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• Everything Communicates - 7 Steps for Great internal communication
• PITOC Overview
• Why do we need professional change managers and leaders?
• Seven signs that your Company is struggling to implement change
• Why do organisations need to transform and change?
• Benefits Management - 'A Strategic Business Skill for all Seasons'.
• The challenge of creating positive working environments
• A summary of Professor John Kotters 8 step change process
• Leadership challenges in the Public Service
• Can staff engagement really pay back to bottom line business performance?
• Are any of these bad habits holding you back?

Benefits Management - 'A Strategic Business Skill for all Seasons'.

This article was originally produced by the APM Benefits Management SIG and a full copy of the report can be downloaded here

Formal benefits management is often a much misunderstood area. It is a relatively new approach that has not yet reached a high level of maturity. As a result, many in business circles regard benefits management as an esoteric subject. There is now an opportunity to re-define the approach to managing benefits, both within the project/programme management community and amongst wider business professionals engaged in implementing change.

The economic downturn has increasingly focussed business attention on benefits, both financial and non-financial, particularly to inform strategic decision-making. In addition, many senior executives have become dissatisfied with process-led project and programme management not delivering the expected business outcomes. With investment in change being more closely scrutinised by senior executives, there is a need for greater innovation in using benefits management to drive change. The increasing frequency, scale and complexity of change is also driving the need for a more strategic approach to managing benefits.

Our vision, ‘a strategic business skill for all seasons’ is centred on using benefits management to align the journey from business strategy to delivery to the embedding of change within organisations. It is supported by the following factors:

• the economic climate is driving the requirement for greater value for money, including cost reduction, across both public and private sectors;
• the contribution of benefits management to successful strategic planning;
• the need to align strategy, delivery and the embedding of change into a single approach to managing benefits;
• benefits management is emerging as a core business skill for all managers engaged in leading and implementing change;
• strategic portfolio management is now recognised as a standard board-level competency;
• the need to align the management of change with corporate performance management across the organisation.

Our challenge is for a broad spectrum of business leaders to consider how they can improve their organisation’s approach to benefits management in times of downturn and recovery.

Executive summary

All organisations invest in change in order to deliver their business strategy and this is necessary to remain competitive. Benefits are the single reason why we undertake change, yet so often the race for delivery and other business priorities detract from the reason why change was undertaken in the first place.

Most organisations undertake formal projects and programmes to deliver change. More recently, portfolio management has become the accepted standard for managing the overall set of projects and programmes across an organisation or business area. Organisations also invest in initiatives related to the softer aspects of embedding change such as organisational design, employee engagement and customer communications.

The common thread between strategy, delivery and embedding the change is the requirement to realise benefits. However, benefits management is traditionally seen as an element of project and programme delivery.

Formal benefits management is less than twenty years old and has developed out of the limitations of more traditional investment appraisal techniques, such as

Return on Investment. A recent national APM survey asked respondents to describe the approach to benefits management within their organisation. Interestingly,

60% described the approach as informal or incidental. It is evident that the maturity of benefits management is still developing. In our view, the reasons for this include:

• senior executives becoming dissatisfied with process-led project and programme management not delivering the expected business outcomes;
• benefits management is often wrongly seen as a specialist discipline requiring deep expertise;
• benefits management is often misperceived as only a financial skill-set;
• a misperception that benefits management is benefits tracking which provides monitoring of metrics only after the change has occurred.

The increased emphasis on benefits management in the APM Body of Knowledge, PRINCE2 and Managing

Successful Programmes is starting to make a difference. There are a number of other emerging factors which are building organisational capability and support our vision, ‘a strategic skill for all seasons’. They are:

1. The economic climate is driving the requirement for greater value for money, including cost reduction, across both public and private sectors;

Most business organisations in the UK are experiencing a tightening of financial spending, particularly those in the public sector. For example, government professionals are facing choices over resource allocation, head-count, capital programmes and the need to align their service delivery planning more closely to minimum statutory commitments.

The private sector is facing difficult choices in order to minimise costs in challenging market conditions. In the recent APM national survey, 54% of respondents indicated that cost reduction is a primary driver of projects and programmes in their organisation.

Approval for investment in change now requires tangible evidence of sustainable benefits, both financial and non-financial.

While the economic situation creates challenges for many organisations, it is proving to be a catalyst for improving benefits management. Organisations are taking the lessons learned from applying essential cost reduction and using them to improve their approach to benefits management. Successful benefits management provides a rational argument to gain approval for investment in change and to ensure subsequent success in realising the benefits and then exploiting them.

