roi on people management interventions - it is possible!!
DESCRIPTION
My interpretation of the ROI for sof interventionsTRANSCRIPT
ROI of Human Capital Interventions
A Practice Toolkit
Description Icon
Relevant quote
Concept/Framework
Tools, Techniques
Template
Step 1
Presenting Problem to Real Problem
Step 1. Presenting Problem to Real Problem
The first task of the practitioner is almost always analysis
Starts with a “presenting”
problem – not a “hunch” but a
problem … as it presents itself
Step 1. Presenting Problem to Real Problem
Example…
Let's take an example – higher staff turnover for
Graduate Engineers (let say compared to an
industry standard)
The first question should not be, what skills and knowledge are required. It should be which metric(s) are affected negatively.
Step 1. Presenting Problem to Real Problem
Example…
Unit cost per replacement
Cost of 'covering' a vacant position
(Calculated costs of other employees
'filling in' while the position is vacant)
Cost to fill a vacant position
On boarding & Orientation cost
Cost of productivity ramp-up
Step 1. Presenting Problem to Real Problem
1.1 Calculating benchmark employee cost
Nr Metric Element Description Example
1. Departing employee annual base salary
N/a 100,000
2. Calculated annual benefits cost Estimated at 20% of base salary
20,000
3. Calculated monthly salary + benefits 10,000
4. Calculated daily salary + benefits Based on 230 (8hr) working days
522
Step 1. Presenting Problem to Real Problem
1.2 Cost of 'covering' a vacant position (Calculated costs of other employees 'filling in' while the position is vacant)
Nr Metric Element Description Example
1. Number of days until the vacant position is filled
N/a 90
2. Calculated daily cost of 'covering' a vacant position
33% of departing employee's daily salary + benefits
522/3
3. Total cost to 'cover' vacant position 15644
Step 1. Presenting Problem to Real Problem
1.3 Cost to fill a vacant position
Nr Metric Element Description Example
1. HR/Hiring manager's annual salary N/a 200,000
2. Calculated HR/Hiring manager's hourly rate Based on 230 (8hr) working days and 20% fringe rate
130
3. Cost of advertising (online and/or print) Enter cost 3000
4. Cost of resume screening HR/Hire manager hours * hourly rate
50*130=6500
5. Cost of interviews (telephone screening, 1st and 2nd)
HR/Hire manager hours * hourly rate
50*130=6500
6. Cost of behavioural and skills assessments Enter cost 3000
7. Cost of background checks (criminal, credit, reference, education)
Enter cost 4000
8. Cost of travel/moving expenses (if applicable) Enter cost 5000
9. Total cost to fill a vacant position: 28,000
Step 1. Presenting Problem to Real Problem
1.4 On boarding & Orientation cost
Nr Metric Element Description Example
1. Trainer/Manager annual salary: N/a 100,000
2. Calculated trainer/manager daily rate Based on 230 (8hr) working days and 20% fringe rate
522
3. Total training days Enter number of days 10
4. Total on boarding and orientation cost N/a 5220
Step 1. Presenting Problem to Real Problem
1.5 Cost of productivity ramp-up (During the first 3 months, an average new employee performs at 50% productivity of a tenured top performing employ
Nr Metric Element Description Example
1. Daily employee cost (salary + benefits) N/a 522
2. Number of working days during first 3 months: Enter number of days (avg. 58 days
50
3. Cost of productivity ramp-up N/a 26100
Step 1. Presenting Problem to Real Problem
1.6 Unit cost for filling a vacancy
R 74964
Two important learning points:I. Know your metricsII. Negotiate, and even request help from your client to determine the right metrics. They are
closer to the business and at the same time you obtain by in for the intervention.
