ROI Demystified<br />“A proven approach in good times and bad”<br />Curt Archambault – Jack in the Box/Roi – Cyber Space<b...
Managing What Counts<br />Financial“Has our financial performance improved?”<br />What areour financialgoals?<br />Custome...
ROI Demystified “A proven approach in good times and bad”<br />The question is asked today more than ever before. It is al...
ROI Demystified “A proven approach in good times and bad”<br />To understand the business value of investments:<br />“If i...
THE TOP FIVELIST<br />ROI Demystified “A proven approach in good times and bad”<br />
1<br />&quot;The Bottom Line - PROFIT!“ <br />2<br />Shows tangible outcomes, not &quot;touchy-feely&quot; motivations<br ...
  Activity        vs.              <br />                      vs.      Proactive<br />Results<br />Reactive<br />ROI Demy...
ROI Demystified “A proven approach in good times and bad”<br />
WONDER WHAT IT WILL BE LIKE TO ORDER A PIZZA IN THE FUTURE?...<br />THE FUTURE…<br />
Coming to you live from the mystical, magical, real-time, virtual world of SecondLife…<br />THE FUTURE… IS NOW!<br />
ROI Demystified “A proven approach in good times and bad”<br />Benefits - Costs<br />ROI (%)   =<br />x  100%<br />Costs<b...
Level 1<br />DO SESSION SURVEYS<br />Kirkpatrick-Phillips Model<br />Level 2<br />TEST FOR LEARNING<br />Level 3<br />APPL...
ROI Demystified “A proven approach in good times and bad”<br />The “MUST” ListFor An Effective ROI Process...<br />  1) Be...
ROI Demystified “A proven approach in good times and bad”<br />Reversing the Model…<br />Level 4	OPERATIONAL NEEDS<br />Le...
OperationalNeeds<br />INITIATIVE<br />INTERVENTION<br />Job PerformanceNeeds <br />Non-TrainingSolution <br />Skill/Knowle...
ROI Demystified “A proven approach in good times and bad”<br />What is the Business Impact<br />$ALE$<br />Don’t rely excl...
ROI Demystified “A proven approach in good times and bad”<br />“HARD DATA”<br />Productivity<br />Time<br />Costs<br />CAS...
ROI Demystified “A proven approach in good times and bad”<br />Data Collection Methods<br />Performance         Impact<br ...
ROI Demystified “A proven approach in good times and bad”<br />Data Collection Methods<br />               ()<br />Perfo...
 Observation
 Interviews
 Focus Groups
Historical Data</li></ul>                ()<br />                ()<br />                     <br />Pre-program     P...
ROI Demystified “A proven approach in good times and bad”<br />TRAINING SOLUTION<br />Estimate ProgramCosts <br />Cost Cat...
PROGRAM COST WORKSHEET<br />
40,000<br />1.3<br />… includes vacation<br />= 365 - 104<br />234<br />222<br />… Lodging & Meals <br />105<br />5<br />1...
EvaluationTools<br />EvaluationTiming<br />Collect ROI  Data<br />IdentifyTangible Results<br />IdentifyIntangible Results...
ROI Demystified “A proven approach in good times and bad”<br />Level 3        Level4<br />Identifying The Effects<br />  ...
 Observation
 Interviews
 Focus Groups
  Historical Data</li></ul>                ()<br />                ()<br />                     <br />Pre-program    ...
ROI Demystified “A proven approach in good times and bad”<br />Isolating The Effects<br /><ul><li> Use of a control group
 Match against performance forecasting</li></ul> “Are the results what we said they’d be?”<br /><ul><li> Previous program ...
 Calculating “other factors” impact</li></li></ul><li>ROI Demystified “A proven approach in good times and bad”<br />Conve...
 Food Costs
 Historical cost data
 Internal/external expert estimates
 External databases
 Linking to other measures
 Estimates (Confidence %’s)	- Learner	- Supervisor	- Manager/Staff</li></li></ul><li>ROI Demystified “A proven approach in...
 Determine a value for each unit </li></ul>Sometimes Easy…<br />…Sometimes hard<br />FOOD COSTS   *  LABOR COSTS<br />GUES...
CUSTOMER SERVICE INDEXSurvey<br />1% “will return” = $ales x .05607<br />Value = $1052640 x .05607 =  $59021<br />TURNOVER...
ROI Demystified “A proven approach in good times and bad”<br />General Steps for Converting Data <br /><ul><li> Focus on a...
