Low Change Readiness Will Cost You

The graph below shows that as an organisation’s change readiness increases, the costs of change decrease. The opposite is also true – the lower your organisation’s change readiness, the more you pay and the less you get.

costs of change

Organisations with low change readiness are more than twice as likely to fail at change compared to change-ready organisations. FAILURE – that’s a pretty big cost. Failure is disruptive, expensive, lowers morale, and damages careers.  But, unfortunately, the costs don’t stop here.

Increased Costs, Increased Risks

When change readiness is low, failure is linked to 3 other costs of change.

The Financial Cost

  • According to the Society for Human Resource Management (SHRM), the cost of replacing a technical/leader-level employee is around 250% of their salary. In other words, it could cost the business up to $312,500 to replace a single employee on a salary of $125,000 (including benefits).

Salary $125,000
Cost of Employee Replacement $312,500

According to Gallup, 17.2% of the workforce are actively disengaged and only 13% are actively engaged. Gallup estimates that for every $10,000 in worker salaries, $3,400 is lost to disengagement in the workforce. Over a third of the payroll is lost to disengagement. To be precise, one disengaged manager on a package of $125,000 costs the business $42,500 in lost productivity.

You Pay $125,000
You Get $82,500 Worth of Value

The Human Cost

  • Change resistance, change fatigue, disengagement, and increased staff turnover

The Cultural Cost

  • High levels of resistance, disengagement, apathy, change fatigue, and staff turnover results in employees losing commitment to the organisation and looking for other employment. The stress and disengagement produces negativity and can create long-term damage to the organisation’s culture.