ROI Introduction to Investors in People Return on Investment Ricky Kujawa
Introduction <ul><li>Investors in People </li></ul><ul><li>Return on Investment </li></ul><ul><li>Benefits of ROI  </li></...
Investors in People <ul><li>Effective Outcome Based Plans </li></ul><ul><li>Effective Leadership   Behaviours   </li></ul>...
Wages – Human Capital Mgt. <ul><li>Wages Department </li></ul><ul><li>Welfare Department </li></ul><ul><li>Personnel Depar...
Changing Management Styles <ul><li>Compliance With Rules </li></ul><ul><li>Management by Objectives </li></ul><ul><li>Mill...
Return on Investment <ul><li>Commonly used management term. </li></ul><ul><li>Mirrors a move towards Human Capital Managem...
Benefits of ROI on Training and Development <ul><li>Ability to show the Contribution of Selected Programmes </li></ul><ul>...
Kilpatrick Model <ul><li>4 Levels  Brief Description </li></ul><ul><li>1  Reaction :  Measures participant’s reaction </li...
Phillips’ five levels of evaluation <ul><li>.  1 Reaction, Satisfaction and Planned Action </li></ul><ul><li>Measures part...
Framework Comparisons <ul><li>Kirkpatrick  Phillips’  </li></ul><ul><li>4 Levels  5 Levels </li></ul><ul><li>Participant R...
ROI MODEL record smart smart smart 1 collect ROI smart smart smart 5 total record smart smart smart 4 collect record smart...
Example Implementation Plan <ul><li>Period --------------------------------------------------------------  </li></ul><ul>...
Examples of ROI <ul><li>Organisation  Sector  Programme  ROI </li></ul><ul><li>Edison  Electrical  Machine Operations.  57...
Reporting Structure Example <ul><li>Programme Title:  Leadership Skills </li></ul><ul><li>Target Audience:  Managers, Team...
Tangible Benefits <ul><li>S </li></ul><ul><li>M </li></ul><ul><li>A </li></ul><ul><li>R </li></ul><ul><li>T </li></ul>
Intangible Benefits 1 <ul><li>Employee Satisfaction </li></ul><ul><li>Organisational Commitment (Alignment) </li></ul><ul>...
Intangible Benefits 2 <ul><li>Innovation and Creativity </li></ul><ul><li>Competencies </li></ul><ul><li>Leadership </li><...
Tests for Converting Intangibles to Monetary Values <ul><li>1  Does an acceptable, standard money value exist for the meas...
Changing Management Behaviours <ul><li>Old Style - Rules </li></ul><ul><li>Telling, fault finding. </li></ul><ul><li>Resul...
Levering Advantage <ul><li>1 More Meaningful Meetings – Teams and One to One </li></ul><ul><li>Global Survey – South Afric...
Fortune 500 survey. <ul><li>4 th  World Quality Conference </li></ul><ul><li>Paper Tracked Fortune 500 Share Prices </li><...
Popular Methods <ul><li>Benefits Cost Ratio </li></ul><ul><li>. BCR =  Programme Benefits   e.g. Ratio of 2:1 </li></ul><u...
Tips <ul><li>Golden Rule - Never Exaggerate Impact </li></ul><ul><li>Build evaluation into the performance improvement pro...
ROI Summary <ul><li>ROI is of growing importance in T&D </li></ul><ul><li>It is becoming a key management skill. </li></ul...
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ROI on Learning and Development _long_dec_6_2007

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Return on Investment on Learning and Development Talk to Large Organisations in Scotland given at the request of Investors in People, Scotland.

