Best Practices in Change Management 2014 Edition

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1 Best Practices in Change Management 2014 Edition Executive Overview A look at Prosci s latest change management research In Brief: Since 1998, Prosci has conducted eight benchmarking studies to discover what works and what doesn t when it comes to managing the people side of change. The findings from Prosci s latest 2013 study have been compiled with the findings from the previous studies. The compendium report, 2014 Edition, presents this data. With insights from 3400 change leaders, the report is the largest body of knowledge on change management on the market today. This Executive Overview is a 10-page snapshot of the 250-page report. Executive Overview Table of Contents Participant profile New sections in the report Study highlights Further free information

2 Participant profile Eight hundred and twenty-two participants from 63 countries took part in Prosci s 2013 Best Practices in Change Management benchmarking study. This report combines the findings and data from the 2013 study with Prosci s previous seven studies to form one of the largest bodies of knowledge related to managing the people side of change based on insights and experiences of more than 3400 participants study 822 participants 2011 study 650 participants 2009 study 575 participants 2007 study 426 participants 2005 study 411 participants 2003 study 288 participants 2000 study 152 participants 1998 study 102 participants Figure 1 shows the geographic distribution of participants in the 2013 study. Proportionately, participation dropped from the United States, Africa, Latin America and Asia and Pacific Islands. Participation increased from Australia and New Zealand, Canada, Europe and the Middle East. Latin America, 2% Asia and Pacific Middle East, 2% Islands, 3% Africa, 5% Europe, 14% Canada, 15% Australia and New Zealand, 25% United States, 34% Figure 1 Geographic distribution of participants throughout the last five benchmarking studies. As in the 2011 study, the top three job roles of participants were: Change management team leader External consultant Project team leader Change management team leader External consultant Project team leader Change management team member Internal change management support staff Project team member Human Resources Study objective Project sponsor Other 0% 10% 20% 30% 40% 50% Percent of respondents Figure 2 Role of participants The objective of this study is to uncover lessons learned from practitioners and consultants so current change management teams can benefit from these experiences. Emphasis is placed on what is working and what is not working in all areas of change management. The 2014 report also presents emerging trends in change management to identify the changes that have occurred and the future direction of the discipline. Because change management is a holistic system that requires involvement by change management practitioners, project teams, executives, managers, supervisors and front-line employees, this report details the engagement and role of each of these groups in change management. Study participants represented a variety of roles in relation to the change on which they reported. Figure 2 shows the role of study participants

3 New sections in the report New questions were added to the 2013 study to expand the scope and depth of the research. These new areas of focus include: Expected trends in the discipline of change management in the coming five years How the change management methodology was used Effectiveness of particular types of methodologies Rationale, steps and sources for internally developed methodologies Sources and rationale for combination/hybrid methodologies Guidance for scaling and customizing a methodology for a specific change Accommodating for organizational culture in the change management approach Action steps if change management is brought on late to a project Most important skills for a great change management practitioner Prevalence of permanent positions or job roles for change management Duration of permanent positions or job roles Organizational locations of permanent positions or job roles Number of projects supported by change management positions Annual salary of change management job roles Career paths in change management Change management team structures, effectiveness and rationale Use of change agent networks Use and sufficiency of dedicated change management resources Factors for estimating change management resource needs Use and sufficiency of change management budgets Factors for estimating change management budgets Components that make up change management budgets Change management budget profiles Prevalence of integrating change management and project management Impacts of integrating change management and project management Steps for integrating change management and project management Reasons for integrating change management and project management and reasons for keeping them separate Dimensions of change management and project management integration Tools most commonly integrated Steps for integrating change management and project management processes Integration across the project lifecycle Impact of project management maturity on change management and integration Evaluating overall change readiness Evaluating group and individual readiness Measuring the overall outcome of applying change management Demonstrating the value-add of applying change management Measuring and reporting on change management effectiveness Measuring individual transitions

