How Does Resistance Impact Return on Investment (ROI)?
EXPLORING THE VALUE OF CHANGE MANAGEMENT & ROI: PART 2
Change Agents, Practitioners and Sponsors are well aware of the impact resistance has on the overall success of projects and the acceptance/adoption of the change by those impacted. Resistance identification and mitigation are at the core of the LaMarsh Global Managed Change™ Methodology. Based on our years of experience helping organizations and individuals manage resistance, we know that there are eight major sources of resistance to change that greatly impact acceptance levels and subsequently impact return on investment.
8 Sources of Resistance that Impact ROI
- Resistance to leaving the Current State
- Disagreement with the definition of the Desired State and/or not wanting to be there
- Going through the change itself: the implementation or delta
- Perceived lack of willingness or ability of Sponsors to lead the change
- Perceived lack of willingness or ability of Change Agents to do their change implementation job well
- Reluctance on the part of any given individual or group impacted by the change in and of itself
- Unwillingness to give up current beliefs and behaviors and adopt new ones: changing the culture
- Mistrust developed over time as a result of experience of past changes and how they were handled
What is the percentage of the total population of impacted employees that must accept the change and adopt the associated new behaviors?
The level, degree and impact of resistance perceived by those impacted by the change has a direct correlation to the effectiveness of the change management approach and the ROI. In addition to the actual cost of implementing the solution, the greater the level of resistance, the more effort and investment are required to shift the resistance to acceptance. The greater the level of resistance, the greater the number of needed resistance mitigation activities, events and interventions. The cost associated with the shift from resistance to acceptance becomes even more evident in the amount of communication, learning, reward and Sponsor development required to assure those impacted by the change that they should decide to adopt/accept it.
R = Qs x A
Results = Quality of Solution x Acceptance
Remember our earlier suggestion to focus less on ROI and more on Results (R)? Because we know Acceptance (A) of the solution is key to effectively and efficiently mitigating resistance, we must first agree on the required or Targeted Level of Acceptance. Simply stated, what is the percentage of the total population of impacted employees that must accept the change and adopt the associated new behaviors? Usually the initial response by most Sponsors to this question is 100%. But we know the reality is that it is nearly impossible and typically unrealistic to assume the organization can achieve 100% Acceptance (A). Depending on the change, the investment in time and resources to achieve the last 20 – 30% is equal to or more than the cost of the first 70 – 75% — the law of diminishing returns at work.
The Sponsor authorizing the change — the most senior leader to whom all impacted employees report — is responsible for determining the Targeted Level of Acceptance. He or she is ultimately responsible not only for making the decision, but also for:
- Ensuring the resources are in place to achieve the Targeted Level of Acceptance.
- Requiring those impacted to make the change or accept the consequences.
- Holding the Change Agent accountable for monitoring and reporting the Current Level of Acceptance at key milestones during the lifecycle of the change.
Although we would like these calculations to be scientific, they are often no more than estimates that reinforce the art elements of true change management ROI calculations.
Most importantly, we also need to understand which Critical Success Factors constitute the highest risk to achieving the Targeted Level of Acceptance. As we’ve all seen in past projects, what we measure is what we move. It is key that we define and measure the Critical Success Factors that generate successful change and acceptance because they improve overall change management effectiveness and ultimately help mitigate resistance.
10 Critical Success Factors for Effective Change
- Current State Case for Change is Strong
- Desired State Definition is Clear
- Delta State Performance Impact is Acknowledged
- Impact of Multiple Changes is Understood
- Impact of History is Acknowledged
- Sponsors are Effective at All Levels
- Change Agents are Capable and Willing
- Resistance is Identified and Analyzed
- Resistance is Mitigated Effectively
- Governance is Operational
We measure Acceptance (A) by defining how well prepared or ready the organization is to effectively implement the change. The importance of weighing each factor may vary by project type or organization. It is important to determine the level of acceptance required for each of the Critical Success Factors. The combination of these readiness factors represents the Current Level of Acceptance and will drive the acceptance of the project.
We know the mitigation of resistance costs money, and the cost associated with resistance mitigation is a factor in the calculation of ROI. The gap between the Target Level of Acceptance and your determination of the Current Level of Acceptance is the relationship to be evaluated. The less ready the organization is in any one of the Critical Success Factors, the greater the potential for resistance and the more mitigation activities that are required. The more resistance mitigation events required, the higher the cost of effectively managing the change and the greater the impact on the ROI calculation.