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ROI on Learning and Development _long_dec_6_2007

  1. 1. ROI Introduction to Investors in People Return on Investment Ricky Kujawa
  2. 2. Introduction <ul><li>Investors in People </li></ul><ul><li>Return on Investment </li></ul><ul><li>Benefits of ROI </li></ul><ul><li>Kilpatrick Model of Evaluation </li></ul><ul><li>Phillips 5 Levels of Evaluation </li></ul><ul><li>Comparison of both models </li></ul><ul><li>Examples of evaluation targets </li></ul><ul><li>Examples of ROI figures obtained </li></ul><ul><li>Intangible benefits </li></ul><ul><li>Measuring intangible benefits </li></ul><ul><li>Levering advantage from intangible benefits </li></ul><ul><li>Example implementation plan </li></ul><ul><li>Reporting structure example </li></ul><ul><li>ROI Model </li></ul><ul><li>ROI Calculation </li></ul><ul><li>Tips </li></ul><ul><li>Summary </li></ul><ul><li>Next Steps </li></ul>
  3. 3. Investors in People <ul><li>Effective Outcome Based Plans </li></ul><ul><li>Effective Leadership Behaviours </li></ul><ul><li>Line Manager Ownership and Evaluation </li></ul>
  4. 4. Wages – Human Capital Mgt. <ul><li>Wages Department </li></ul><ul><li>Welfare Department </li></ul><ul><li>Personnel Department </li></ul><ul><li>HR Department </li></ul><ul><li>Human Capital Management </li></ul>
  5. 5. Changing Management Styles <ul><li>Compliance With Rules </li></ul><ul><li>Management by Objectives </li></ul><ul><li>Millennial Management </li></ul>
  6. 6. Return on Investment <ul><li>Commonly used management term. </li></ul><ul><li>Mirrors a move towards Human Capital Management. </li></ul><ul><li>Now used by 5% of organisations and growing quickly </li></ul><ul><li>Enables and encourages accountability. </li></ul><ul><li>Responsibility lies with the line manager. </li></ul><ul><li>Effective evaluation Improves focus and forecasting. </li></ul>
  7. 7. Benefits of ROI on Training and Development <ul><li>Ability to show the Contribution of Selected Programmes </li></ul><ul><li>Earn the Respect of Senior Management </li></ul><ul><li>Gain the confidence Clients. </li></ul><ul><li>Improve Training and Development Processes </li></ul><ul><li>Develop a Results – Based Approach </li></ul><ul><li>Alter or Remove Ineffective Programmes </li></ul>
  8. 8. Kilpatrick Model <ul><li>4 Levels Brief Description </li></ul><ul><li>1 Reaction : Measures participant’s reaction </li></ul><ul><li>2 Learning: Measures change in attitudes, knowledge, skills </li></ul><ul><li>3 Behaviour: Measures individuals improvement in performance. </li></ul><ul><li>4 Results: Measures changes in business results team or Org. </li></ul>
  9. 9. Phillips’ five levels of evaluation <ul><li>. 1 Reaction, Satisfaction and Planned Action </li></ul><ul><li>Measures participants’ reaction to the programme and Stakeholder </li></ul><ul><li>satisfaction with the programme and the planned implementation. </li></ul><ul><li>2 Learning </li></ul><ul><li>Measures Skills, Knowledge, or Attitude Changes related to the programme </li></ul><ul><li>and implementation. </li></ul><ul><li>. 3 Application & Implementation </li></ul><ul><li>Measures changes in Behaviour On the Job and specific application and </li></ul><ul><li>implementation of the programme. </li></ul><ul><li>4 Business Impact </li></ul><ul><li>Measures business impact changes related to the programme. </li></ul><ul><li>5 Return on Investment </li></ul><ul><li>Compares the monetary value of the business impact with the costs for the </li></ul><ul><li>programme. </li></ul>
