What Is the Cost of Ignoring Change Management?

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Change is necessary for innovation to occur. If managed well, it is effective, but if managed incorrectly, it can be worse than no change at all.

Change management requires a well-developed strategy. Failing to create one can result in high cost and significant loss. Here’s what you need to know.

What is change management?

Change occurs over time. It requires strategy and planning. Companies that ignore this process won’t succeed.

General Electric CEO Jack Welch understood the importance of change management and the role it played in innovation. He proposed that GE would adopt Six Sigma, a process that helps organizations shed waste and streamline how they operate.

He felt it important to support his employees through this change so they would be on-board. This transformation took five years and was a case study in working through change.

Change management helps employees grow accustomed to new processes, so larger changes within the organization will succeed. It requires guidance and support, so employees can embrace new technologies and processes.

Change managers work with employees to make the process smoother. Through preparation and acceptance over time, expected outcomes are achieved.

Why is change management necessary?

Change management was once seen as something nice to implement, but not necessary. Economic shifts and the ever-changing technology landscape constantly cause disruptions that can’t be ignored. This is forcing workplaces to continually adjust.

Change management is an investment. It saves companies money and increases productivity. Research shows company initiatives that include well-executed change management are six times more likely to reach their goals and objectives than those that don’t.

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How do you introduce change management?

Introduce change management over time rather than all at once. Some employees will be ready for change, while others will resist. When this occurs, costs increase.

Companies spend more to operate because their old processes have become inefficient. Projects are not completed within the specified deadline or on budget.

Proficiency decreases, and employees can’t utilize resources that haven’t been adopted. These factors all negatively affect expected returns.

What happens on a project level?

Projects are impacted by the presence or lack of change management. Projects influence technologies, tools, and processes that affect how employees work.

Projects become delayed, and milestones are missed. Budgets are sometimes exceeded due to additional work.

Obstacles sometimes unexpectedly appear, causing the project to be placed on hold. In some cases, it is not possible to pick it up again.

Project risks affect the entire organization. This causes valuable employees to leave the company, adding more costs. Productivity halts, and work quality suffers. 

How do you effectively apply change management?

Effective change management prevents unnecessary costs. It decreases risks associated with a lack of change and creates a positive atmosphere in the organization.

The supply chain is strengthened. This positively impacts customer relationships.

Project quality improves with effective change management. According to research, a project is six times more likely to meet benchmarks when the right techniques are in place. Leaders who improperly manage processes and people don’t see this success.

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