The Bottomline on ROI

Transcription

1 Accountability Progress The Bottomline on ROI Presented by Patti Phillips, PhD author of The Bottomline on ROI Describe the five levels of evaluation Identify six types of data Identify ten steps in the ROI Methodology Explain the importance of twelve guiding principles Determine when to use ROI ROI Methodology HR Profit Center Balanced Scorecard HR Macro Studies Human Capital Measurement HR Auditing HR Case Studies Feedback Surveys MBO in Personnel Competitive HR Benchmarking HR Satisfaction Surveys HR Cost Monitoring HR Key Indicators 1960s 1970s 1980s 1990s

2 Value must: Be balanced, with qualitative and quantitative data Contain financial and non-financial perspectives Reflect strategic and tactical issues Represent different time frames Satisfy all key stakeholders Be consistent in collection and analysis Be grounded in conservative standards Come from credible sources Create a call for action Capital Investments (15%) Non-Capital Investments (85%) Buildings Vehicles Equipment Companies Tools Some Technology Marketing Some Technology Human Resources Staff Support Quality Processes BCR = Benefits Costs ROI = Net Benefits Costs x 100 2

3 BCR = $750,000 $425,000 ROI = $750,000 - $425,000 x 100 $425,000 BCR = $750,000 $425,000 = 1.76:1 ROI = $750,000 - $425,000 x 100 = 76% $425, Set the value at the same level as other investments 15% 2. Set slightly above other investments 25% 3. Set at breakeven 0% 4. Set at client expectations 3

4 1. Set the value at the same level as other investments 15% 2. Set slightly above other investments 25% 3. Set at breakeven 0% 4. Set at client expectations What is positive about a negative ROI? Five pieces of a puzzle come together An Evaluation Framework Case Applications and Practice Implementation A Process Model Operating Standards and Philosophy Levels of Evaluation 0. Inputs and Indicators Measurement Focus The input into the project in terms of scope, volume, efficiencies, costs Typical Measures Participants, Hours, Costs, Timing 1. Reaction & Perceived Value Reaction to the project or program, including the perceived value Relevance, Importance, Usefulness, Appropriateness, Intent to use, Motivation to take action 2. Learning & Confidence Learning to use the content and materials, including the confidence to use what was learned Skills, Knowledge, Capacity, Competencies, Confidence, Contacts 3. Application & Implementation 4. Impact and Consequences 5. ROI Use of content and materials in the work environment, including progress with actual items and implementation The consequences of the use of the content and materials expressed as business impact measures Comparison of monetary benefits from program to program costs Extent of use, Task completion, Frequency of use, Actions completed, Success with use, Barriers to use, Enablers to use Productivity, Revenue, Quality, Time, Efficiency, Customer Satisfaction, Employee Engagement Benefit-Cost Ratio (BCR), ROI%, Payback Period 4

5 Stage 1 Evaluation Planning Stage 2 Data Collection Develop Objectives Of Solution Develop Evaluation Plans and Baseline Data Collect Data During Solution Implementation Collect Data After Solution Implementation Level 1 Level 3 Level 2 Level 4 Capture Costs Of Solution Stage 3 Data Analysis Stage 4 Communicate Results Isolate the Effects of Solution Convert Data to Monetary Value Calculate the Return On Investment Generate Impact Study Report Level 5 Identify Intangibles Measures Intangible Benefits 1. Report the complete story 2. Conserve resources 3. Use the most credible sources 4. Choose the most conservative alternatives 5. Isolate the effects of the program 6. No data no improvement 7. Adjust estimates for error 8. Throw out the extreme and unsupported 9. Use first year benefits for short-term programs 10.Include fully-loaded costs 11.Report intangible benefits 12.Communicate results to all stakeholders ROI Institute, Inc. 5

6 Inputs Reaction Learning Application Isolate the Effects of the Impact ROI Intangible Benefits aaaaaaaaaaaaaaaaa aaaaaaaaaaaa Consider the following: Life cycle of the program Linkage of program to operational goals and issues Importance of program to strategic objectives Top administrator interest in the evaluation Cost of the program Visibility of the program Size of target audience Investment of time required John Piccolo Dressing Change Delays Business Impact Sales/Margin Control Group Standard Value 6

7 Edward Nathan Online English-as-a-Second-Language Business Impact Time Savings Standard Value Mauro Cossu, Gtanlutgt, and Lisa Ann Edwards: Italy Executive Coaching Business Impact Varies Based on Action Plan Standard Value Executive Estimations Rika Tome: South Africa Supervisor Coaching Business Impact (varies) Beat Rate (efficiency) Sales Targets Supervisor Estimations 7

8 Sean O Toole and Al Dawood: Australia Caseworker Development Business Impact Retention of Aboriginal Staff Promotion of Aboriginal Staff into Management Roles Standard Value Balanced set of measures Step-by-step process Bridges evaluation disciplines Balances research and reality Flexible Credible Assess your readiness for ROI Identify stakeholders and their data needs Determine the purpose of your evaluation practice Identify programs suitable for ROI Develop capability in the ROI Methodology 8