Organizations are expected to continuously drive results and outperform competitors. To decide how best to achieve this end and prioritize efforts, leaders optimize limited resources by thoughtfully considering derived value: if we invest X, we will achieve Y. Simple enough, right? Not exactly.
All too often, decisions and delivery are overly focused on tangible and technical outcomes of projects. Missing from consideration is how employees will react to and adopt the changes. Changes are delivered, but the new mindsets, behaviors and ways of working required to ensure the sustainable success of the changes are missing (or they’re included as an afterthought) and anticipated ROI does not transform into actual ROI. When this happens consistently, the impact – and losses – compound. But get the balance right and the rewards are clear to see.
We tend to overvalue the things we can measure and undervalue the things we cannot.”John Hayes | The Theory and Practice of Change Management
Recent WTW research shows that organizations highly effective in change management deliver revenue growth over a three-year period 2.5x greater than organizations with below-average change effectiveness.
Delivering these results doesn’t happen by chance. It requires intentional effort and investment to develop change management as a core enterprise competency.
Let’s consider how enterprise change management can unlock value and keep your organization ahead of the pack.
An organization’s ability to manage change can be viewed along a spectrum. As organizations move up the spectrum, they manage change with greater efficiency and effectiveness, increasing their chances of delivering sustained success and a project’s anticipated ROI.
At one end of the spectrum, change is managed on an ad-hoc basis without centralized expertise, a formal approach or sponsorship from leaders. Often in ad-hoc organizations, a project’s workstreams are launched independently and without considering the employee experience. This approach risks having employees who are not receptive to the change or don’t understand its goals, which can impact adoption and return on investment due to the costs of rescoping and reallocating resources.
Organizations at the height of the spectrum take an enterprise approach where change management is embedded into programs from the outset. There is dedicated change expertise, a centralized change philosophy with universal tools, and executive sponsorship focused on sustainable change. In these organizations, anticipated ROI becomes actual ROI, and time and money are saved by not having to recreate practices.
The value of developing an enterprise approach to change management goes beyond the benefits delivered in a single project.
Employees remember successful and unsuccessful changes and use that to indicate what to expect from future initiatives. Providing positive, consistent change experiences generates momentum, engagement and the discretionary effort crucial to landing the change. When the balance tips the other way, you risk change fatigue, resistance and attrition.
Further, when change is centralized within an organization, each project provides an opportunity to iterate, improve and grow your organization’s ‘change muscle.’ When change is managed on an ad-hoc basis, issues are addressed in isolation, learning is not shared and avoidable mistakes are repeated.
Organizations that have developed change management as a core enterprise competency share several key features:
Building and delivering this capability requires a focused center of expertise that delivers interventions and builds knowledge grounded in a common change management method with proven effectiveness across the organization.
Where your center of expertise is located and what form it takes can vary depending on factors such as organization size, structure and change maturity.
A common approach is developing a change management office (CMO) – a team of trusted change partners with a dual mandate to:
The CMO is executed through a lean and leveraged model (e.g., an organization of 50,000 might have a CMO of five people) that blends central, local and external resources to allow it to scale up without creating a resource and cost-heavy central team.
Due to its mandate and enterprise-wide remit, the CMO is typically positioned in an organization’s project management office (PMO), strategy office or HR function. Any of these placements provide the CMO with visibility into upcoming changes, allow it to define and coordinate required change efforts at the group and local level, and supply program-level oversight and reporting.
When not actively engaged in a change effort, the CMO builds the change capability of the organization through outreach, training and communities of practice.
The CMO coordinates change activity across the organization, working closely with the PMO to identify the right level of support required for projects and coordinating activity with local change management resources and partner functions.
Here’s a quick overview of what that can look like in practice.
Change Management Office
Local change management resources
Partner functions (e.g., Training, Communications, HR, Analytics)
In conclusion, the ROI on successful change management spans from employee experience to financial performance. Moving up the change maturity curve requires dedicated expertise to coordinate efforts across the organization and continually build and improve capability. When you get it right, the benefits stretch beyond individual projects to deliver enterprise-wide gains, increasing your chances of converting anticipated ROI to actual ROI.