4 Study highlights Greatest contributors to success For the eighth consecutive study, active and visible executive sponsorship was identified as the greatest contributor to success. Six of the seven contributors were consistent with previous studies, with a slight change in ranking. Engagement and integration with project management is a new addition to the list of the greatest contributors to success. 1. Active and visible executive sponsorship 2. Structured change management approach 3. Dedicated change management resources and funding 4. Frequent and open communication about the change and the need for change 5. Employee engagement and participation 6. Engagement and integration with project management 7. Engagement with and support from middle management Greatest obstacles to success The top five obstacles to success identified in the 2013 benchmarking study are similar to findings from the 2011 study; however, poor communication was not identified as a top obstacle. A new obstacle, division between project management and change management, was identified. 1. Ineffective change management sponsorship 2. Resistance to change from employees 3. Insufficient change management resourcing 4. Division between project management and change management 5. Middle management resistance What to do differently on the next project By a two-to-one margin, the top suggestion by participants for what they would do differently on their next project was to more effectively engage sponsors by involving them early and ensuring they are active and visible throughout the project. The next most common responses were to secure sufficient resources for change management and emphasize the preparation and planning activities. Top trends in change management within organizations For the fourth consecutive study, the top trend identified by participants was a greater awareness of the need for and value of change management. Additional trends included the broader application of change management, increased leadership support for change management and the establishment of dedicated functional groups or a Change Management Office (CMO). Top trends in the discipline of change management For the first time, participants in the 2013 study identified the trends they expected in the discipline of change management for the coming five years. The top trend identified was the continued maturation of the practice of change management, including continued formalization and evolution of the discipline and its methodologies and tools. Participants also expected a greater focus on building internal capabilities and organizational core competencies in change management in the future. Change management effectiveness Projects with effective change management programs were more likely to meet objectives, stay on schedule and stay on budget than those with ineffective change management. This direct correlation mirrors the findings from the 2007, 2009 and 2011 studies. Projects with excellent change management programs were six times more likely to meet or exceed their objectives than those with poor change management programs.

5 Percent of respondents that met or exceeded project objectives 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 16% Poor (n=244) Figure 3 Correlation of change management effectiveness to meeting or exceeding objectives Practitioner advice Experienced practitioners shared advice on how to apply change management. Practitioners identified the three most important activities at the beginning of an engagement, with effective communications being the top recommendation. Participants identified four challenges or hurdles, the top one being ineffective sponsorship. Communication, timing, integration with project management, building buy-in for change management and sponsorship were the five topics of advice for new practitioners. Motivation for change management Participants identified two primary motivations for applying change management. The top response was as a necessity stemming from the nature of the change, including the complexity, number of people affected and breadth of impact. The second primary motivator was to contribute to overall project success, as change management was viewed as a key success factor and driver of buy-in and adoption. Use of a methodology 46% Fair (n=653) The percentage of participants that reported using a particular methodology increased to 79%, up from 72% in 2011, 60% in 2009, 58% in 2007, 55% in 2005 and 34% in Participants who reported using a particular methodology reported higher levels of overall change management effectiveness than those who did not. The most 77% Good (n=834) Overall effectiveness of change management program 96% Excellent (n=165) common uses of the methodology were to provide general guidance and as an activities checklist. Scaling and customizing the methodology Participants highlighted inputs used to effectively scale their methodology to the particular change, including project characteristics, change management assessments, organizational attributes and resource availability. When the methodology was scaled, participants noted a greater focus on change management activities and on impacted audiences. Accommodating for organizational culture Organizational culture was accounted for by tailoring change management activities, adapting communications and seeking input and engagement from various impacted groups. Sponsors in various parts of the organization, as well as networks of key influencers, were also important in accommodating for organizational culture. Change management job roles Participants in the 2013 study reported a much higher prevalence of change management permanent positions or jobs roles in their organization, compared to 2011, with over half of participants having change management job roles. Most organizations have had permanent positions for less than three years, and less than 20% have change management career paths, although over 25% were developing them. The Project Management Office (PMO) and Human Resources (HR) were the most common organizational locations for change management job roles. Attributes of a great team member Communication skills and change management competencies were the top attributes of a great change management team member, followed by flexibility and interpersonal skills.

