is not because this calculation is impossible to answer, but instead there is more understanding of vital contributions to a project’s success when solutions are accepted and adopted by people.
If you are asked about the ROI of change management, here are four questions to answer.
1. What are the minimum results we need to be successful?
An ROI equation looks at the value of the inputs and outputs. We always reposition the ROI discussion to focus beyond the outputs and define the intended or expected results.
We use this formula to help define or understand the factors that contribute to results:
Results = Quality of Solution x Acceptance of the Solution
Before diving into what it takes to achieve the desired results, you need to define or envision what success looks like.
Too often, the intended results of a change or project are not universally understood across an organization or even across the leaders. Before considering the inputs, get on the same page with deciding what you want to get out of the project.
2. What will it take to implement the best solution?
The results equation acknowledges both the solution and the acceptance of that solution.
We don’t want to minimize the importance of the quality of the solution, including the solution itself and its implementation. Many organizations have incredible expertise in developing new and innovative ideas, and they have dedicated project management resources to ensure implementation is successful.
Many ROI calculations focus solely on the intended results and the quality of the solution. This calculation describes the opportunity, alternatives considered, proposed solution, the total cost of ownership and projected benefits – and likely expressed in limited financial terms.
The quality of the solution is essential, but the desired results are also dependent on the acceptance of that solution.
3. What level of acceptance is required for this change to be successful?
There are often provisions for much-needed internal or external project management resources, but only sometimes an assessment of risk is included that hints that people and processes will also need to change. If that is the case, then some degree of acceptance of the change is necessary for success.
The acceptance of the solution describes its acceptance or adoption by people impacted by the change or the leaders responsible.
4. What support do we need to provide to those who are impacted?
We rarely see any mention of the need for acceptance of the solution in an ROI calculation. In many cases, it is simply assumed that the acceptance rate will be 100% and does not recognize the complete costs to get people to understand, accept and adopt the change. And the temporary or short-term challenges associated with the change are not considered.
In many instances, there is no plan to help people make the change. Without a plan, the focus often becomes picking the best solution and getting the implementation completed on time and on budget, rather than ensuring that the people are ready for the change or have accepted it.
With strategic support, challenges associated with the transition can be minimized and the benefits of the change can be maximized. Change management provides the resources and approach to identify who will be impacted, the risks associated with these impacts and strategies to mitigate the risks.
If the ROI of change management comes up on a project, this question can reframe the conversation to consider the acceptance and adoption of the solution:
Does the success of this change depend on behavior change?
If behavior change is necessary to implement a solution, then preparing for and managing the change is critical. ■