Step 1. Presenting Problem to Real Problem
1.7 Total cost of replacing graduate engineers
R 74964 x 6 = R 449784
Let's assume that we had to replace five graduate engineers the past six months
Analysis and Definition of
Business Need
Identification of Performance
NeedCompetence Gap
Solution Generation
Intervention Strategy
Presenting Problem/
Opportunity
Non Training Solution
Step 1. Presenting Problem to Real Problem
Now we can move on to analysis
We know now which metrics are affected
Consultant speciality
Step 1. Presenting Problem to Real Problem
The basic tasks in analysis
4. Perspective and information for decision making
3. Data analysis
2. Data consolidation
1. Data gathering
Step 1. Presenting Problem to Real Problem
Two types of data
Data
Quantitative
Qualitative
” More about context, how people experience in their own words”.
”The truth is in a number” – however does not say much about context
Step 1. Presenting Problem to Real Problem
Data gathering
I. QuestionnairesII. SurveysIII. TestsIV. InterviewsV. Focus groupsVI. ObservationVII. Performance recordsVIII.Knowledge and skills testingIX. Program follow upX. Project assignments
Before intervention
After intervention
Before intervention
After intervention
Step 1. Presenting Problem to Real Problem
Data gathering
I. Target population/participants;II. Supervisors of target
population/participants;III. Subordinates of target
population/participants;IV. Peer Group;V. HRD Staff;VI. Documentation:
• Organizational Performance Records:
• Disciplinary records;• Safety records;• Scorecards
Before intervention
After intervention
Step 1. Presenting Problem to Real Problem
Contextual factors to consider when selecting data collection methods
I. Time for participants to respond;II. Costs;III. Amount of disruption of normal
activities;IV. What is the level of certainty that
you will achieve with the result;V. Practicality;VI. Culture/Philosophy – example the
10% syndrome.
Before intervention
After intervention
Step 1. Presenting Problem to Real Problem
Requirements for effective data collection instruments and techniques
I. Construct validity ( methods, techniques and test instruments should be evaluated in terms of its theoretical grounding);
II. Predictive validity (methods, techniques and test instruments should be evaluated regularly in terms of its ability to predict what it purport to predict);
III. Face validity – for line management very important!
Before intervention
After intervention
Step 1. Presenting Problem to Real Problem
Requirements for effective data collection instruments and techniques
Reliability:I. Produce consistent results
over time, that differentiates effectively, and are independent of the assessor/data collector, or context.
Before intervention
After intervention
Step 1. Presenting Problem to Real Problem
Data consolidation
Data Consolidation Techniques are Wide and Varied
Descriptive statistics
Qualitative description, using organizational and other models and concepts
Step 1. Presenting Problem to Real Problem
Data analysis
Data Analysis Varies According to Situation
Descriptive and inferential statistics
Qualitative decisions about the situation, based on decision making and techniques
Note the following !• Because this toolkit does not aim to transfer knowledge about
analysis as such the previous slides provides a brief and high level overview, for the sake of a clearity… for the sake of the toolkit we assume that the analysis provided clarity about the problem….
Brief Exposition of ProblemOur analysis shows that the HR and line managers involved in selection decisions do interviews in a haphazard and nonscientific fashionSolutionFollowing discussions with consultants, HR experts and line all agreed we need to implement competency based interviewing
Step 1. Presenting Problem to Real Problem
Lets assume this based
on the core example
The training department is instructed to develop an appropriate program and put all line and support staff through training – they however indicate that a change in results is required quickly and that ROI for the training need to be justified soon after implementation…
Step 1. Presenting Problem to Real Problem
Lets assume this based on the core
example
Presenting Problem to Real Problem
So we have addressed this even before we asked any questions about training – and
now we can move on to the next step
Starts with a “presenting”
problem – not a “hunch” but a
problem … as it presents itself
Step 2a
Planning the Intervention (Starting With the End In Mind)
Step 2a: Planning the Intervention (With ROI in Mind)
When we plan an intervention – considering that we want to measure ROI- we really reverse engineer (or start with the end in mind) – We use the Kirkpatrick Model to achieve this
4. Impact
What is the business impact we need to achieve (refer step 1 where we got a firm grip on the metric that must change)
3. Transfer
What is the work place behaviour that must change
2. Learning
What knowledge, skills and attitudes need to be acquired
1. Reaction
What is the required reaction of the learner to the intervention
Step 2a: Planning the Intervention (With ROI in Mind)
Back to our case study to show how we plan “backwards” – remember these objectives and measures for clarification, based on our core example/case study (re graduate engineers)
Kirkpatrick Level Objectives Measures
Impact Train target population (define) in behaviour based interviewing techniques, with the aim to:a. Improve predictive validity of selection decisionsb. Driving down cost of filling vacancies for graduate
engineers
25% reduction in total cost of filling vacancies for graduate engineers
Transfer Correct application of behaviour based interviewing techniques by target populations during selection interviewing
Expert observation with the aid of checklists show that all involved in selection interviews use the correct interviewing structure (agenda) and questioning techniques at least 85% of the time. Observation is conducted for two months following the initial training and corrective coaching is implemented where required, following interviews.