6 Change management team structure The most prevalent team structure in use had the change management resource sitting on the project team, followed by the change management and project resources being one and the same. In over one-third of cases, the team structure was a deliberate decision for the project. Over four in five participants (81%) used change agent networks of employees within the organization who were not considered formally part of the change management team to support their projects. Impacts of having a dedicated change management resource Just under three-quarters of participants reported that their project had a dedicated change management resource, a slight decline from the 2011 study. The greatest advantages of having a dedicated change management resource were improved focus on change management and having a single point of contact with clear responsibility and accountability. The greatest consequence of not having a dedicated resource was neglected change management activities. Use of a dedicated change management resource correlated to more effective change management programs. Estimating change management resource needs Participants identified a number of factors that went into their estimation of change management resource needs, including the scale and complexity of the change, the project plan and timeline, resource availability, resource capability and past experiences. Change management budget Just over one-quarter (27%) of participants had a dedicated change management budget. The most frequent cost components for the change management budget were change management resource costs, training costs and communication costs. Change management budgets were typically comprised of between three and six line items. Participants considered the scale and complexity of the change, the project plan and timeline, overall availability of resources and specific costs when estimating a change management budget. Integration of project management and change management Seventy-one percent of participants integrated change management and project management on their projects. Those who integrated reported higher levels of change management effectiveness and a higher likelihood of meeting project objectives. Working collaboratively was viewed as key in integrating the two work streams. Integration happened at the people, process, methodology and tool levels. The most commonly integrated tools were the communications plan, project plan, training plan and schedules. Change readiness In terms of evaluating readiness, 43% evaluated general readiness, 53% evaluated readiness for the specific change, 54% evaluated readiness at the group level and only 33% evaluated readiness at the individual level. Change management measurement Improving employee adoption of the change and delivering on intended project results were the two primary focuses for participants measuring the overall outcome of change management and demonstrating the value-add of applying change management. Only 39% measured change management effectiveness while 45% had to report on change management effectiveness. Participants provided reports on individual employee metrics, overall project performance metrics and change management activity metrics, most often to senior leaders. Speed of adoption, ultimate utilization and proficiency were measured by 24%, 39% and 30% of participants respectively. Sponsorship Participants identified active and visible participation in the project as the most important activity for sponsors in support of change, followed by direct communication to employees, and building and maintaining a healthy coalition

7 of support. There was a direct correlation between sponsor effectiveness and meeting project objectives. Participants engaged sponsors in the change by holding regular meetings and updates, outlining objectives and communicating directly with sponsors. Managers and supervisors Participants identified the most important activities for managers and supervisors during change as communicating the change to their direct reports and advocating for the change. Managers and supervisors were least effective at coaching direct reports through change and managing resistance. Communicating effectively and building awareness of the need for change were identified as approaches to get managers and supervisors on board with the change so they can effectively lead their direct reports. Preferred senders of change messages As in previous studies, an employee s supervisor was identified as the preferred sender of personal messages, while senior leaders were identified as the preferred senders of business-level or organizational-level messages about why the change was needed and how the change aligned with the organization s direction. Communication messages The business reasons for the change were identified as the most important messages for employees and the second most important for managers and senior leaders, behind expectations and their role in the change. Change details were often low on the list relative to the reasons for change. Use of social media Just over one in four participants used social media in communications (26%), up from 19% in the 2011 study. Reach and channel variety were the most common drivers for using social media. Over half of participants used social media only occasionally or once or twice. Nearly 40% evaluated social media as Somewhat effective while just under 35% evaluated it as Effective. Project-related training The most common roles played by change management resources in project-specific training were design, training providers and support, and start-to-end accountability. Face-toface training was the most commonly used vehicle followed by on-the-job training. Training was most commonly delivered during the implementation stage of the project. Resistance Participants provided five tactics for identifying resistance, led by observing behavior and using feedback tools. Resistance was most severe during project implementation. The top reasons for employee resistance and manager resistance paralleled previous studies, led by a lack of awareness of the need for change. Reinforcement and sustainment Participants shared insights on how they planned and resourced for reinforcement and sustainment. Over half of participants (61%) planned for reinforcement and sustainment activities, while less than half (44%) allocated resources for reinforcement and sustainment. In both cases, those that did reported a higher likelihood of meeting or exceeding project objectives. Tactics were shared for sustainment, individual reinforcement and group reinforcement, as well as using performance appraisals and measures to encourage adoption. Consultants Participants reported a slight decline in the use of an external consultant for change management, from 48% in 2011 to 46% in Having sufficient internal capabilities was the top reason for not using a consultant, while a lack of internal competencies and resources was the top reason for using a consultant. The most common roles played by consultants were change management lead, advisor to the change management team and provider of change management tools.

