ROI of Change Management PMI Conference 230515 by Being Human

The ROI of Change Management Presented by Catherine Smithson PMI Australia Conference May 2015

Introducing Being Human •  Founded in 1994 •  Our mission: develop

change-capable people and organisations so they achieve the benefits of change. •  Exclusive Prosci Primary Affiliate Australia and New Zealand. 2

Prosci by the numbers •  1994 – Founded in Loveland

(Denver) Colorado, USA •  8 global Benchmarking Reports •  16 years of longitudinal research •  3,400+ research participants •  63 countries •  80% Fortune 500 companies •  30,000+ Certified practitioners worldwide •  4,000+ Certified practitioners

Australia/New Zealand

Topics •  Why care about the ROI of Change Management? •  The three ages of Change Management •  Connecting Change Management to benefits and outcomes •  Q&A Getting back to Normal… it’s a town in Illinois USA.

Prosci 2014 Best Practices in Change Management Benchmarking Report •  822 participants •  63 countries •  Top 3 roles:

2% 2% 3% 5%

Middle East Latin America

34% 14%

Asia and Pacific Islands

•  Change Management team

leader •  External consultant •  Project team leader

•  244 pages •  38 new topics

Africa Europe 15%

Canada Australia and New Zealand

25%

United States

The largest body of Change Management knowledge in the world. 5

Snapshot of participants - ANZ

In 2015, every business is in the change business

Yet success rates of change remain low

IBM Making Change Work Report While the Work Keeps Changing Report August 2014 1,400 organisations globally, over 20 industries,

And many organisations lack change capabilities

IBM Making Change Work Report While the Work Keeps Changing Report August 2014 1,400 organisations globally, over 20 industries,

Most organisations invest 5% or less of total budget in Change Management

IBM Making Change Work Report While the Work Keeps Changing Report August 2014 1,400 organisations globally, over 20 industries,

Major gap between Change Management at project and enterprise levels

of organisations apply a Change Management methodology

of organisations applying Change Management methodology to all projects

“So, does anyone else feel that their needs aren’t being met?”

Changing the conversation from what we do to what we deliver Communications Plan Engagement Workshops Training

Manage resistance

Readiness Assessments Town Hall Meetings Impact Assessments Stakeholder Management 14

PMI Research shows the connection •  “Organisations reporting

higher-than-average success rates for projects also report higher-thanaverage adoption of organizational Change Management practices.” Pulse of the Profession Report 2012

Change Management increases the probability of success 100% t e m t a th ts n e d n o p s e r f o t n e c r e P

s e iv t c je b o t c je ro p d e d e e c x e r o

•  "Of the 165 research

Correlation of change management effectiveness to meeting project objectives

90%

96%

80% 77%

70% 60% 50% 46%

40% 30% 20% 10%

16%

0% Poor (n=244)

Fair (n=653)

Good (n=834)

Excellent (n=165)

Change Management increases success rates by a factor of 6

participants who reported having excellent change management effectiveness, 96% met or exceeded project objectives" •  "Participants with the highest level of change management effectiveness were 6X more likely to meet or exceed project objectives"

16 16

Change Management drives staying on budget Percentage of respondents that met or exceeded project objectives

Correlation of change management effectiveness to staying on budget

t a th st n e d n o p s e r f o t n e cr e P

100% 90% t e g d u b r e d n u r o n o e r e w

80%

81%

70%

71%

60%

63%

50% 40%

48%

30% 20% 10% 0% Poor (n=258)

Fair (n=737)

Good (n=1001)

Excellent (n=180)

Overall effectiveness of change management program * Data from 2007, 2009, 2011 and 2013 Copyright ÂŠ 2014 Prosci. Best Practices in Change Management â&#x20AC;&#x201C; 2014 Edition.

Percentage of respondents that met or exceeded project objectives

Change Management drives staying on schedule e r e w t a h t st n e d n o p s e r f o t n e cr e P

Correlation of change management effectiveness to staying on schedule

100% 90% le u d e h c s f o d a e h a r o n o

80% 70%

72%

60% 50%

54%

40% 30%

32%

20% 10%

16%

0% Poor (n=293)

Fair (n=793)

Good (n=1032)

Excellent (n=181)

Overall effectiveness of change management program * Data from 2007, 2009, 2011 and 2013 Copyright ÂŠ 2014 Prosci. Best Practices in Change Management â&#x20AC;&#x201C; 2014 Edition.

Getting more specific on ROI Whatâ&#x20AC;&#x2122;s the connection between Change Management and project results and outcomes? Do all projects need Change Management to succeed? How do we quantify the Change Management investment required in a project? How can we target Change Management investment on a project so it delivers the best return? 19

Organisations change for a reason Current state

Performance

Transition state

Future state

Performance

Expected Results and Outcomes

Results and Outcomes Benefit Realisation Value Creation Return on Investment (ROI) Delivering on the project promise

Future

Individuals make their own transitions: Adoption and usage

Results and outcomes depend on employee adoption and usage Solution must be: •  Designed •  Developed •  Delivered

and

Future

Making the connection between employee adoption and usage and achieving benefits

Future

The Swiss Cheese Syndrome “Most locations implemented, but the

team in Sydney are still in transition.” “Key users are still struggling, they need more support.” “The new operating model has rolled out but teams are still operating in silos”. “There is a wide variation in the benefits being realised in different parts of the business.” “We need to start Phase 2 to capture all the expected benefits.”

“Soft side” drives success on “hard side” •  How much value does a

new process deliver if no one follows it? •  How much value does a new technology or system deliver if no one uses it? •  How much benefit is realised if the people drift back to the “old ways”?

With a very large, negative ROI

Benefits have two components: Technical and People (Adoption and Usage)

Dependent on adoption and usage

Future Technical Contribution

“People dependence” of project benefits varies Dependent on adoption and usage

Technical Contribution

Dependent on adoption and usage

Technical Contribution Technical Contribution

Few employees impacted Single location

Many employees impacted Many locations

Few aspects of work impacted Small transition from current state

Many aspects of work impacted Transformational change

Activity: What is the “people dependence” of your project benefits? •  Select a current or

completed change

•  Estimate the % of benefits

that are dependent on “people doing their jobs in a new way, i.e. adoption and usage. •  0 – 25% •  26 - 50% •  51 – 75% •  76 -100%

How much are you investing (budget, people, focus) in driving adoption and usage?

Back to those ROI questions Whatâ&#x20AC;&#x2122;s the connection between Change Management and project results and outcomes? Do all projects need Change Management to succeed? How do we quantify the Change Management investment required in a project? How can we target Change Management investment on a project so it delivers the best return? 31

New directions in quantifiying the ROI of Change Management •  Which benefits are most

significant? •  What is the dependence on Adoption and Useage? •  Which employees are most critical to realising these benefits? •  What is the risk assessment for these groups? •  What level of investment in Change Management will support those employees in making the transition?

The unified value proposition Project management

Current

Transition

Future

Change management

Solution is designed, developed and delivered effectively (Technical side)

Solution is embraced, adopted and utilised effectively (People side)

Complementary disciplines with a common objective

More info Being Human www.beinghuman.com.au Prosci www.change-management.com www.prosci.com Change Management Institute www.change-managementinstitute.com Association of Change Management Professionals www.acmp.info/