Step 2a: Planning the Intervention (With ROI in Mind)
Back to our case study to show how we plan “backwards” – remember these objectives and measures a merely examples
Kirkpatrick Level Objectives Measures
Learning Using Blooms Taxonomy of Learning Objectives here are a few examples of the objectives that will be outlined here:a. The learner should demonstrate that they can
analyse a CV, with the aim to develop behaviour based questions for an interview;
b. The learner should demonstrate the ability to develop interview questions according to the behavioural interview format
c. Etc. etc…
100% compliance with the Bloom Taxonomy, alignment with SAQA Unit Standards and also SAQA guidelines and requirements for assessment and moderation;Learners score 75% on theoretical paper to pass and 80% on practical simulation interview.
Remember this is a snapshot – there is a whole learning map and course development process underlying these objectives
Step 2a: Planning the Intervention (With ROI in Mind)
Back to our case study to show how we plan “backwards” – remember these objectives and measures a merely examples
Kirkpatrick Level Objectives Measures
Reaction The reaction to the learning material, environment, perception of preparation, facilitator style and
Using a Likert type scale participants rate the following on average no less than “agree”:a. Preparationb. Facilitator stylec. Learning environmentd. Participatione. General expectations met
Step 2a: Planning the Intervention (With ROI in Mind)
What have we achieved by planning the intervention this way?
4. ImpactWhat is the business impact we need to achieve (refer step 1 where we got a firm grip on the metric that must change)
3. Transfer
What is the work place behaviour that must change
2. Learning
What knowledge, skills and attitudes need to be acquired
1. Reaction
What is the required reaction of the learner to the intervention
A path – trail linking the business need w
ith the intervention
Results
Results
Results
Results
ROI ?
Step 2a: Planning the Intervention (With ROI in Mind)
We can also go some steps further and plan where we will get the information to evaluate the intervention and how…
Kirkpatrick Level Objectives Measures Where Will We Find Information For Evaluation
In What Format
Impact See previous slides See previous slides
HR Budget vis ActualStaff Turn Over Records
Business Report
HR ReportTransfer See previous slides See previous
slidesAudit/Observation results Possibly checklists
Learning See previous slides See previous slides
Test scoresPractical simulation scores
Tests papers and answer sheetsSimulation checklists and grading papers
Reaction See previous slides See previous slides
Survey results Possibly tabulated and presented in graphs
Step 2b
Planning the Intervention (Planning Beyond Training – With ROI In Mind)
Step 2b: Planning the Intervention (With ROI in Mind)
Usually once we have done the planning and developed the training intervention we are ready to implement…
a. With ROI in mind our planning needs to go some steps further…
b. We need to determine what technique(s) we will use to show that the intervention actually had an impact
Step 2b: Planning the Intervention (With ROI in Mind)
We need to determine what technique(s) we will use to show that the intervention actually had an impact – but our dilemma is this…
External Factors
ManagementAttention
Incentives
Systems/ProceduresChanges
Here is our trainingprogram
AND YES THERE ISIMPROVEMENT
AFTERPROGRAM
IS IT THETRAINING PROGRAM?
OR SOMETHING
ELSE?
