Strategies to Help Unlock Organizational Change Management Budget Constraints
You’ve undoubtedly seen the frequently quoted McKinsey statistic that claims 70% of change initiatives fail. In reality, change initiatives — whether focused on systems, processes, or culture — are rarely outright failures. More often, they don’t meet their full intended objectives for one reason or another, they suffer from poor planning, lack of leadership support and resources, an overemphasis on systems instead of the people affected by change, and inadequate change leadership skills.
And that’s where organizational change management (OCM) comes in — the catalyst between your vision for transformation and the on-the-ground reality of that transformation for your organization and employees months and years down the line.
We wanted to uncover the most significant challenges change management professionals anticipated in 2023, helping guide them to build a more successful transformation journey. In our recent LinkedIn poll of business transformation and change management professionals, 35% of respondents revealed that their most pressing concern this year was “budget constraints.”
If budgeting for OCM is your biggest hurdle, it can seem insurmountable: Either you have the money or you don’t. However, there are strategies to make use of the budget you have to continue moving forward, and discussion points you can share with leadership to make the case for why change management is important.
Get In Front of Leadership Early
Your leadership team is the key to ensuring a change initiative meets its goals. Ensuring they also understand the value of OCM — and the need to adequately budget for it — is critical to the overall success of the initiative. Getting in front of them early is important so you can foster this understanding and give them time to consider and ask questions.
For this session to be effective (and ultimately win the budget you need for OCM), make these points:
- How fully funded and structured OCM initiatives deliver a higher ROI than unstructured change
- How OCM will reduce the length and severity of change-related disruption
- OCM’s role in defining and personalizing change for individual employees
- How the OCM budget ensures employees receive the necessary training and upskilling
- How OCM supports comprehensive and regular communication to ensure change sticks
Choose the Right Provider (Hint: It May Not Be “The Big Four”)
It’s tempting to look at the biggest OCM providers in your space to help lead and execute your initiative, but this can be an expensive mistake. If the budget for your OCM initiative is small (i.e., your OCM budget is supporting an overall change initiative of less than $10 million), you will not be getting the “A players” at those firms on your account. It will likely be junior folks who, while smart and motivated, do not have the experience you need to be effective.
Selecting a smaller and more cost-effective OCM provider ensures that you’ll have their veteran professionals (think decades of experience) leading the charge. They’ll make better use of the budget you do have and will likely help with the execution as well, rather than simply dropping hundreds of pages of strategy on your desk for you to figure out and implement the change.
Make Your Transformation Budget CapEx, Not OpEx
When it comes to your change and OCM budget, it may seem logical to make this an operating expense since it can involve technology, processes, and human capital. And frankly, OpEx budgets are sometimes easier to obtain without too many hoops to jump through.
However, because the change initiative and associated change management, as well as the products, processes, and staff needed to implement it will extend beyond the current tax year, budgeting these initiatives under capital expenditures (CapEx) has advantages. These fixed assets are depreciated over time to distribute the cost over the useful life of the change. This helps your organization to avoid a substantial hit to its bottom line during the year the change initiative happens, which can make getting the necessary budget with your leadership a little easier and more enticing.
Drive Incremental Change and OCM with the Budget You Have
Change initiatives do not always need to be sweeping all-or-nothing changes that impact the entire enterprise. If your budget for the change and associated change management supports incremental transformation focused on a smaller subset of your organization, it’s a good place to start.
If possible, choose an area of the organization that has bought into the “why” of the change — they’re more likely to embrace and implement the change, and you’re more likely to be successful. A successful pilot program can help you make the case for broader change across the organization — with the necessary OCM budget to support it.
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