Measuring ROI in Two Steps

From Suzie Price's recent presentation:

In the past, when executives would ask for metrics around development programs, I'd get a sinking feeling in my gut - but not anymore.  This logical formula makes sense and you do not have to have a PhD. with  a staff of 50 to figure it out and report it! 
 
Now I have a process and an answer.  The process, which I will outline for you here, involves using online surveys and a simple Return on Investment (ROI) formula.  Many of you already use our survey platform system (see 20/20 Insight Demo) to conduct 360 feedback surveys, exit interviews, employee opinion surveys and customer satisfaction surveys. 

But, you can also use it to measure and report return on investment (ROI) metrics around development programs to the CEO and other leaders in your organization. 

Here's how you can get ROI measurement:

1. Use a Pre-development survey/diagnostic: Use our survey engine (20/20 Insight) to generate performance improvement data by setting up a survey that consists of questions that describe the behaviors taught in training.  You gather feedback from the participants' boss, coworkers and others - all online with less than 15 minutes of administration time.
    
   The results are shared prior to class with each training participant.  This helps participants set quantifiable, behavior-based performance improvement goals.   People come to training motivated!   
2. Use a Post-development survey/diagnostic:   Offer the same online survey, completed in Step 1, six to nine months after training. Compare post development survey results to pre-class survey results using a simple ROI formula (detailed below) . Improved scores will confirm improved performance.  If there's no improvement you can objectively meet with the training participant, manager and trainer to determine next steps.

For continued feedback and measures of performance improvement, repeat the assessment at the twelve-month and eighteen-month marks.
 
This simple common sense, reinforcement strategy, along with our low-cost UNLIMITED USAGE LICENSES found in our survey software, helps people stay motivated to use the skills taught in the classroom.  AND gives you the data you need to report ROI figures and results. 

Here’s the Return On Investment (ROI) formula and real-world example.

A leadership development program was delivered to lead engineers for a technology company. The participant's average salary was $70,000/year.

The cost of the training program per person was $2,200.

It was determined that leadership skills being taught in the program accounted for 50% of a manager's effectiveness.

The group scored 6.4 overall on the pre-class measurement survey and 7.7 overall on the post-class skills measurement - overall a 20% skill improvement.

ROI:

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