Step 2b: Planning the Intervention (With ROI in Mind)
We have to isolate the effects of our intervention!
I. Isolating the results/effect of our intervention is the most difficult and also most
important element of building the case for value (ROI);
II. Because of this, value at the higher levels is seldom determined;
III. However, the credibility not only of your study to show value, but also the training
function is based on this element.
Step 2b: Planning the Intervention (With ROI in Mind)
We have to isolate the effects of our intervention!
I. The complexity of isolating the effect, is a function of the variables that are in play at
any moment in time in an organization;
II. The analyst should however always try to prove a causal relationship to an
acceptable degree of accuracy;
III. Acknowledging the forces that influence individual, group and business
performance is the first step in this process.
Step 2b: Planning the Intervention (With ROI in Mind)
We have to isolate the effects of our intervention!
Remember that we are trying to isolate the effect of out intervention to an acceptable
degree of accuracy – this makes very important to involve and agree with the client:
a. What metrics should change as result of the intervention (see step 1)
b. What isolation technique will be used (because they differ in terms of accuracy)
Let’s consider the isolation techniques…
Step 2b: Planning the Intervention (With ROI in Mind)
Let's look at the techniques!
a. Trend line analysis of performance data;
b. Control groups;
c. Participant’s estimation of impact;
d. Supervisor’s estimation of impact;
e. Management’s estimation of impact;
f. Use of previous studies
g. Subordinate’s report of other factors;
h. Estimating the impact of other factors;
i. Use of customer input.
With these techniques we try to isolate the effects of our intervention
Step 2b: Planning the Intervention (With ROI in Mind)
Let's look at the techniques!
a. Trend line analysis of performance data;
b. Control groups;
c. Participant’s estimation of impact;
d. Supervisor’s estimation of impact;
e. Management’s estimation of impact;
f. Use of previous studies
g. Subordinate’s report of other factors;
h. Estimating the impact of other factors;
i. Use of customer input.
With these techniques we try to isolate the effects of other interventions and then declare the rest as due to our effort
Step 2b: Planning the Intervention (With ROI in Mind)
Trend Line Analysis
I. Draw a trend-line using previous performance data as a base;
II. When intervention is conducted, actual performance is plotted and compared to the trend line;
III. Improvement in actual performance over what the trend line predicted can then be reasonably attributed to the intervention.
Advantages Disadvantages
I. Show quick results
II. Easy to calculate
III. Easy to understand
IV. Inexpensive
V. Not difficult to organize (basically just
monitor changes in metrics)
VI. A good first order analysis
I. Uses only one factor to isolate the effect
of the intervention (time- before and
after implementation)
II. Thus less accurate and client could be
sceptical to accept only an analysis of
the trend line.
Trend Line Analysis- Advantages and Disadvantages
Step 2b: Planning the Intervention (With ROI in Mind)
Example- Not from our central case study…
Step 2b: Planning the Intervention (With ROI in Mind)
AveragePost Program 35
AveragePre Program 55
TIME
COM
PLAI
NTS
SexualHarassment
Prevention Program
O N D J F M A M J J A S O N D J F M A M J J A S O
Effect of the intervention
Step 2b: Planning the Intervention (With ROI in Mind)
Control Groups Technique
I. Similar to classical research the control group method, involves an experimental group and a control group;
II. The so called experimental group will be the target of our intervention;
III. The control group would be a group that is paired with the experimental group, but would not undergo the intervention;
IV. Important things to remember with this method are:
a. Paring need to be thought about carefully so as not to dilute the impact of the intervention;
b. Although not as rigid as classical research key factors that could dilute the impact or assessment of the impact of the intervention need to be controlled.
Advantages Disadvantages
I. More accurate than most techniques
II. If the pairing and control of variables are
agreed with the client the outcome has high
level of credibility
III. With this control groups, given the level of
accuracy it is possible to benchmark the ROI
of certain interventions given a
predetermined set of variables
I. More complicated
II. Require more planning, negotiation, control
and monitoring
III. As result of above many practitioners are
unwilling to use this technique
IV. Requires absolute agreement with the
client environment that variables will be
kept constant for the duration of the ROI
evaluation.