2. The contribution of benefits management to successful strategic planning;

Business strategy is delivered through projects and programmes. Many successful organisations are using benefits identification and planning to inform strategic decision-making. This ensures that desired strategic outcomes are linked to project/programme delivery and change management from their inception.

The opportunity to drive strategic decision-making through benefits management requires commitment from the senior management team to ensure that the organisation’s culture supports the approach. Ideally, it requires an executive champion with strong influence across the organisation.

The alignment of benefits management to strategic decision-making is a major catalyst in the development of outcome-based programme and portfolio management.

Many organisations have already implemented benefits driven strategic business planning to drive their investment in change. As a result, they are constantly improving the success rate of their change programmes and thereby increasing their competitive position in relation to other organisations.

3. The need to align strategy, portfolio delivery and embedding change into a single approach to managing benefits;

Evidence suggests that a long history of process-led project and programme management has resulted in many organisations having a delivery-led culture to managing change. This can result in failure to realise benefits post delivery as once the project/programme is delivered, change is seen as complete. In addition, the softer aspects of change management are not always aligned to delivery resulting in a disconnect between those delivering the change and those embedding the change. To be successful, the journey from strategy, through delivery, to embedding change needs to be benefits-driven. There are good examples starting to emerge.

4. Benefits management is emerging as a core business skill for all managers engaged in leading and implementing change;

Change is almost continual for business organisations and many people are impacted. According to John Kotter in his Harvard Business Review article on leading change, ‘Up to 70% of change initiatives fail to deliver on the benefits that they set out to achieve’. Realising benefits cannot be the responsibility of only the project or programme manager.

Instead, it needs to be a partnership approach between the managers delivering change and those in ‘business as usual’. The governance model needs to be centred on ‘business as usual’ managers owning the benefits relevant to their area. Often when a programme closes, the changes are still being embedded and significant benefits are yet to be realised. To ensure success, all managers involved in change must understand their roles and responsibilities in this partnership approach. Benefits management is becoming a core business skill for all managers engaged in implementing change.

5. Portfolio management is now recognised as a standard board-level competency;

Traditionally, project and programme management has had limited exposure in the board room. Senior executives often perceive it as a tactical or operational level skill.

Portfolio management is now the accepted standard for managing the overall set of projects and programmes across an organisation. In simple terms, portfolio management ensures alignment of change with corporate business strategy whilst prioritising the use of resources. In the recent APM national survey, 37% of respondent’s organisations currently use portfolio management whilst a further 35% are considering doing so.

Ultimately, senior executives are interested in the strategic benefits from change and the associated risks to them. A benefits-driven approach to portfolio management ensures that the overall set of projects and programmes are outcome focussed. It also ensures that benefits across the portfolio are not double-counted, thereby avoiding financial and reputational risk. Successful benefits management provides the framework to ensure that portfolio management is benefits focussed.

6. The need to align the management of change with corporate performance management across the organisation;

All organisations undertake performance management at a corporate level whether through monthly management accounts, performance reports or other measures. For example, Public Service Agreements detail the aims and objectives of UK government departments over a three-year period. Such agreements also describe how targets will be achieved and how performance against these targets will be measured. For change to be successful, management information on benefits should be aligned to the corporate performance framework; this ensures ownership and accountability for the outcomes of change. In the recent APM national survey, 60% of respondents indicated that their organisation had a standard set of key performance indicators to measure corporate business performance.

However the same survey revealed that only 12% of respondents used a software application to support management information on benefits. This implies a lack of maturity in the software market for benefits management.

Without robust management information, the governance of benefits is likely to be ineffective as decisions will be made without fully understanding the implications. It is important to ensure that there is a ‘single version of the truth’ to manage performance at a corporate level.

Conclusion: Seizing the opportunity

In recent years, organisations have come under increasing pressure to ensure that investment in change realises the expected benefits. This challenge has been heightened in the last twelve months by the economic downturn. By adopting a more strategic approach to benefits management, organisations can address this challenge.

Implementing the vision set out in this report depends on the ability of business leaders to recognise the need, not only for a series of tactical adaptations but also for a broader programme of strategic transformation across the key areas outlined. This includes developing new corporate capabilities in benefits management encompassing the broad range of business functions that all have a role in realising benefits. This includes board members, finance, strategy, project/programme and change management, human resources and the wider business organisation.

The vision set out in this report should encourage business managers to undertake an end to end review of their entire approach to benefits management. This should include an assessment of how well the organisation is using its leadership, skills and systems to manage benefits.

Changing hearts and minds across an organisation can be challenging. The economic downturn provides an opportunity to drive through a new approach to benefits management to ensure that it is ‘a strategic business skill for all seasons for recovery as well as downturn’. The time to respond to that opportunity is now.

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