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2009 Chart Ro Ioption1
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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.

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?

2009 Chart Ro Ioption1 2009 Chart Ro Ioption1 Presentation Transcript

  • ROI Demystified
    “A proven approach in good times and bad”
    Curt Archambault – Jack in the Box/Roi – Cyber Space
    Cleveland, Ohio/July 2009
  • Managing What Counts
    Financial“Has our financial performance improved?”
    What areour financialgoals?
    Customer“Do customers recognize that we are delivering more value?”
    What customers do wewant to serve and howare we going to win andretain them?
    VisionandStrategy
    Internal Business Processes“Have we improved key business processes so that we can delivermore value to customers?”
    What internalbusiness processesare critical to providingvalue to customers?
    Learning and Growth“Are we maintaining our ability to change and improve?”
  • ROI Demystified “A proven approach in good times and bad”
    The question is asked today more than ever before. It is also one of the most difficult to answer.
    One reason for the difficulty is a definition problem. A common financial definition is:
    “ROI is a measure of the net income a company is able to earn with its total assets”.
    An acceptable definition for a company as a whole; but, hardly realistic for a single project or product.
    Others prefer a more micro-definition:
    “ROI is the gain from an action divided by the cost of that action”.
    Works well if both gain and cost are easily known and clearly result from the action.
    When someone asks about ROI, they are really asking:
    “What do I get back ('return') for the money I'm being asked to spend ('investment')?”
  • ROI Demystified “A proven approach in good times and bad”
    To understand the business value of investments:
    “If it's important enough to spend money and time on,
    it's important enough to figure out if you're getting the end result you were hoping for”. *
    To make resource allocation decisions and manage a budget:
    “You can’t manage what you can’t measure”. **
    * Erica Iacono, PRWeek, 14/03/05
    ** Hewlett-Packard
  • THE TOP FIVELIST
    ROI Demystified “A proven approach in good times and bad”
  • 1
    "The Bottom Line - PROFIT!“
    2
    Shows tangible outcomes, not "touchy-feely" motivations
    3
    Gets Senior Executives to "buy in" to Training initiatives
    4
    Speaks in a language the CFO understands
    5
    It serves as a prime tool to support the needs analysis process
    The Top 5 Reasons ROI is“A proven approach in good times and bad”
  • Activity vs.
    vs. Proactive
    Results
    Reactive
    ROI Demystified “A proven approach in good times and bad”
  • ROI Demystified “A proven approach in good times and bad”
  • WONDER WHAT IT WILL BE LIKE TO ORDER A PIZZA IN THE FUTURE?...
    THE FUTURE…
  • Coming to you live from the mystical, magical, real-time, virtual world of SecondLife…
    THE FUTURE… IS NOW!
  • ROI Demystified “A proven approach in good times and bad”
    Benefits - Costs
    ROI (%) =
    x 100%
    Costs
    Benefits
    BCR =
    Costs
    Let’s start simple.
    What is…
  • Level 1
    DO SESSION SURVEYS
    Kirkpatrick-Phillips Model
    Level 2
    TEST FOR LEARNING
    Level 3
    APPLY THE LEARNING
    Level 4
    BUSINESS IMPACT
    Level 5 RETURN ON INVESTMENT
    Jack Phillips
    Donald Kirkpatrick
    ROI Demystified “A proven approach in good times and bad”
  • ROI Demystified “A proven approach in good times and bad”
    The “MUST” ListFor An Effective ROI Process...
    1) Be Simple
    2) Be Economical
    3) Be Credible
    4) Be Theoretically Sound
    5) Be Flexible: Analysis, Data, Programs
    6) Account For Other Factors
    7) Include Cost Of Program
    8) Have A Successful Track Record
  • ROI Demystified “A proven approach in good times and bad”
    Reversing the Model…
    Level 4 OPERATIONAL NEEDS
    Level 3 JOB PERFORMANCE NEEDS
    Level 2 SKILL/KNOWLEDGE GAPS
    Level 1 TRAINING PROGRAM PREFERENCE
    …gives you an ASSESSMENT PROCESS
  • OperationalNeeds
    INITIATIVE
    INTERVENTION
    Job PerformanceNeeds
    Non-TrainingSolution
    Skill/KnowledgeGaps
    AnticipatedProblem/Opportunity
    ExistingProblem/Opportunity
    Non-TrainingSolution
    4
    Training Program Preferences
    3
    Estimate ProgramCosts
    2
    1
    Design & Implement
    Assessment
    Process
  • ROI Demystified “A proven approach in good times and bad”
    What is the Business Impact
    $ALE$
    Don’t rely exclusively on sales…Everyone wants a slice of that pie!
  • ROI Demystified “A proven approach in good times and bad”
    “HARD DATA”
    Productivity
    Time
    Costs
    CASE STUDY * CASE STUDY * CASE STUDY * CASE STUDY *
  • ROI Demystified “A proven approach in good times and bad”
    Data Collection Methods
    Performance Impact
    CASE STUDY * CASE STUDY * CASE STUDY * CASE STUDY *
  • ROI Demystified “A proven approach in good times and bad”
    Data Collection Methods
     ()
    Performance Impact

