ROI Fundamentals Why and When to Measure Return on Investment

by Phillips , Patricia Pulliam; Phillips, Jack J.

• ISBN13: 9780787987169
• ISBN10: 0787987166
• Edition: 1st
• Format: Paperback
• Copyright: 2008-02-08
• Publisher: Pfeiffer

Summary

ROI in Actionprovides real-world case studies from companies all over the world that show the successful implementation of the ROI Methodology. The book covers major workplace learning and performance applications, including leadership development, sales training, performance improvement, technical skills training, information technology training, orientation and on the job training, and supervisor training.

Author Biography

Jack J. Phillips is chairman of the ROI Institute, Inc. A world-renowned expert on measurement and evaluation, Phillips provides consulting services to Fortune 500 companies and workshops for major conference providers throughout the world. Phillips is the author or editor of more than thirty books and more than one hundred articles.

Patricia Pulliam Phillips is an internationally recognized author, consultant, and president and CEO of the ROI Institute, Inc. Phillips provides consulting services to organizations worldwide. She helps organizations build capacity in the ROI Methodology by facilitating the ROI certification process and teaching the ROI Methodology through workshops and graduate-level courses.

The ROI Institute, Inc., is a benchmarking, research, and information sharing organization that provides consulting services, workshops, and certification in the ROI Methodology. Widely considered the leading authority on evaluation and measurement of learning and development in organizations, the ROI Institute conducts workshops and offers certification for thousands of practitioners through a variety of strategic partners.