Control Groups- Advantages and Disadvantages
Step 2b: Planning the Intervention (With ROI in Mind)
Step 2b: Planning the Intervention (With ROI in Mind)
Schematic Explanation of control groups design
Control Group
ExperimentalGroup M1 Intervention
M2
M2
M1
*M = measurement
1. Pairing 2.
Control Variables
Step 2b: Planning the Intervention (With ROI in Mind)
Looking at pairing and control of variables
Select your experimental and control group
carefully
Note:I. Too small then meaningful pairing is not
possible – too big then you are not going to be able to control the variables during and after the implementation of your intervention;
II. Remember we go for reasonable accuracy therefore you pair the major elements and also control the major variables!!
III. The above makes it very important to agree upfront with your client environment what how pairing will be done and which variables will be controlled.
Note:I. Too small then meaningful pairing is not
possible – too big then you are not going to be able to control the variables during and after the implementation of your intervention;
II. Remember we go for reasonable accuracy therefore you pair the major elements and also control the major variables!!
III. The above makes it very important to agree upfront with your client environment what how pairing will be done and which variables will be controlled.
PAIRING
VARIABLES
Step 2b: Planning the Intervention (With ROI in Mind)
So what do you typically pair?
Negotiate creafully
Size
Nat
ure
of w
ork
Lead
ersh
ip st
ype
Perf
orm
ance
leve
l
Gen
eral
dem
ogra
phy
Pair for (Primarily)
Step 2b: Planning the Intervention (With ROI in Mind)
So what do you typically try to control?
Negotiate creafully
Size
Nat
ure
of w
ork
Lead
ersh
ip st
ype
Perf
orm
ance
leve
l
Gen
eral
dem
ogra
phy
Changes in:
Negotiate creafullyst
ruct
ure
Func
tion
Reco
gniti
on a
nd re
war
d
Turn
ove
r
Syst
ems
and
proc
edur
es
Changes in:
+
Step 2b: Planning the Intervention (With ROI in Mind)
Remember your decision about pairing and control of variables….
= (f) (your knowledge and judgement) + agreement with
the client environment + practicability
Step 2b: Planning the Intervention (With ROI in Mind)Estimation of impact by third parties ( this technique can include an estimation of the
perceived impact of the intervention, by participants, participants supervisors, participants managers)
This technique provides participants with a questionnaire, and based on the improvement ask them to respond to the following:
I. What percent of this improvement can be attributed to the application of skills/techniques/knowledge gained in the training program?
II. What is the basis for this estimation?
III. What confidence do you have in this estimate, expressed as a percentage?
IV. What other factors contributed to this improvement in performance?
V. What other individuals or groups could estimate this percentage or determine the amount?
Step 2b: Planning the Intervention (With ROI in Mind)
Estimation of impact by third parties – how do you increase the confidence level for this technique?
I. Individuals who do not respond to the questionnaire or provide non- usable data on the questionnaire are assumed to report no improvement/impact;
II. Extreme data and unrealistic claims are omitted from the analysis;
III. Only annualized values are used, it is assumed that there are no benefits from the program after the first year of implementation;
IV. The confidence level, expressed as a percent, is multiplied by the improvement value to reduce the amount of the improvement by the potential error;
V. If value is expressed it is also factored by the confidence value.
Advantages Disadvantages
I. Easy to implement;
II. Based on the assumption that participants
are capable of determining or estimating
impact;
III. Although an estimate, this value will usually
have considerable credibility with
management because participants are at the
centre of the change or improvement;