8 Training on change management Participants in the 2013 study reported much higher levels of training specifically on change management for groups within their organization. The most common vehicles used to provide change management training were formal classroom training and informal information sharing. Participants outlined the common topics addressed in these training sessions, including change management plans, methodology, tools and change management principles. Participants recommended delivering more training than they were actually able to deliver. Change management capability and competency building Overall, participants in the 2013 study identified that their level of organizational maturity in change management had increased in the past two years. Over half of participants (53%) reported that they were actively working to deploy change management, up from 46% in Leadership commitment to and support of change management were critical factors for building change management capabilities and competencies. Change Management Offices (CMOs) Thirty-eight percent of participants reported having a functional group or Change Management Office, an increase from 36% in the 2011 study. Participants identified the responsibilities of this group, with the most common being owning and maintaining the change management methodology, owning and maintaining change management tools, and providing consultative support to resources on project teams. The Project Management Office (PMO) was the most common location for the CMO, followed by Human Resources (HR) and Organizational Development (OD). Over threequarters of participants (77%) reported having the group in a single organizational location while 16% reported having it in two locations. Participants outlined the advantages of having the CMO in different locations within the organization. Common and shared definition of change management Participants reported that there was a more common and shared definition of change management in their organization today than there was two years ago. Participants also identified a higher recognition of the value and need for change management within their organization relative to 2011 study results. Percent of projects applying change management Overall, participants reported that 39% of projects in their organization were applying change management; however, nearly half of participants (49%) stated that less than one in four projects in their organization applied change management. Compared to the 2011 results, more projects were applying change management. Justifying change management to project teams Nearly two-thirds of participants (64%) had to justify change management to some degree to the project team they were engaging. The primary focus of their justification was improvement of project results and outcomes, increased focus on adoption and the people side of change, and minimized risk associated with poorly managed change. Justifying change management to senior leaders Three in five study participants had to justify change management to senior leadership teams. Impact on benefit realization, financial outcome, project results and risk mitigation were the most common ways change management was justified to senior leaders. Change saturation and portfolio management More participants reported being near, at or past the point of saturation than in previous studies (77% of participants in 2013, 73% in 2011, 66% in 2009 and 59% in 2007). Forty-eight percent reported saturation universal across the organization while 37% reported localized saturation. Participants outlined several specific change management tactics for their particular project to address the organizational level of

9 saturation. Less than one-third (32%) reported that they were actively managing the portfolio of change and only 20% reported that there was a high or extremely high interest in addressing the portfolio of change. The top motivator for those managing the portfolio of change was to mitigate and alleviate change saturation. Unique change types Participants identified specific change management issues and provided recommendations for seven unique change types. 1. Changes that spanned wide geographic areas 2. Changes that had impact across various cultures 3. Changes that occurred over a long time frame 4. Changes that had little or no what s in it for me? (WIIFM) 5. Changes that occurred in a union environment 6. Changes that had layoffs or significant staff reduction 7. Changes that involved a merger or acquisition Aligning change management with specific approaches Participants identified action steps and recommendations for aligning change management with several specific approaches. 1. Program-management 2. Continuous Process Improvement (CPI) 3. Lean 4. Agile 5. Six Sigma

10 Get your copy of Prosci s 2014 Edition and Immediately start applying the new insights into your change management applications. Further Free Information Learn more and register for Prosci's 2014 Best Practices Webinars and participate interactively with peers and the latest research findings. Attend world-leading change management training programs that are based on Prosci's 16 years of research with over 3,400 change leaders. Sign up for Prosci's 2014 Top Contributors to Success ecourse series and start receiving in-depth insights to the top contributors of success to change management. Receive engaging tutorials straight to your inbox on all the hottest topics in change management. Contact us Prosci Inc South Garfield Avenue Loveland, CO USA

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