The Link Between Effective Change Management and ROI - Modern Distribution Management

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The Link Between Effective Change Management and ROI

Distributors that have successfully transformed over the past several years are the ones that have quickly pivoted to change management programs.
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Whether it’s implementing new digital tools, e-commerce platforms or pricing programs, distributors are undergoing transformations at a rapid clip. Those who have pivoted successfully have embraced change management as one of their core values.

During the recent MDM webcast “Transformation Management: Capture Maximum Value” PROS Lead Strategic Consultant Bill Dudziak provided a detailed blueprint for implementing a change management plan. Dudziak said the winners and the losers of the transformation initiatives are determined by the distributors that can effectively change with the markets. While markets were changing even before COVID-19, the pandemic has accelerated the pace of change across all industries.

“Change management, and the core of objective of effective change management, is to maximize the value captured across people, processes and technology,” Dudziak said. “We’ve been working with more and more customers that have said with the current labor for shortage they’re actually undergoing technology transformation not so much to deliver a better experience to their customers, but actually to deliver a better experience to their employees.

“The employees want to do a good job. They want to have the tools to do a good job, but not having those causes frustration, potential burnout and employee turnover when it’s very difficult to replace these people.”

Dudziak said there are numerous studies that link successful change management practices with higher returns, including one by McKinsey that found average project ROI increases by 43% when there are effective change management initiatives. Also, according to McKinsey, companies with effective change management systems in place are six times more likely to reach their objectives through better cooperation, productivity, quality of work and reduction of stress. All of which improves employee loyalty and employee engagement.

Dudziak said building an effective change management campaign needs to be done across three key areas: best practices, communications and measurement.

How to make it happen

Best practices and communication include:

  • Setting up a change management team that includes all of the stakeholders, such as field sales, sales operations, supply chain management and pricing teams.
  • Designating a change management lead employee who owns the strategy and manages the relationship with an executive sponsor.
  • Creating a communications lead who is in charge of the detailed communication plan while also coordinating the execution of all communication activities.
  • Designating a training lead who owns the training strategy and plan, coordinates the training plan activities and ensures that all of the training meets the desired outcomes.

“I can’t express this enough, you have to over-communicate to overcome emotion,” Dudziak said. “That communication has to be constant, and from all levels. It really starts with a well-defined vision. You have to give people permission to let go of what they were doing and embrace what they’re expected to do.”

For measurements, distributors can identify what key KPIs they’re trying to improve and then break them down to their simplest elements before gradually increasing the levels of complexity.

Measurements are often more needed at the beginning of the change management process to make sure that adoption is taking place, but it’s also important to keep measurements in place as the change management transformation matures.

“I would say, independent of whether a project is very simple or very complex, you want to measure, adjust and adapt if needed,” Dudziak said. “It’s a pretty straightforward task. I would say once a week to start, and then slowly drift off from that. If you see people reverting back to the old behavior, then you want to start  picking up measurements more often.”

Click here to listen to the MDM webcast in its entirety. 

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