IV. High face validity.
I. Less accurate than control groups
II. Based on perceptions – could be
regarded as Return on Expectation
rather than ROI
III. Could become victim of “group think”
Estimation Of Impact By Third Parties - Advantages And Disadvantages
Step 2b: Planning the Intervention (With ROI in Mind)
Example from an actual coaching intervention- Not from our central case study…
Step 2b: Planning the Intervention (With ROI in Mind)
All indicators were pre agreed with the client
Participants and management agreed which the respective groups will rate
So now we can complete our plan
Step 2b: Planning the Intervention (With ROI in Mind)
Kirkpatrick Level
Objectives Measures Where Will We Find Information For Evaluation
In What Format
When Purpose of Data Collection and Analysis
Impact See previous slides
See previous slides
HR Budget vis ActualStaff Turn Over Records
Business Report
HR Report
Six months after final course was presented
ROI and Training Evaluation
Transfer See previous slides
See previous slides
Audit/Observation results
Possibly checklists
Period of three months following training
Training Evaluation
Learning See previous slides
See previous slides
Test scoresPractical simulation scores
Tests papers and answer sheetsSimulation checklists and grading papers
Within one week following training
Training Evaluation
Reaction See previous slides
See previous slides
Survey results Possibly tabulated and presented in graphs
Within one week following training
Training Evaluation
Note – because the techniques related to isolating the impact of other factors are
not used often it is only referred to in this toolkit…
Step 2b: Planning the Intervention (With ROI in Mind)
a. Trend line analysis of performance data;
b. Control groups;
c. Participant’s estimation of impact;
d. Supervisor’s estimation of impact;
e. Management’s estimation of impact;
f. Use of previous studies
g. Subordinate’s report of other factors;
h. Estimating the impact of other factors;
i. Use of customer input.
With these techniques we try to isolate the effects of other interventions and then declare the rest as due to our effort
Step 3
Implementation and Data Gathering (With ROI in Mind)
Implementation and Data Gathering (With ROI in Mind)
Referring back to our original example (turnover in graduate engineers) – let us assume the following:
Mine AControl
Correct pairing
Correct control of variables
Agreement on metrics Mine B
Experiential
Correct pairing
Correct control of variables
Agreement on metrics
We opted for a control group evaluation method
Impact
Transfer-Evaluation completed
Learning -Evaluation completed
Reaction – Evaluation completed
Implementation and Data Gathering (With ROI in Mind)
Referring back to our original example (turnover in graduate engineers) – let us assume the following:
Six months after the intervention the
need for replacement of graduates were
down by 50% in the experimental
group
Impact
Transfer-Evaluation completed
Learning -Evaluation completed
Reaction – Evaluation completed
Implementation and Data Gathering (With ROI in Mind)
Referring back to our original example (turnover in graduate engineers) – let us assume the following:
In the control group the need for replacement of graduate engineers also down by 10%...possibly because of anticipation
of changes in HR approach
Impact
Transfer-Evaluation completed
Learning -Evaluation completed
Reaction – Evaluation completed
Implementation and Data Gathering (With ROI in Mind)
Referring back to our original example (turnover in graduate engineers) – let us assume the following:
In the control group the need for replacement of graduate engineers also down by 10%...possibly because of anticipation
of changes in HR approach
So because to the method we used we can assign the
change in te metric to our intervention, mainly because we
controlled major variables. We do this as follows…
Step 4
Converting the Change As Result of the Intervention to Value and Calculating ROI
Step 4.a Converting the Change As Result of the Intervention to Value
Referring back to our original example (turnover in graduate engineers)…this is how it is dome…
Identify the unit of improvement
In our case study: Number of replacements of graduate engineers in the past six months
Value per unit =R 74964 (see slide 12 AND 13
Determine the performance level change
Original replacements = 6Six months after the intervention = 3Improvement of 50%
Original cost of replacement R 449784Our latest cost of replacement following interventionR 224892
Calculate the performance improvement
50% saving R 224892
Step 4.a Converting the Change As Result of the Intervention to Value
Because this is such a vast area to know here is some additional input re calculating the value of change in a metric..
Primary Measurementsof Improvement
OutputIncreases
Quality
Impro
vem
en
t
Time
Savings
CostSavings
Step 4.a Converting the Change As Result of the Intervention to Value
Always try to link to a metric – alternatively use the method of
Estimation Of Impact By Third Parties – See slide 55 and 56 (this method is also referred to as Return on Expectation)
Step 4.a Converting the Change As Result of the Intervention to Value
See whether one can link tangible values to these?