Table of Contents

Acknowledgments from the Editors	p. xix
Preface: The Realities of ROI	p. xxi
A Brief Description of the ROI Methodology	p. 1
Evaluation Levels: A Beginning Point	p. 1
Evaluation Planning	p. 9
Data Collection	p. 14
Isolation of Program Effects	p. 17
Data Conversion	p. 19
Intangible Benefits	p. 22
Program Costs	p. 22
Return on Investment Calculation	p. 23
Reporting	p. 24
Case Study	p. 24
Final Thoughts	p. 26
Why ROI?	p. 27
Progress and Status of ROI	p. 28
Global Trends in Measurement	p. 29
ROI Applications Across Fields and Sectors	p. 30
Growth of ROI as a Conference Topic	p. 32
Global Expansion of ROI Applications	p. 32
The Move from Activity to Results	p. 33
ROI Is Here to Stay	p. 34
Why ROI?	p. 34
Increased Budgets	p. 35
The Ultimate Level of Evaluation	p. 36
Change, Quality, and Reengineering	p. 36
Business Mindset of Support Managers	p. 37
The Trend Toward Accountability	p. 38
Top Executive Requirements	p. 39
Concerns About Using ROI	p. 39
Practitioners	p. 40
Senior Managers, Sponsors, and Clients	p. 40
Researchers	p. 41
Criteria for an Effective ROI Process	p. 41
Barriers to ROI Implementation	p. 43
Financial and Time Costs	p. 44
Lack of Staff Skills and Orientation	p. 44
Faulty Needs Assessment	p. 44
Fear	p. 44
Lack of Discipline or Planning	p. 45
False Assumptions	p. 45
Benefits of Using ROI	p. 46
Measurement of a Program's Contribution	p. 46
Clear Priorities	p. 46
Focus on Results	p. 46
Respect from Senior Executives and Program Sponsors	p. 47
Positive Changes in Management Perceptions	p. 47
ROI Best Practices	p. 47
Evaluation Targets	p. 48
Microlevel Evaluation	p. 48
A Variety of Data Collection Methods	p. 49
Isolation of the Program	p. 49
Sampling for ROI Calculations	p. 49
Conversion of Program Results to Monetary Values	p. 51
Final Thoughts	p. 51
Who Should Use the ROI Methodology?	p. 53
The Typical Organization	p. 54
The Typical Program	p. 55
Signs That an Organization Is Ready for the ROI Methodology	p. 57
Taking a Reactive Versus a Proactive Approach	p. 61
Reactive Approach	p. 62
Proactive Approach	p. 62
Final Thoughts	p. 63
How to Build a Credible Process	p. 65
The Evaluation Framework	p. 67
The Process Model	p. 72
The Operating Standards: Guiding Principles	p. 72
Report the Complete Story	p. 73
Conserve Important Resources	p. 73
Enhance Credibility	p. 73
Be Conservative	p. 73
Account for Other Factors	p. 74
Account for Missing Data	p. 74
Adjust Estimates for Error	p. 74
Omit the Extremes	p. 74
Capture Annual Benefits for Short-Term Programs	p. 75
Account for All Program Costs	p. 75
Report Intangible Benefits	p. 75
Communicate Results	p. 75
Case Applications and Practice	p. 76
Implementation	p. 77
Assign Responsibilities	p. 77
Develop Skills	p. 77
Develop an Implementation Plan	p. 78
Prepare or Revise Evaluation Guidelines	p. 81
Brief Managers on the Evaluation Process	p. 81
Final Thoughts	p. 81
Inhibitors of Implementation	p. 83
Barriers to Implementation	p. 83
Costs and Time	p. 83
Lack of Skills	p. 84
Faulty or Inadequate Initial Analysis	p. 85
Fear	p. 85
Discipline and Planning	p. 86
ROI Myths	p. 86
ROI Is Too Complex for Most Users	p. 87
ROI Is Expensive, Consuming Too Many Critical Resources	p. 87
If Senior Management Does Not Require ROI, There Is No Need to Pursue It	p. 87
ROI Is a Passing Fad	p. 88
ROI Is Only One Type of Data	p. 88
ROI Is Not Future-Oriented; It Reflects Only Past Performance	p. 89
ROI Is Rarely Used by Organizations	p. 89
The ROI Methodology Cannot Be Easily Replicated	p. 89
ROI Is Not a Credible Process; It Is Too Subjective	p. 90
ROI Is Not Credible When Evaluating Soft-Skill Programs	p. 90
ROI Is Only for Manufacturing and Service Organizations	p. 90
Isolation of the Influence of Factors Other Than the Program Is Not Always Possible	p. 91
Measurement of On-the-Job Activities Is Impossible Because Post-Program Control of Application Is Impossible	p. 91
ROI Is Appropriate Only for Large Organizations	p. 92
The ROI Methodology Has No Standards	p. 92
It's All About Change Management	p. 92
Next Steps	p. 94
Final Thoughts	p. 95
ROI Quiz	p. 96
Quiz Answers	p. 98
Planning for Evaluation	p. 99
Establishing Purpose and Feasibility	p. 99
Purpose	p. 99
Make Decisions About Programs	p. 100
Improve Programs and Processes	p. 100
Demonstrate Program Value	p. 101
Feasibility	p. 103
Validation of Program Objectives	p. 103
Availability of Data	p. 104
Appropriateness for ROI Measurement	p. 104
Defining Program Objectives	p. 104
Reaction Objectives	p. 105
Learning Objectives	p. 108
Application Objectives	p. 111
Impact Objectives	p. 112
ROI Objectives	p. 115
Developing the Planning Documents	p. 117
Data Collection Plan	p. 117
What Do You Ask?	p. 117
How Do You Ask?	p. 117
Whom Do You Ask?	p. 121
When Do You Ask?	p. 121
Who Asks?	p. 121
ROI Analysis Plan	p. 121
Methods for Isolating the Effects of the Program	p. 121
Methods for Converting Data to Monetary Values	p. 123
Cost Categories	p. 123
Intangible Benefits	p. 123
Communication Targets for the Final Report	p. 123
Other Application Influences and Issues	p. 123
Comments	p. 124
Project Plan	p. 124
Conducting the Planning Meeting	p. 125
Who Should Be Involved	p. 125
Agenda	p. 126
Factors for Success	p. 126
Identifying Data Sources	p. 127
Organizational Performance Records	p. 127
Participants	p. 127
Participants' Managers	p. 128
Participants' Direct Reports	p. 128
Team or Peer Group	p. 128
Internal and External Groups	p. 129
Final Thoughts	p. 129
Appendix	p. 131
Index	p. 133
About the Authors	p. 143
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