How Do You Pay for Change Management?

pay-for-change-management-puzzle

This is a question I’ve wrestled with many times. Through years of implementation projects with every size nonprofit, I’ve seen how important it is to invest in change management efforts. And in every project, the one question that always comes up is: How do we justify the cost of these efforts? Where does the budget for this come from?

Quantify the Benefit

This obvious financial question can seem like a difficult barrier to many change management efforts, and for good reason. In any nonprofit initiative understanding value per dollar spent is essential. In our projects, instead of being a barrier, this is the perfect question to initiate a discussion on the VALUE of change management. It allows the team to view the very real costs of not including a change management strategy in the scope of the project. Not only costs, but greatly increasing the risk of an initiative failing completely. In previous posts, we’ve discussed how many initiatives fail, and it’s a frighteningly large percentage considering how much time, effort, and resources they consume. For a nonprofit, this loss can dramatically impact the organization’s ability to deliver their mission.

So how does this discussion happen? Hopefully, in any initiative the organization has already clarified and quantified the benefits of the project– what they will get out of it. Ideally, this also includes the monetary benefit and value of the components of the project. This is the best place to start. For each component or benefit that the project will provide, the team should indicate if it is dependent on user adoption and usage, or if it will happen regardless of user behavior. For example, there are aspects to a project, like a simple system upgrade, that are hardly dependent on user adoption. The upgrade will provide speed and stability fixes that everyone will get, but few may even notice. Another example may be a decrease in licensing fees. This will happen regardless if users adopt and use the new system.

Then there are aspects that are entirely dependent on user adoption and usage, such as a conversion to a new fundraising system. The new system offers sophisticated engagement and timely reports that showcase a fundraiser’s pipeline and next steps. For the organization to see any benefit, it’s essential that users embrace and master the powerful new tools and processes. This clearly requires user adoption and active, knowledgeable use. Change management is critical here.

When all the benefits of the project have been marked as “adoption dependent” or not, you can easily see the percent of the project that requires change management strategies. It will clearly show which aspects of the project are at risk, the value of change management strategies to eliminate those risks, and justify the investment for the success of the initiative.

Additional Benefits of Change Management

Once we have established a financial benefit, it’s important to emphasize the intangible benefits change management provides outside immediate financial concerns.

Increases the likelihood of project success

Research over the last three years shows that projects with excellent change management strategies met or exceeded objectives 95% of the time, while projects with poor change management met or exceeded objectives 15% of the time. Additionally, the studies show that strong change management practices lead to a higher percentage of projects that are on budget and on time.  Read here for full details of this study.

Provides tools to manage resistance

A reality of every project is there will be resistance. If resistance is ignored, it can have a negative impact on your project in the long run. If you are proactive and address resistance effectively, it can be turned to work in your favor. Change management methodologies provide tools for managing resistance to yield to positive outcomes to your project. For example, if you become aware that one department or manager is frustrated by having to adopt new tools, you can use their input to help create a more effective training process. By listening to and addressing their concerns, you can help convert them to an advocate and supporter. In the best-case scenario, the biggest resisters become the biggest change agents and champions of your initiative.

Encourages trust and confidence in the plan

Often times when we start a technology project with clients, some of the commonly asked questions are “When is training, and how will that happen?” This showcases that people are interested in how the change will impact them, and want to know how they get ready for this change. By having a plan in place to help people transition through the change, it will instill trust in the plan and show that their roles are being considered. In the most effective strategies, we plan to have staff, managers, and users contribute their ideas and input meaningfully throughout the plan.

Reduces turnover

Many technology projects require a significant change to people’s behaviors and the way they work.   That is a big ask, and can instill anxiety and fear. Fear combined with a lack of trust can easily lead to individuals questioning why they must change. They start to notice other staff’s resistance, a lack of sponsorship from leadership, a poorly constructed or lack of training and communication planning, and no good “why” for the project. The end result can be high turnover, losing people who have supported your organization, sometimes for years. Change management provides a process and methodology for all of the above factors. Ideally, with a key project you are not losing your valuable team players–they are part of leading the change at your organization.

Conclusion

This is a very brief summary of how to define the value of change management, and how to answer the question of “How do we pay for this?” But by determining the project benefits that are dependent on user adoption and usage, you will reveal how important change management is for the project. Once that is determined, it’s not as difficult to allocate a percentage of your total technology project budget. This way, change management is not viewed as a “nice to have” but a “must have” for the project to be successful. Change management may seem abstract and fuzzy since it is on the “people” side of things, but it is important to invest time and resources toward it. The fact is, if you don’t invest in it upfront, you’ll end up paying more in the long run in staff morale, turnover, and financially.

Find out more

For more detail, visit this article from PROSCI on how to calculate the ROI of change management within an initiative.

We also recommend you download Managing Technology Change at Enterprise Nonprofits.  In this paper we discuss:

  • How technology is leading change for nonprofits
  • Why change management is especially important for enterprise nonprofits
  • Risks of change, and why projects fail
  • Drivers of successful technology change
  • Strategies to manage change effectively

If you have additional questions about the costs or process of strategic change management, enter them in the comments below, or contact us. We’d love the opportunity to discuss your specific initiative, and how change management strategies can help ensure success.

 

About the author

Smita Vadakekalem

As the VP of Professional Services at Heller Consulting, I oversee the work we do to implement technology solutions and strong business practices across a wide range of nonprofits. I love working with project teams – both my staff and our clients – to ensure that the right resources and skills are brought to bear on any initiative. I’m amazed every day by the work carried out by our clients and I love working as a team to help make that work more efficient and effective.

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