How CFOs Can Ensure Change Delivers Results
It is crucial for CFOs to establish a measurement process for change management projects to ensure alignment with stakeholder objectives and effectively track progress. By defining key metrics from the outset, such as the impact on the company, individuals, and overall project quality, CFOs can gain buy-in and demonstrate the success of the initiative. This structured approach helps manage stakeholder expectations and provides tangible evidence of the project’s effectiveness.
For most change management initiatives, CFOs should assess the impact across three key categories:
The effect on the company.
The impact on individuals involved.
The overall quality of the change management project.
CFOs need to identify the most relevant metrics for each project based on its nature. After establishing these key metrics, a plan should be created to collect and review data throughout the project’s lifecycle and beyond, to evaluate its long-term impact. This process may require collaboration with other teams across the organization, depending on the data sources and systems used. To streamline data collection, consider implementing automated dashboards to capture and track data efficiently and in real-time.
To ensure the success of a change project, CFOs must choose the right performance measurement system and be ready to take action if outcomes do not meet objectives. Here are four popular systems, each with its pros and cons:
Return on Investment (ROI): Common and easy to calculate, providing a clear view of profitability. However, it overlooks the time value of money, which can affect accuracy.
Net Present Value (NPV): Accounts for the time value of money, offering greater accuracy than ROI. However, it can be more complex to calculate and interpret.
Internal Rate of Return (IRR): Similar to NPV, factoring in the time value of money. However, calculating IRR can be more challenging.
Payback Period: Simple to understand and calculate, but it doesn’t consider the time value of money.
There is no one-size-fits-all system. The best choice depends on the project and business goals. ROI is a good starting point, but NPV or IRR may be more suitable for certain situations, while the payback period is useful for simpler evaluations. CFOs need to be familiar with these systems and choose the one that aligns with the project’s needs and desired outcomes.
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