  10. 10. Framework Comparisons <ul><li>Kirkpatrick Phillips’ </li></ul><ul><li>4 Levels 5 Levels </li></ul><ul><li>Participant Reaction Yes Yes </li></ul><ul><li>Learning Yes Yes </li></ul><ul><li>Application/Behaviour Yes Yes </li></ul><ul><li>Impact/Results Yes Yes </li></ul><ul><li>Measure ROI No Yes </li></ul><ul><li>Isolate Effects of Prog. No Yes </li></ul><ul><li>Determine Costs No Yes </li></ul><ul><li>Convert / Monetary Value No Yes </li></ul><ul><li>Identify Intangible Benefits Yes Yes </li></ul>
  11. 11. ROI MODEL record smart smart smart 1 collect ROI smart smart smart 5 total record smart smart smart 4 collect record smart smart smart 3 collect record smart smart smart 2 collect Pre Value Impact Train KPI’s Levels Costs
  12. 12. Example Implementation Plan <ul><li>Period --------------------------------------------------------------  </li></ul><ul><li>1 Review Programmes,Processes,Reports,Data </li></ul><ul><li>2 Skill Development </li></ul><ul><li>3 Finalise Evaluation Planning Documents </li></ul><ul><li>4 Evaluation Data Collection </li></ul><ul><li>5 Analysis of Data </li></ul><ul><li>6 Development of Reports </li></ul><ul><li>7 Presentation of Impact Study Results </li></ul><ul><li>8 Develop Scorecard Framework </li></ul><ul><li>9 Develop Guidelines </li></ul><ul><li>10 Manager/Team Briefings </li></ul>
  13. 13. Examples of ROI <ul><li>Organisation Sector Programme ROI </li></ul><ul><li>Edison Electrical Machine Operations. 57% </li></ul><ul><li>Nassau Police Interpersonal Skills 144% </li></ul><ul><li>FNB Banking Sales Training 555% </li></ul><ul><li>Litton Avionics Self Directed Teams 650% </li></ul><ul><li>MESC Electronics Literacy Training 741% </li></ul><ul><li>Coca Cola Soft Drinks Supervisory 1,447% </li></ul>
  14. 14. Reporting Structure Example <ul><li>Programme Title: Leadership Skills </li></ul><ul><li>Target Audience: Managers, Team Leaders </li></ul><ul><li>Duration: 2 days – 2 sessions </li></ul><ul><li>Results </li></ul><ul><li>Level 1 Reaction e.g. Overall rating 4.4 out of 5 95% Provided Action Items </li></ul><ul><li>Level 2 Learning e.g. 76% Increase post-test versus pre test, Skills in use Test/Observation </li></ul><ul><li>Level 3 Application e.g. 95% conducted meetings and minutes, 72% Report action items done. </li></ul><ul><li>Level 4 Impact e.g. R Costs reduction, R Complaints Reduced, R Total Improvements </li></ul><ul><li>Level 5 ROI e.g. 1,245% </li></ul><ul><li>Intangible Benefits e.g. Job Satisfaction, Alignment, Reduced Absences, Staff Satisfaction Up </li></ul><ul><li>Notes of methodology used </li></ul><ul><li>Date Due: Date Sent: Name: </li></ul>
  15. 15. Tangible Benefits <ul><li>S </li></ul><ul><li>M </li></ul><ul><li>A </li></ul><ul><li>R </li></ul><ul><li>T </li></ul>
  16. 16. Intangible Benefits 1 <ul><li>Employee Satisfaction </li></ul><ul><li>Organisational Commitment (Alignment) </li></ul><ul><li>Climate Survey Data </li></ul><ul><li>Employee Complaints </li></ul><ul><li>Grievances </li></ul><ul><li>Discrimination Complaints </li></ul><ul><li>Stress Reduction </li></ul><ul><li>Employee Retention </li></ul><ul><li>Employee Absenteeism </li></ul><ul><li>Employee Tardiness </li></ul><ul><li>Employee Transfers </li></ul>
  17. 17. Intangible Benefits 2 <ul><li>Innovation and Creativity </li></ul><ul><li>Competencies </li></ul><ul><li>Leadership </li></ul><ul><li>Customer Satisfaction </li></ul><ul><li>Customer Complaints </li></ul><ul><li>Customer Loyalty </li></ul><ul><li>Customer Responses/Response Time </li></ul><ul><li>Teamwork </li></ul><ul><li>Cooperation </li></ul><ul><li>Conflict </li></ul><ul><li>Decisiveness </li></ul><ul><li>Communications </li></ul>
