Organisations sometimes sell themselves and their people short by over-investing in initiatives that sound good, without ever considering whether they will truly add value.
Meanwhile, businesses may be missing out on the chance to make efficiencies because they treat ‘soft’ roles such as human resources, and learning development positions, as overheads rather than direct contributors to the bottom-line.
These roles can make and demonstrate significant contributions. But professionals in these ‘soft’ roles are often aware that being unable to measure the monetary value of their work makes them vulnerable, and also makes it less likely they will have a place at the top table.
Very few can prove the value of the programmes they implement, or predict their value in advance.
READ MORE: Better business performance means measuring what really matters
So, here are five top tips for measuring ‘soft’ initiative return on investment
How does the initiative align with and support the organisation’s vision, mission, values and business objectives? What does the business need? What does the proposed training or initiative hope to achieve? How will it affect participants and other stakeholders? How will it affect the business? How will it add value to the business? Can its return-on-investment (ROI) be calculated?
Collect data throughout the planning and implementation phases. Valuable information can be lost if its collection is left until after the initiative’s implementation.
This can appear difficult, but isolation strategy examples may include the use of control groups, trend analysis, forecasting methodology and experts’ estimates of the impact of other factors. Also be sure to ask participants, supervisors and/or managers about the extent to which they attribute any improvements to your initiative.
Participant impact estimates are particularly useful in estimating what percentage of performance improvement can be attributed to the initiative being evaluated. They are also important for helping to ensure the data is credible by reducing the likelihood that credit is mistakenly claimed for something that cannot be attributed to that programme.
Different isolation techniques may produce different ROIs. Reporting the most conservative result will ensure credibility, but also include the other ROI results to provide context.
Many different attributes can be assessed, including participants’ reactions to the initiative and their subsequent skills, knowledge and attitude changes.
Behavioural changes can also be measured, either generally or right down to the behaviour’s relationship with specific applications of the programme or initiative.
Also measure the initiative’s business impact. This can be done by taking before and after measures of the business’s key performance metrics and by identifying what has changed since the initiative was implemented.
The return-on-investment (ROI) calculation itself is straightforward: ROI (%) = Net Programme Benefits / Programme Costs x 100.
Understanding and being able to demonstrate the organisation’s return its investment in any initiative – whether that be training, change projects or programmes – will benefit the employee who leads the initiative, their own profession, and the business as a whole.
Determining the financial contribution of ‘overhead’ roles has often incorrectly been dismissed as too difficult. Businesses and employees alike are doing themselves a disservice by shying away from putting measures in place to reveal this valuable information.