 Determine a value for each unit
 Calculate the change in performance data
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2009 Chart Ro Ioption1

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Presentation made at recent CHART conference by John Kidwell and Curt Archambault. John presented via Second Life as an avatar named Roi Reanimator. Groundbreaking for CHART.

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  • ASK – “So, what does the future hold? Let’s take a look at what could be the future in pizza ordering.”PLAY CLIP FROM INTERNET STATE – “So this is an exaggeration, or is it? The world is changing rapidly and as we have discussed already, we can be a victim of it or we can be part of it.”
  • Reference Dana Gaines Robinson – Performance Consulting process as a companion piece to ROI
  • Ask audience for an example of a current issue that a training solution may be implementedBrainstorm a list of “hard data” that you will look at to determine success
  • Use same process that you used for Hard Data
  • Tie to ROI calculator that will be showed later…
  • Find out what SMG says the improvement in VOG will return in sales?
  • Transcript of "2009 Chart Ro Ioption1"

    1. 1. ROI Demystified<br />“A proven approach in good times and bad”<br />Curt Archambault – Jack in the Box/Roi – Cyber Space<br />Cleveland, Ohio/July 2009<br />
    2. 2. Managing What Counts<br />Financial“Has our financial performance improved?”<br />What areour financialgoals?<br />Customer“Do customers recognize that we are delivering more value?”<br />What customers do wewant to serve and howare we going to win andretain them?<br />VisionandStrategy<br />Internal Business Processes“Have we improved key business processes so that we can delivermore value to customers?”<br />What internalbusiness processesare critical to providingvalue to customers?<br />Learning and Growth“Are we maintaining our ability to change and improve?”<br />
    3. 3.
    4. 4. ROI Demystified “A proven approach in good times and bad”<br />The question is asked today more than ever before. It is also one of the most difficult to answer.<br />One reason for the difficulty is a definition problem. A common financial definition is:<br />“ROI is a measure of the net income a company is able to earn with its total assets”. <br />An acceptable definition for a company as a whole; but, hardly realistic for a single project or product. <br />Others prefer a more micro-definition:<br />“ROI is the gain from an action divided by the cost of that action”.<br />Works well if both gain and cost are easily known and clearly result from the action.<br />When someone asks about ROI, they are really asking:<br />“What do I get back (&apos;return&apos;) for the money I&apos;m being asked to spend (&apos;investment&apos;)?”<br />
    5. 5. ROI Demystified “A proven approach in good times and bad”<br />To understand the business value of investments:<br />“If it&apos;s important enough to spend money and time on, <br />it&apos;s important enough to figure out if you&apos;re getting the end result you were hoping for”. *<br />To make resource allocation decisions and manage a budget:<br />“You can’t manage what you can’t measure”. **<br />* Erica Iacono, PRWeek, 14/03/05 <br />** Hewlett-Packard <br />
    6. 6. THE TOP FIVELIST<br />ROI Demystified “A proven approach in good times and bad”<br />
    7. 7. 1<br />&quot;The Bottom Line - PROFIT!“ <br />2<br />Shows tangible outcomes, not &quot;touchy-feely&quot; motivations<br />3<br />Gets Senior Executives to &quot;buy in&quot; to Training initiatives <br />4<br />Speaks in a language the CFO understands<br />5<br />It serves as a prime tool to support the needs analysis process<br />The Top 5 Reasons ROI is“A proven approach in good times and bad”<br />
    8. 8.
    9. 9.