  18. 18. Tests for Converting Intangibles to Monetary Values <ul><li>1 Does an acceptable, standard money value exist for the measure. Yes – Use it; Not – go to next step. </li></ul><ul><li>2 Is there a method that can be used to convert the measure to money? If Yes –Use it; Not – list as intangible. </li></ul><ul><li>3 Can the conversion be done with existing resources. If yes – Use it; Not – list as intangible. </li></ul><ul><li>4 Can the conversion process pass the Guinness Test for Senior Management. If so – Use it; if not list as intangible. </li></ul>
  19. 19. Changing Management Behaviours <ul><li>Old Style - Rules </li></ul><ul><li>Telling, fault finding. </li></ul><ul><li>Results: Minimum Acceptable Employee Effort, lack of ideas from staff, staff fail to accept responsibility. </li></ul><ul><li>New Style – Change Orientated </li></ul><ul><li>Listening, encouraging, recognising </li></ul><ul><li>Results: Releases Discretionary Effort, Ideas, Innovation, Staff accept responsibility. </li></ul>
  20. 20. Levering Advantage <ul><li>1 More Meaningful Meetings – Teams and One to One </li></ul><ul><li>Global Survey – South Africa tops world league table – 83% feel that meetings are a waste of time </li></ul><ul><li>Changed Management Behaviours </li></ul><ul><li>Managers Practice Active Learning </li></ul><ul><li>Staff Alignment Grows </li></ul><ul><li>Ideas are Created </li></ul><ul><li>Staff Innovate and Accept Responsibility </li></ul><ul><li>2 Global Survey 650,000 staff in 50 Global Cos. </li></ul><ul><li>Staff Aligned + 5 % Performance </li></ul><ul><li>Staff Not Aligned – 15% Performance </li></ul><ul><li>Difference to an organisation – 20-30% Performance / same or lower cost </li></ul><ul><li>Can only be released through improved Mgt. behaviours </li></ul>
  21. 21. Fortune 500 survey. <ul><li>4 th World Quality Conference </li></ul><ul><li>Paper Tracked Fortune 500 Share Prices </li></ul><ul><li>Only 2 Metrics followed price changes </li></ul><ul><li>Customer Satisfaction </li></ul><ul><li>Staff Satisfaction </li></ul>
  22. 22. Popular Methods <ul><li>Benefits Cost Ratio </li></ul><ul><li>. BCR = Programme Benefits e.g. Ratio of 2:1 </li></ul><ul><li>Programme Costs </li></ul><ul><li>. Return on Investment </li></ul><ul><li>. ROI (%)= Net Programme Benefits x 100 e.g. 250% </li></ul><ul><li>Programme Costs </li></ul>
  23. 23. Tips <ul><li>Golden Rule - Never Exaggerate Impact </li></ul><ul><li>Build evaluation into the performance improvement process. </li></ul><ul><li>Develop criteria for selecting appropriate programme measurement levels. </li></ul><ul><li>Plan for evaluation at the inception. </li></ul><ul><li>Require participants to conduct main steps </li></ul><ul><li>Use short cut methods for main stages </li></ul><ul><li>Use Estimates </li></ul><ul><li>Develop internal capability. </li></ul><ul><li>Streamline reporting processes. </li></ul><ul><li>Use technology </li></ul>
  24. 24. ROI Summary <ul><li>ROI is of growing importance in T&D </li></ul><ul><li>It is becoming a key management skill. </li></ul><ul><li>Using ROI as a forecasting skill makes follow up valuable. </li></ul><ul><li>You have now seen the basics. </li></ul><ul><li>You have now seen some of the benefits. </li></ul><ul><li>You now know some things to avoid. </li></ul><ul><li>You have seen an overview of how to draw up an implementation plan. </li></ul><ul><li>You have seen an overview of how to draw up a report </li></ul><ul><li>Golden Rule – Never exaggerate benefits. </li></ul><ul><li>The use of information from the works of Patricia Pulliam Phillips and Jack J. Phillips is acknowledged </li></ul>
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