Financial planning and change management may seem like distinct domains, but they share a deeper connection than meets the eye. For a long time change managers have been battling with the preconception that the change function is an overhead cost, dispensable rather than core, and an easy target when the budget needs to be trimmed.
There seems to be an excitement-remorse cycle of investing the time and energy to set up a change practice, develop or purchase a methodology, hire sound change practitioners, start to execute and implement, build from project level support to program level to change portfolio; only to cut the function out of the next financial planning cycle.
Organisations that have been through this cycle already know the pain it generates. Because there will always be another project needing change resources. In the meantime there has been no care taken over the methodology artefacts and templates have lapsed and general organisational knowledge is back at square one. This often results in single resource procurement and 'floating' change practitioners who are not given a full opportunity to develop excellence for the organisation.
Not only is the cycle short-sighted, it is counterproductive.
We are slowly shifting the paradigm to a place where change management is not an overhead but an essential enabler. And the organisations embracing this new paradigm are places where change excellence grows, the change community is excited, organisational leadership is surprised by how well supported they are, and ready to step up their own performance to better embrace inspiration and innovation.
Change management and financial planning are not, therefore, natural enemies. The challenge for financial planners at budget time is to resist the urge to cut a function that inevitably grows back. Let's have a look at why financial planners should care about retaining change management.
Bringing people to the party
Strategic Alignment
When financial plans adapt to new market dynamics or shifts in business models, effective change management ensures smooth transitions. Financial planning involves setting goals, allocating resources, and creating budgets to achieve organisational objectives and change management ensures that these financial strategies align with broader organisational changes.
Budgeting for Change
A well-coordinated approach between financial planning and program planning cycles is what's called for. A coordinated approach ensures that change projects stay on budget and achieve desired outcomes. Change initiatives often require financial investments—whether in technology upgrades, process redesign, or talent development. Financial planning allocates funds for these changes, ensuring they are adequately resourced.
Risk Mitigation
The final hurdle at which the big expense or capital items fail to reach return on investment is often adoption. Yet change management identifies and mitigates people risk in advance. By integrating risk management into financial strategies, organisations can navigate change more effectively. See more in our article Risk in Change: Mitigation through Intelligent Failure. Change introduces risk, including financial risks. When risk assessment is closely linked to financial planning, appropriate financial contingency can be incorporated.
Communication and Transparency
Transparent financial discussions build trust and foster alignment during transformation. Change management emphasises clear communication and stakeholder engagement. Financial planners benefit from this as they communicate budget allocations, cost implications, and financial impacts of change.
Measuring Success
Financial metrics play a crucial role in evaluating initiatives that promised to deliver benefits. Whether delivering cost savings, revenue growth, or return on investment, financial indicators validate change efforts. Change management tracks financial KPIs (Key Performance Indicators) to assess project success. Having the metrics align early on enables organisations to move from pockets of good practice to joined-up processes of a much higher order. Further, the oft-forgotten sustainability efforts of change management can be finely tuned to maximise the projected benefits.
Behavioural Economics
Aligning insights from financial planning with change management ensures that financial strategies resonate with employees and drive behaviours towards growth outcomes. Change management considers human behaviour and financial planning also involves understanding how people make financial decisions. By combining the forces of financial planning and change management, an organisation can create an environment that focusses behaviourally - and by 'putting it's money where it's mouth is' - on consistently supporting it's own growth strategies.
Is Change Management the natural enemy of Financial Planning?
In essence, financial planning and change management are intertwined threads in the fabric of personal growth and business evolution. By bringing together practical, tangible plans for change with planning the financial future, organisations plan to create and achieve lasting success.
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