OUTPUTUnits ProducedTons ManufacturedItems AssembledMoney CollectedItems SoldForms ProcessedLoans ApprovedInventory TurnoverPatients VisitedApplications ProcessedTasks CompletedOutput Per HourProductivityNew Accounts GeneratedCOSTSBudget VariancesUnit CostsCost By AccountVariable CostsFixed CostsOverhead CostOperating CostsNumber of Cost ReductionsProject Cost SavingsAccident CostsSales Expense
TIMEEquipment DowntimeOvertimeTime to Project CompletionProcessing TimeBreak in Time for New EmployeesLearning TimeMeeting SchedulesRepair TimeWork StoppagesOrder ResponseLate ReportingLost Time DaysQUALITYScrapWasteRejectsError RatesReworkShortagesProduct DefectsDeviation From StandardProduct FailuresInventory AdjustmentsTime Card CorrectionsPercent of Tasks Completed ProperlyNumber of Accidents
Step 4.a Converting the Change As Result of the Intervention to Value
And these….WORK HABITS
AbsenteeismTardinessVisits to the DispensaryFirst Aid TreatmentsViolations of Safety RulesNumber of Communication Break-downsExcessive BreaksFollow-Up
WORK CLIMATE/SATISFACTION
Number of GrievancesNumber of Discrimination ChargesEmployee ComplaintsJob SatisfactionEmployee TurnoverLitigationOrganization CommitmentEmployee LoyaltyIncreased Confidence
CUSTOMER SERVICE
Customer ComplaintsCustomer SatisfactionCustomer DissatisfactionCustomer ImpressionsCustomer LoyaltyCustomer RetentionCustomer ValueLost CustomersEMPLOYEE DEVELOPMENT/ADVANCEMENTNumber of PromotionsNumber of Pay IncreasesNumber of Learning Programs AttendedRequests for TransferPerformance Appraisal RatingsIncreases in Job Effectiveness
INITIATIVE/INNOVATIONImplementation of New IdeasSuccessful Completion of ProjectsNumber of Suggestions ImplementedSetting Goals and ObjectivesNew Products and Services DevelopedNew Patents and Copyrights
Step 4.a Converting the Change As Result of the Intervention to Value
Or determining value on a case by case basis using historical data
Actual cost from records
Estimated additional from staff
Staff time;Management
time
Cost R 285,000
Total of 35 complaints
Legal fee;Settlement
cost
R 285,000/35 = Cost per complaint
Cost of Sexual Harassment Complaint
Step 4.a Converting the Change As Result of the Intervention to Value
In our case example we did determine the value of
the change and can therefore now move on to
calculate cost benefit and therefore also ROI
Step 4.b Calculating ROI
First thing to do now is to determine the cost of the intervention – again back to our main example …
Cost element Notes ZAR value (for the sake of our example)
Development Costs If you use more than one trainer or one trainer on more than one project – pro-rate
R50,000
Program Materials R10,000
Instructor/Facilitator Costs If you use more than one trainer or one trainer on more than one project – pro-rate
R10,000
Facilities Costs R10,000
Travel and lodging R10,000
Salaries and time loss of participants Will need to consult HR and line and pro-rate R50,000
Administration costs R5,000
Evaluation costs R 5,000
Total cost of the intervention R150,000
Step 4.b Calculating ROI
First thing to do now is to determine the cost of the intervention – again back to our main example …
Benefit/Cost Ratio =Net Program Benefits (R224892- R150,000)
Program Costs (R150,000)
Ratio = 0.499928
Net Program Benefits (R224892- R150,000)
Program Costs (R150,000)
Step 4.b Calculating ROI
First thing to do now is to determine the cost of the intervention – again back to our main example …
Benefits ROI =X 100
1
Benefit ROI = 50% thus for every R1 I spent on this
program you got your money back through saving as well as an additional 50 cents.