10 Steps That Will Improve Your ROI of Change Management Calculation
EXPLORING THE VALUE OF CHANGE MANAGEMENT & ROI: PART 3
Remember our suggestion to focus less on ROI and more on RESULTS (R)? In the article, we explored the hard and soft data points required to do a solid and trusted ROI calculation. In general, the key to an accurate estimate is to not forget about Acceptance (A), by being very thoughtful as to how those impacted by the change are likely to react.
R = Qs x A
RESULTS = QUALITY OF SOLUTION x ACCEPTANCE
I’ll bet everyone reading this can think of at least a few projects where there was no consideration of what it takes to insure acceptance of change by those who are impacted. In those cases, none of the critical milestones, events or tasks needed to support Acceptance (A) 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 accept everything about it at 100%. By not intentionally focusing on these key factors, we’re left guessing at why a project didn’t produce at the expected level.
Included in the art of forecasting Results (R) is to know the audience and complexity of the change and to be open, honest and transparent about the Acceptable Level of Resistance. Of course, mitigating resistance that hurts Acceptance (A) can be expensive if not managed well, or if 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 calculation, the more reliable the outcome. Most importantly, you must decide whether the investment in completing our proposed ten-step approach is value added and answer the important question — Does your focus need to be more on ROI or Results (R)?
The more rigor you put into the calculation, the more reliable the outcome.
Calculating the ROI of Change Management
Step 1: Clearly define the Desired State
Step 2: Define the Targeted Level of Acceptance (A)
Step 3: Identify and document 8 Sources of Resistance from impacted groups
Step 4: Define the Current Level of Acceptance (A) and Organizational Readiness
Step 5: Develop & implement the Project Plan, including change management tasks
Step 6: Deploy communication, learning, reward and Sponsor development events and activities
Step 7: Calculate the cost of installing the Quality Solution (Qs)
Step 8: Calculate cost required to minimize the gap between current and targeted Acceptance (A)
Step 9: Calculate cost of accelerating acceptance on speed, quality, and Delta State performance
Step 10: Integrate overall cost of Acceptance (A) into the ROI calculation
The art and science behind each of these steps can be complex. Your goal should be to keep it simple, quick and easy. Use honest forecasting whenever possible and put more emphasis on 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 as to how much time and effort should be invested in resistance data collection and analysis. Although you could spend a lot of it, even a minimal time investment will yield a solid return on your effort. With this information in hand, 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 environment 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. So, be intentional and focus on Acceptance (A) and you’ll have more successful projects. Or at least start to better understand where failed projects have gone wrong.