    10. 10. Activity vs. <br /> vs. Proactive<br />Results<br />Reactive<br />ROI Demystified “A proven approach in good times and bad”<br />
    11. 11. ROI Demystified “A proven approach in good times and bad”<br />
    12. 12. WONDER WHAT IT WILL BE LIKE TO ORDER A PIZZA IN THE FUTURE?...<br />THE FUTURE…<br />
    13. 13. Coming to you live from the mystical, magical, real-time, virtual world of SecondLife…<br />THE FUTURE… IS NOW!<br />
    14. 14. ROI Demystified “A proven approach in good times and bad”<br />Benefits - Costs<br />ROI (%) =<br />x 100%<br />Costs<br />Benefits<br />BCR =<br />Costs<br />Let’s start simple.<br />What is…<br />
    15. 15. Level 1<br />DO SESSION SURVEYS<br />Kirkpatrick-Phillips Model<br />Level 2<br />TEST FOR LEARNING<br />Level 3<br />APPLY THE LEARNING<br />Level 4<br />BUSINESS IMPACT<br />Level 5 RETURN ON INVESTMENT<br />Jack Phillips<br />Donald Kirkpatrick<br />ROI Demystified “A proven approach in good times and bad”<br />
    16. 16. ROI Demystified “A proven approach in good times and bad”<br />The “MUST” ListFor An Effective ROI Process...<br /> 1) Be Simple<br /> 2) Be Economical<br /> 3) Be Credible<br /> 4) Be Theoretically Sound<br /> 5) Be Flexible: Analysis, Data, Programs <br /> 6) Account For Other Factors<br /> 7) Include Cost Of Program<br /> 8) Have A Successful Track Record<br />
    17. 17. ROI Demystified “A proven approach in good times and bad”<br />Reversing the Model…<br />Level 4 OPERATIONAL NEEDS<br />Level 3 JOB PERFORMANCE NEEDS<br />Level 2 SKILL/KNOWLEDGE GAPS<br />Level 1 TRAINING PROGRAM PREFERENCE<br />…gives you an ASSESSMENT PROCESS<br />
    18. 18. OperationalNeeds<br />INITIATIVE<br />INTERVENTION<br />Job PerformanceNeeds <br />Non-TrainingSolution <br />Skill/KnowledgeGaps <br />AnticipatedProblem/Opportunity<br />ExistingProblem/Opportunity<br />Non-TrainingSolution <br />4<br />Training Program Preferences<br />3<br />Estimate ProgramCosts <br />2<br />1<br />Design & Implement <br />Assessment<br />Process<br />
    19. 19. ROI Demystified “A proven approach in good times and bad”<br />What is the Business Impact<br />$ALE$<br />Don’t rely exclusively on sales…Everyone wants a slice of that pie!<br />
    20. 20. ROI Demystified “A proven approach in good times and bad”<br />“HARD DATA”<br />Productivity<br />Time<br />Costs<br />CASE STUDY * CASE STUDY * CASE STUDY * CASE STUDY *<br />
    21. 21. ROI Demystified “A proven approach in good times and bad”<br />Data Collection Methods<br />Performance Impact<br />CASE STUDY * CASE STUDY * CASE STUDY * CASE STUDY *<br />
    22. 22. ROI Demystified “A proven approach in good times and bad”<br />Data Collection Methods<br /> ()<br />Performance Impact<br /> <br /><ul><li> Surveys/Questionnaires
    23. 23. Observation
    24. 24. Interviews
    25. 25. Focus Groups
    26. 26. Historical Data</li></ul> ()<br /> ()<br /> <br />Pre-program Post-program<br />CASE STUDY * CASE STUDY * CASE STUDY * CASE STUDY *<br />
    27. 27. ROI Demystified “A proven approach in good times and bad”<br />TRAINING SOLUTION<br />Estimate ProgramCosts <br />Cost Categories<br />Analysis<br />Development<br />Implementation<br />Evaluation<br />Cost Accounts<br />CASE STUDY * CASE STUDY * CASE STUDY * CASE STUDY *<br />
    28. 28. PROGRAM COST WORKSHEET<br />
    29. 29. 40,000<br />1.3<br />… includes vacation<br />= 365 - 104<br />234<br />222<br />… Lodging & Meals <br />105<br />5<br />1635<br />238<br />… Avg. of Mileage & Airfare <br />= .005 FC & Labor increases<br />90<br />15<br />29,445<br />6938<br />= Activities & Outside Speaker <br />36,383<br />PARTICIPANTS’ COSTS WORKSHEET<br />÷<br />
    30. 30. EvaluationTools<br />EvaluationTiming<br />Collect ROI Data<br />IdentifyTangible Results<br />IdentifyIntangible Results <br />Isolate Effectsof Program<br />Measuring<br />ROI<br />Convert Data to Monetary Value <br />CalculateROI <br />Communicate Results <br />
    31. 31. ROI Demystified “A proven approach in good times and bad”<br />Level 3 Level4<br />Identifying The Effects<br /> ()<br /> <br /><ul><li> Surveys/Questionnaires
    32. 32. Observation
    33. 33. Interviews
    34. 34. Focus Groups
    35. 35. Historical Data</li></ul> ()<br /> ()<br /> <br />Pre-program Post-programAnalysis Evaluation <br />
