ROI? Does That Scare You?

Have you ever wondered what you would do if you were told that you need to evaluate the value of your contribution to the organization as a Performance and Learning Professional?  That Level 4 Evaluation can be intimidating.  And, what about return on investment (ROI)?  Does that scare you?

You’re not an accountant?  You don’t do financial analysis.  As a Training and Development specialist, you are familiar with collecting the reactions of your participants; you know those, “smiles sheets.”  You design good performance assessments that prove that your participants can meet your training objectives.  And, you even have managers who encourage the use of new skills back on the job.  But, how do you prove that your efforts have made a difference to the organization?

What if you made that decision right up-front?  What if you found that if you improve a key position’s performance, you could, in turn, improve the overall performance of the organization?  Most organizations can tell you what positions have a great impact on organizational performance.  That may be why you were asked to develop learning activities for those positions.  If people in these positions were more knowledgeable and skillful, their performance would improve and so would the performance of the company.

So, let’s say you began an instructional design project with the thought that you need to find Subject Matter Experts you could interview and observer.  Once you know how the job is done, you could begin designing learning and development activities.  But lets say you decided to make a different approach this time.  Lets say you take a performance point-of-view and decided to look at accomplishments of the best performers and the average performers in this position.  And, use that performance data to determined the Potential for Improved Performance the PIP, as Thomas Gilbert would say, between the best performers and the typical/average performers.

After some fact-finding you might discover that average performers have the potential to improve their performance in one major performance areas by two times…Two times!  And then, you translate that ratio, or PIP to an economic value.  As a simple example, let say the daily output for the accomplishment was 25 units for average employees, and 50 for the best employees.  Each unit equals $10.00.  So if each employee created 25 more units, the company would see an increase of $250.00 per employee per day.  Set the performance of the best performers as your standard for your project goal with a potential of $250.00 increase in productivity.

For your project look at the improvement in terms of quality, quantity, timeliness, cost savings, customer service, or whatever measures the organization uses.  Hopefully the productivity gain will be enough to sell moving ahead with your project and validate that the sponsors were right when they said that the position was key to company performance.

To get a final project ROI you’ll need to subtract your solution cost from the amount of gain the performance improvement would produce.  But, you should be able to show a sizable gain, especially if your solution is efficient and focused on the performance areas you identified.

Now you just need to have the average performers meet the new performance standards and you already are very good at improving performance through instructional design.  You’ll need to find out what the best employees are doing as compared to the average employees.  And, since you need on-the-job application to produce increased performance and better results, you will need to look at the environment surrounding the people doing the job.  What are the forces supporting and distracting the performance?  Are the job instructions and standards clear?  Is the feedback timely and relevant?  Are resources and equipment available?  Is the supervision and coaching present?  Are the consequences in place, both positive and negative for meeting the standard?  If you find that the environment doesn’t support the performance you want, ask yourself, what can you do to sustain the performance of your instructional course?

Can this be done?  We once revised a course for preparing newly hired Customer Service Reps, in half the time of the old course, and produced graduates that out-performed average tenured reps. The savings and improved productivity of the graduates impressed the client so much that they now use the performances based approach for all existing courses.  So now we can also look at improving the performance of average tenured reps – What do you think of that PIP might be?

The keys to our success were to:

•  Pick a key position

•  Look at what the standard of performance should be

•  Convert PIP to economic terms

•  Design a performance based course

•  Analyze job environment and suggest improvements

•  Implement the course in the job environment, on-the-job, or simulated (to meet job conditions)

•  Use job standards for in course assessments

•  Certify participants to minimum standards

Give it a try.  Look at the difference between average and the best performers as a potential for improved performance.  Set a standard for performance and sell your project based on what that improvement will mean for the organization.