Jul 07 , 2020
Quantifying the Value of Change Management
How you start is how you finish

With the dawn of a new financial year, many organisations find themselves under increased pressure to create value in a post-COVID-19 world where budgets are under immense strain. Leaders who may have previously gotten by with short term thinking and band-aid solutions currently face the highest level of scrutiny of their business cases for change as well as alignment with medium to long term business vision and goals. And for transformation focussed consultants like change managers, IT contractors, project managers and business analysts, being able to readily explain, demonstrate and report back on value and return on investment is becoming more of a non-negotiable capability instead of a nice to have.

It seems there is a national trend in Australia that when organisational budgets are squeezed, what follows is the immediate discounting of the value of communications, engagement and training which ironically are the key ingredients to propel organisations through though times and reach new plateaus of growth and profitability. We are finding that the common logical justifications simply aren’t enough anymore, and our change clients are demanding a comprehensive understanding of the return on investment of including change management as well as regular measurement and reporting of value. This means that we can no longer purely rely on “positive employee sentiment” and qualitative data around awareness, desire and capability to justify the strategic value of change if we are to earn our seat as strategic business consultants. Simply put, well received communications with positive feedback on training facilitation and creative engagement falls flat unless we can clearly link these to changes in actual behaviour, operational metrics and return on investment at a business case level. Because under the current economic client, it is not enough to justify the value of change management as a journey whose value can only be determined once the project is completed.

At Earth2Mars, we believe that how we start is how we finish. So, when we train up change managers in our methodology as well as kick off transformation programmes with our clients, we make sure that we position the commercial value of change upfront and measure this before, during and well after the programme, as well reporting and soliciting feedback regularly. We have found tremendous success in this approach as we are not only able to justify and demonstrate the dollar and operational value in financial terms to sponsors, but also pick up deviations from alignment with the overarching business case early on and address this in an agile way.

Thankfully, we have the support of the ROI Institute. Founded in 1992, by Patti and Jack Phillips the institute has been helping organisations evaluate the success of projects and programs, including measuring the financial return on investment (ROI) in United States and in over 70 countries with the help of over 100 ROI consultants. Aside from having worked with both Patti and Jack in the past, we fell in love with this approach as it is specifically aimed at translating human engagement and behaviour into operational metric changes and allowing us as change managers to literally “put our money where our mouths are” when our clients ask for return on investment in change, communications and training. The proverbial penny dropped for me when I completed my certification back in my big 4 days in 2011. We love sharing the ROI V-model with our trainees and clients alike as it helps shed a bit of light on the how:

Source: https://roiinstitute.net/program-alignment-v-model/

We like to define measures of change success of the change programme at every level:

  • ROI Pay-off – linking the change success to the ultimate business case dollar value and financial measures
  • Business/Operational Impact – defining clear operational metrics, which deliver the ROI payoff
  • Performance/Application/Behavioural Metrics – spending time to outline and agree on the behavioural objectives and metrics that are required to support the business needs/operational metrics
  • Learning and Preference needs – outlining communication, training and engagement needs and preferences

By starting at the top, all programme stakeholders are clear about how the change programme links to performance, operational and commercial metrics and we can plan to measure and report on our change return on investment before, during and after the program, then measure bottom up from reaction through to application, and ultimately converting into ROI using operational impact metrics.

The result is that by starting with clearly aligned value chains and a solid foundation to measure and evaluate change programmes, we are able to finish with equally clear value and most importantly demonstrate return on investment to clients. We have also found regular reporting and feedback before, during and after the transformation helps educate our clients on the value of change management and allows our team to have more robust and strategic conversations.


Interested in finding out more on ROI? We’re excited to announce our partnership with the ROI institute and bringing the course to the Australian community. Reach out to us to find out more.

space@andrewp42.sg-host.com

Comments
  • Hi Andrew,
    The Change profession certainly needs courses like this one. I couldn’t agree more with your statement: “…we can no longer purely rely on “positive employee sentiment” and qualitative data around awareness, desire and capability to justify the strategic value of change if we are to earn our seat as strategic business consultants.”

    Capturing and communicating benefits throughout the project life cycle helps elevate our profession from “soft and fluffy” (a perception that unfortunately still exists today) to evidence-based, commercially-minded behavioural change experts.