    36. 36. ROI Demystified “A proven approach in good times and bad”<br />Isolating The Effects<br /><ul><li> Use of a control group
    37. 37. Match against performance forecasting</li></ul> “Are the results what we said they’d be?”<br /><ul><li> Previous program data</li></ul> “Are the results similar to last time we did this?”<br /><ul><li> Guest feedback</li></ul> “Do all factors total 100%?”<br /><ul><li> Estimate of impact (Confidence %’s) - Learner - Supervisor - Manager
    38. 38. Calculating “other factors” impact</li></li></ul><li>ROI Demystified “A proven approach in good times and bad”<br />Converting Data to $$$<br /><ul><li> Employee time (Labor Dollars)
    39. 39. Food Costs
    40. 40. Historical cost data
    41. 41. Internal/external expert estimates
    42. 42. External databases
    43. 43. Linking to other measures
    44. 44. Estimates (Confidence %’s) - Learner - Supervisor - Manager/Staff</li></li></ul><li>ROI Demystified “A proven approach in good times and bad”<br />General Steps for Converting Data <br /><ul><li> Focus on a unit of measure
    45. 45. Determine a value for each unit </li></ul>Sometimes Easy…<br />…Sometimes hard<br />FOOD COSTS * LABOR COSTS<br />GUEST SATISFACTION<br />TURNOVER<br />
    46. 46. CUSTOMER SERVICE INDEXSurvey<br />1% “will return” = $ales x .05607<br />Value = $1052640 x .05607 = $59021<br />TURNOVER* Historical Data Comparison ** Linking to Expert Estimates *<br />Avg. # of Empl. x $1150/12<br />Value = 400 x $96 = $38400<br />
    47. 47. ROI Demystified “A proven approach in good times and bad”<br />General Steps for Converting Data <br /><ul><li> Focus on a unit of measure
    48. 48. Determine a value for each unit
    49. 49. Calculate the change in performance data
    50. 50. Determine an amount for the change - Annual - Quarterly - Monthly
    51. 51. Calculate the total value</li></ul>SELECT THE APPROPRIATE DATA<br />
    52. 52. Considering Other Factors<br />Labor: %<br /><ul><li>______________________________
    53. 53. ______________________________
    54. 54. ______________________________</li></ul>&lt;&lt; Hard<br />Production Costs: %<br /><ul><li>______________________________
    55. 55. ______________________________
    56. 56. ______________________________</li></ul> Hard&gt;&gt;<br />Turnover: %<br /><ul><li>______________________________
    57. 57. ______________________________
    58. 58. ______________________________</li></ul>&lt;&lt; Hard/Soft<br />Customer Satisfaction Attribute %<br /><ul><li>______________________________
    59. 59. ______________________________
    60. 60. ______________________________</li></ul>Soft&gt;&gt;<br />
    61. 61. ROI Demystified “A proven approach in good times and bad”<br />Converting Data to $$$<br />EVALUATION OF RETURN<br />Measure: ________________________ Unit of Measure:__________<br />Value or cost of unit of measure: $_____________<br />How much change occurred in unit of measure? X _____________<br />(Average per quarter/month)<br />Period of evaluation (quarters/months) X _____________<br />POTENTIAL IMPACT= $_____________ <br />CONFIDENCE FACTOR<br />Percent of change caused by program: _______% X ____________<br />Confidence in information: _______% X _____________<br />(100% = Certainty&lt;&lt;&gt;&gt;0% = No Confidence) <br />ESTIMATED RETURN = $____________<br />
    62. 62. ROI Demystified “A proven approach in good times and bad”<br />Converting Data to $$$<br />LABOR<br />FOOD COST<br />TURNOVER<br />Voice of Guest<br />$__________<br />X __________<br />X __________<br />=$__________ <br />X __________<br />X __________<br />$__________<br />$__________<br />X __________<br />X __________<br />=$__________ <br />X __________<br />X __________<br />$__________<br />$__________<br />X __________<br />X __________<br />=$__________ <br />X __________<br />X __________<br />$__________<br />$__________<br />X __________<br />X __________<br />=$__________ <br />X __________<br />X __________<br />$__________<br />Unit Value: <br />Degree of Change <br />(Average per qtr/mo)<br />Timeframe <br />POTENTIAL IMPACT <br />CONFIDENCE FACTOR<br />% Impact<br />% Confidence<br />TOTALS<br />
