Consequences of Poor Change Management [Don’t do the Bare Minimum]

When your organization is on the cusp of a major change, it’s easy to get caught up in the whirlwind. In all this excitement, it can be easy to underestimate the risks of pressing ahead too quickly. 

In particular, if you’re moving so quickly that you fail to account for the people side of change, even the best-laid plans and the sleekest software could leave your company behind the mark. In other words, the impact and consequences of poor change management in an organization are no laughing matter. Examples of poor change management and failures include, but are not limited to, higher costs, greater downtime, and slower benefits realization.  

Today, we’re taking a closer look at what lackadaisical change management looks like, and what change management mistakes could mean for your organization as you embark on an ERP implementation.

An ERP implementation is a busy time. Your team members are pulled in a million different directions, with a looming go-live date hanging over their heads. During this time, it’s all too easy for the project team to lose focus on why the organization initiated the change in the first place.

This is where change management comes in. What is change management? It is the process of looking at the human side of a project and can have major consequences if not performed properly.  

What Does Poor Change Management Look Like?

Especially when you’re in the thick of a project, it can be difficult to see when your organizational change management (OCM) efforts are failing to engage employees. Here are a few telltale signs that OCM isn’t getting the attention it deserves. 

1. Failing to Conduct a Business Readiness Assessment

Taking a general pulse and concluding that everyone is ready could mean overlooking small pockets of resistance that could be huge hurdles to full user adoption.

A business readiness assessment is a tool that anticipates your company’s level of change resistance. It does so by determining the scope of change and outlining potential change impacts to:

• Individual employees
• Project sponsors
• The overall organization
• The company culture

Through this assessment, you might find that the new ERP system will affect some groups beyond what they can currently handle.

2. No Communication Planning

Deciding to make announcements off-the-cuff could take your employees by surprise and stoke fear and confusion. Considering these consequences, we recommend communicating all project details to employees as early as possible.  

Change management communication planning is the process of deciding how, where, and when you will convey these messages. Ultimately, it’s important to connect all of the points back to the business needs driving the change. 

3. Failing to Designate Project Sponsors

Executive buy-in is one thing. Project sponsorship is another.

Project sponsors are more hands-on and can help build a network of support that includes a variety of stakeholders and decision-makers.

If you don’t build a sponsorship roadmap that outlines executives’ roles in project sponsorship, you will have a difficult time coaching sponsors and even securing sponsorship to begin with.

4. Rushing Through End-User Training

Skipping or rushing end-user training not only limits employees’ system knowledge but their process knowledge, as well, especially if your project involves extensive business process reengineering.

Training helps end-users become comfortable with the new ERP software and related processes. It gives them the hands-on opportunity to try new workflows and learn exactly how their daily responsibilities will be changing.

5. No Resistance Management

It’s naive to expect that your entire workforce will be on board with the new ERP system. Likely, there will be some level of change resistance.

Ignoring it or mismanaging it can make employees even more stubborn, but proper planning can move employees in the other direction, toward open-mindedness.

What do we mean by planning? We’re talking about developing a resistance management plan that helps you identify, analyze, and manage all forms of resistance as early as possible.

6. Not Asking for Employee Feedback

Soliciting employee feedback throughout implementation, but especially after go-live, helps you discern what’s working, what’s confusing, and where the pain points lie.

If you don’t seek feedback, you won’t know how to best support your employees through the transition.

For example, you might not know that your accounting team needs supplemental training or that an inventory feature needs to be reconfigured.

3 Types of Consequences of Poor Change Management

1. Project-Level Consequences

If you forego change management, you’ll first feel the effects within your specific project or initiative. These can be both financial and operational in nature, including:

• Project delays
• Budget overruns
• Missed milestones
• Design rework

All these issues heap additional costs on your project and can impact your bottom line. In addition, you incur risks, such as:

• Employee resistance
• Project holds
• Resource unavailability
• Low ERP benefits realization
• Project abandonment 
• ERP failure

2. Organizational-Level Consequences

Sometimes, the consequences of poor change management can be far-reaching enough to affect your entire organization for the long term. Usually, this happens when a company has a longstanding legacy of neglecting change management. 

Some of the organizational costs that can stem from poorly-managed change include:

• Massive dips in productivity
• Employee attrition
• Reduced work quality

While these issues are challenging to navigate, in themselves, they aren’t the only problems you could face. You may also face the following company-wide risks: 

• Customer and supplier dissatisfaction
• Low employee morale
• Employee confusion, frustration, and fatigue
• Change saturation (implementing too much change at once)

3. System-Related Consequences

It’s worth mentioning that a hallmark of ineffective change management is that it’s not future-focused. This type of change management can result in ERP software that doesn’t continue to meet your business needs.

If continuous improvement is important to your company, then change management should be continuous, as well. A short-sited change management plan can result in new pockets of resistance that make you more likely to skip upgrades and other system enhancements. Over time, this means your system becomes misaligned with your business goals.

Prevent a Gloomy Project Outcome by Focusing on Change Management

Just like ERP selection, change management deserves a dedicated team and an adequate budget. When you follow the right OCM methodology, you accelerate your time to full benefits realization. In contrast, when your OCM is lackadaisical, you could end up waiting decades for those same benefits and still not realize them.

The impact and consequences of poor change management in an organization are too great to ignore. Our team of change management consultants can help you follow OCM best practices that are proven to accelerate your project ROI. Contact us below for a free consultation.