    • Surveys/Questionnaires
    • Observation
    • Interviews
    • Focus Groups
    • Historical Data
     ()
     ()

    Pre-program Post-program
    CASE STUDY * CASE STUDY * CASE STUDY * CASE STUDY *
  • ROI Demystified “A proven approach in good times and bad”
    TRAINING SOLUTION
    Estimate ProgramCosts
    Cost Categories
    Analysis
    Development
    Implementation
    Evaluation
    Cost Accounts
    CASE STUDY * CASE STUDY * CASE STUDY * CASE STUDY *
  • PROGRAM COST WORKSHEET
  • 40,000
    1.3
    … includes vacation
    = 365 - 104
    234
    222
    … Lodging & Meals
    105
    5
    1635
    238
    … Avg. of Mileage & Airfare
    = .005 FC & Labor increases
    90
    15
    29,445
    6938
    = Activities & Outside Speaker
    36,383
    PARTICIPANTS’ COSTS WORKSHEET
    ÷
  • EvaluationTools
    EvaluationTiming
    Collect ROI Data
    IdentifyTangible Results
    IdentifyIntangible Results
    Isolate Effectsof Program
    Measuring
    ROI
    Convert Data to Monetary Value
    CalculateROI
    Communicate Results
  • ROI Demystified “A proven approach in good times and bad”
    Level 3 Level4
    Identifying The Effects
     ()

    • Surveys/Questionnaires
    • Observation
    • Interviews
    • Focus Groups
    • Historical Data
     ()
     ()