    63. 63. ROI Demystified “A proven approach in good times and bad”<br />LABOR<br />FOOD COST<br />TURNOVER<br />CSI“RETURN”<br /> $___1052640<br />X ___.006275<br />X ________3_<br />=$_____19816<br />X _______050<br />X _______050<br />$ 4954<br />$___1052640<br />X ___.002833<br />X _______3__<br />=$______8946 <br />X _______050<br />X _______100<br />$ 4473<br />$_____38400<br />X _______.03<br />X _______3__<br />=$______3456 <br />X _______030<br />X _______100<br />$ 1036<br /> $_____59021<br />X ______.666<br />X _______3__<br />=$____118041 <br />X ________60<br />X ________30<br />$ 21247<br />Converting Data to $$$<br />Unit Value: <br />Degree of Change <br />(Average per qtr/mo)<br />Timeframe <br />POTENTIAL IMPACT <br />CONFIDENCE FACTOR<br />% Impact <br />% Confidence<br />TOTALS<br />TOTAL BENEFIT = $31710<br />
    64. 64. ROI Demystified “A proven approach in good times and bad”<br />Benefits - Costs<br />ROI (%) =<br />x 100%<br />Costs<br />$31,710 - $10,000<br />ROI (%) =<br />x 100%<br />$10,000<br />Benefits<br /> BCR =<br />Costs<br />$31,710<br /> BCR =<br />$10,000<br />Calculating the Return<br />
    65. 65. ROI Demystified “A proven approach in good times and bad”<br />Calculating the Return<br />ROI (%) =<br />217%<br /> BCR =<br /> 3.17<br />
    66. 66. ROI Demystified “A proven approach in good times and bad”<br />“SOFT DATA”<br />“HARD DATA”<br />IDENTIFY INTANGIBLE BENEFITS<br />Productivity<br />Time<br />Costs<br />
    67. 67. ROI Demystified “A proven approach in good times and bad”<br />Identifying Intangible Benefits<br /><ul><li> Increased Job Satisfaction
    68. 68. Improved Teamwork
    69. 69. Reduced Complaints
    70. 70. Reduced Conflicts
    71. 71. Improved Communications
    72. 72. Improved Customer Service
    73. 73. Increased Employee Morale/Loyalty</li></li></ul><li>ROI Demystified “A proven approach in good times and bad”<br />
    74. 74. ROI Demystified “A proven approach in good times and bad”<br />Caveats to using ROI<br /><ul><li> The ROI process should be developed for programs where a needs assessment has been conducted
    75. 75. The ROI analysis should always include one or more strategies for isolating the effects of training
    76. 76. When using estimates, use the most reliable and credible sources</li></li></ul><li>External Resources<br />Reduce turnover 25%. Labor is not your biggest controllable cost, retention is. Have you considered the hard-dollar costs of turnover? Here&apos;s a quick tutorial: if your annual unit turnover is 125%, and you have 60 employees on your team that means you hire and train 75 new employees every year. Let&apos;s presume that it conservatively costs you $500 to do so. That&apos;s an annual recurring cost of $37,500. If your annual unit sales are $1 million and you make 10 cents on each dollar you&apos;d have to generate $400,000 in sales (the first 145 days of each year, sometime in May!) just to cover your turnover costs.  So a 25% reduction in turnover is huge in what it saves you and also in what it doesn&apos;t cost you. <br />
    77. 77. ROI Demystified “A proven approach in good times and bad”<br />Caveats to using ROI<br /><ul><li> The ROI process should be developed for programs where a needs assessment has been conducted
    78. 78. The ROI analysis should always include one or more strategies for isolating the effects of training
    79. 79. When using estimates, use the most reliable and credible sources
    80. 80. Take a conservative approach when developing both benefits and costs</li></li></ul><li>ROI Demystified “A proven approach in good times and bad”<br />Caveats to using ROI<br /><ul><li> Use caution when comparing the ROI in training and development with other financial returns
    81. 81. Involve management in developing the returns
    82. 82. Approach sensitive and controversial issues with caution
    83. 83. Teach others the methods for calculating the return</li></li></ul><li>
    84. 84. ROI Demystified “A proven approach in good times and bad”<br />Caveats to using ROI<br /><ul><li> Do not boast about a high return
    85. 85. Do not try to use ROI on every program
    86. 86. Don’t complicate it</li></li></ul><li>ROI Demystified “A proven approach in good times and bad”<br />Q & A<br />
    87. 87. jkidwell@mazzios.com<br />918-641-1227<br />curt.archambault@jackinthebox.com<br />425-687-4952<br />

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