    Pre-program Post-programAnalysis Evaluation
  • ROI Demystified “A proven approach in good times and bad”
    Isolating The Effects
    • Use of a control group
    • Match against performance forecasting
    “Are the results what we said they’d be?”
    • Previous program data
    “Are the results similar to last time we did this?”
    • Guest feedback
    “Do all factors total 100%?”
    • Estimate of impact (Confidence %’s) - Learner - Supervisor - Manager
    • Calculating “other factors” impact
  • ROI Demystified “A proven approach in good times and bad”
    Converting Data to $$$
    • Employee time (Labor Dollars)
    • Food Costs
    • Historical cost data
    • Internal/external expert estimates
    • External databases
    • Linking to other measures
    • Estimates (Confidence %’s) - Learner - Supervisor - Manager/Staff
  • ROI Demystified “A proven approach in good times and bad”
    General Steps for Converting Data
    • Focus on a unit of measure
    • Determine a value for each unit
    Sometimes Easy…
    …Sometimes hard
    FOOD COSTS * LABOR COSTS
    GUEST SATISFACTION
    TURNOVER
  • CUSTOMER SERVICE INDEXSurvey
    1% “will return” = $ales x .05607
    Value = $1052640 x .05607 = $59021
    TURNOVER* Historical Data Comparison ** Linking to Expert Estimates *
    Avg. # of Empl. x $1150/12
    Value = 400 x $96 = $38400
  • ROI Demystified “A proven approach in good times and bad”
    General Steps for Converting Data
    • Focus on a unit of measure
    • Determine a value for each unit
    • Calculate the change in performance data
    • Determine an amount for the change - Annual - Quarterly - Monthly
    • Calculate the total value
    SELECT THE APPROPRIATE DATA
  • Considering Other Factors
    Labor: %
    • ______________________________
    • ______________________________
    • ______________________________
    << Hard
    Production Costs: %
    • ______________________________
    • ______________________________
    • ______________________________
    Hard>>
    Turnover: %
    • ______________________________
    • ______________________________
    • ______________________________
    << Hard/Soft
    Customer Satisfaction Attribute %
    • ______________________________
    • ______________________________
    • ______________________________
    Soft>>
  • ROI Demystified “A proven approach in good times and bad”
    Converting Data to $$$
    EVALUATION OF RETURN
    Measure: ________________________ Unit of Measure:__________
    Value or cost of unit of measure: $_____________
    How much change occurred in unit of measure? X _____________
    (Average per quarter/month)
    Period of evaluation (quarters/months) X _____________
    POTENTIAL IMPACT= $_____________
    CONFIDENCE FACTOR
    Percent of change caused by program: _______% X ____________
    Confidence in information: _______% X _____________
    (100% = Certainty<<>>0% = No Confidence)
    ESTIMATED RETURN = $____________
  • ROI Demystified “A proven approach in good times and bad”
    Converting Data to $$$
    LABOR
    FOOD COST
    TURNOVER
    Voice of Guest
    $__________
    X __________
    X __________
    =$__________
    X __________
    X __________
    $__________
    $__________
    X __________
    X __________
    =$__________
    X __________
    X __________
    $__________
    $__________
    X __________
    X __________
    =$__________
    X __________
    X __________
    $__________
    $__________
    X __________
    X __________
    =$__________
    X __________
    X __________
    $__________
    Unit Value:
    Degree of Change
    (Average per qtr/mo)
    Timeframe
    POTENTIAL IMPACT
    CONFIDENCE FACTOR
    % Impact
    % Confidence
    TOTALS
  • ROI Demystified “A proven approach in good times and bad”
    LABOR
    FOOD COST
    TURNOVER
    CSI“RETURN”
    $___1052640
    X ___.006275
    X ________3_
    =$_____19816
    X _______050
    X _______050
    $ 4954
    $___1052640
    X ___.002833
    X _______3__
    =$______8946
    X _______050
    X _______100
    $ 4473
    $_____38400
    X _______.03
    X _______3__
    =$______3456
    X _______030
    X _______100
    $ 1036
    $_____59021
    X ______.666
    X _______3__
    =$____118041
    X ________60
    X ________30
    $ 21247
    Converting Data to $$$
    Unit Value:
    Degree of Change
    (Average per qtr/mo)
    Timeframe
    POTENTIAL IMPACT
    CONFIDENCE FACTOR
    % Impact
    % Confidence
    TOTALS
    TOTAL BENEFIT = $31710
  • ROI Demystified “A proven approach in good times and bad”
    Benefits - Costs
    ROI (%) =
    x 100%
    Costs
    $31,710 - $10,000
    ROI (%) =
    x 100%
    $10,000
    Benefits
    BCR =
    Costs
    $31,710
    BCR =
    $10,000
    Calculating the Return
  • ROI Demystified “A proven approach in good times and bad”
    Calculating the Return
    ROI (%) =
    217%
    BCR =
    3.17
  • ROI Demystified “A proven approach in good times and bad”
    “SOFT DATA”
    “HARD DATA”
    IDENTIFY INTANGIBLE BENEFITS
    Productivity
    Time
    Costs
  • ROI Demystified “A proven approach in good times and bad”
    Identifying Intangible Benefits
    • Increased Job Satisfaction
    • Improved Teamwork
    • Reduced Complaints
    • Reduced Conflicts
    • Improved Communications
    • Improved Customer Service
    • Increased Employee Morale/Loyalty
  • ROI Demystified “A proven approach in good times and bad”
  • ROI Demystified “A proven approach in good times and bad”
    Caveats to using ROI
    • The ROI process should be developed for programs where a needs assessment has been conducted
    • The ROI analysis should always include one or more strategies for isolating the effects of training
    • When using estimates, use the most reliable and credible sources
  • External Resources
    Reduce turnover 25%. Labor is not your biggest controllable cost, retention is. Have you considered the hard-dollar costs of turnover? Here'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's presume that it conservatively costs you $500 to do so. That'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'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't cost you.
  • ROI Demystified “A proven approach in good times and bad”
    Caveats to using ROI
    • The ROI process should be developed for programs where a needs assessment has been conducted
    • The ROI analysis should always include one or more strategies for isolating the effects of training
    • When using estimates, use the most reliable and credible sources
    • Take a conservative approach when developing both benefits and costs
  • ROI Demystified “A proven approach in good times and bad”
    Caveats to using ROI
    • Use caution when comparing the ROI in training and development with other financial returns
    • Involve management in developing the returns
    • Approach sensitive and controversial issues with caution
    • Teach others the methods for calculating the return
  • ROI Demystified “A proven approach in good times and bad”
    Caveats to using ROI
    • Do not boast about a high return
    • Do not try to use ROI on every program
    • Don’t complicate it
  • ROI Demystified “A proven approach in good times and bad”
    Q & A
  • jkidwell@mazzios.com
    918-641-1227
    curt.archambault@jackinthebox.com
    425-687-4952