We are pleased to bring you a guest blog post today from Dr. Patti Phillips, president and CEO of the ROI Institute, Inc., the leading source of ROI competency building, implementation support, networking, and research. She is also chair and CEO of The Chelsea Group, Inc., an international consulting organization supporting organizations and their efforts to build accountability into their training, human resources, and performance improvement programs with a primary focus on building accountability in public sector organizations. Her husband, Dr. Jack J. Phillips, chairman of the ROI Institute, Inc., and a world-renowned expert on accountability, measurement, and evaluation, will be leading a workshop at SkillSoft’s 2012 Annual Perspectives User Conference – “Show Me the Money: How to Determine ROI in People, Projects, and Programs.” This interactive workshop will introduce the concept of ROI ultimate accountability as participants are exposed to the ROI Process.
By Patti Phillips, Ph.D., President and CEO, ROI Institute, Inc.
Today’s business community is relying more on data about programs and projects than ever before. Yet, many people still ask:
How do we ensure the right measures are taken and that the connection between investment in our people and the results achieved is clear?
We do it through the process of business alignment.
Business alignment is the process of ensuring that investment drives relevant business results. Achieving business alignment requires that programs, projects, and initiatives be positioned for success, and then, evaluated accordingly. There are three phases to business alignment:
- Clarify stakeholder needs
- Develop measurable objectives
- Evaluate accordingly.
Clarify Stakeholder Needs
Initial alignment occurs when stakeholder needs are identified, which begins with potential payoff for opportunities or problems. These payoff opportunities represent an organization’s opportunity to make money, save money, and/or avoid costs. Some payoff opportunities are obvious, such as a $1.5 million cost due to unwanted employee turnover. Other payoff opportunities are not so obvious, like the desire to become a great place to work.
Once clear about the potential payoff opportunity, the next step is to identify the specific business measures that, if improved, will position you to take advantage of the payoff opportunity. For example, let’s say your company executives want the organization to become a green organization. The next step is to identify the business measures that need to improve in order to position your company as green. One relevant business measure may be kilowatt-hours used per month.
Next, identify the performance needs. Performance needs are those behaviors or actions taken, or not, that if changed will improve the business measures. Using the green example, a performance need associated with kilowatt-hours might be employees leaving their computers on after they leave from work.
Next, identify what employees need to know in order to change their behavior. One learning need may be employees need to know the environmental impact associated with leaving computers on.
Then, identify the program, project, or initiative that will address stakeholder needs. Finally, identify the scope of the program including the target audience, timing, and actual investment level.
By getting clear on the ultimate payoff first and working through the process from business need to performance need to learning need, then to solution, you’ve increased your chances of identifying the right investment opportunity given the goal at hand; plus, you’ve established a basis for the measures to be taken.
The second phase of alignment is through the development of objectives. The objectives correspond to stakeholder needs. Developing powerful program objectives at multiple levels positions the investment for success. Objectives describe to designers and developers the intent of an initiative, giving them direction as to what components to include. They provide facilitators, team leaders, and program managers direction as they assist participants in preparing to change behavior, apply knowledge, and drive business outcomes. Objectives representing stakeholder needs communicate “the what” and “why” of a program or project to participants. They keep impact objectives in constant focus, reminding participants of the ultimate reason for investing in a program. Developing objectives that reflect stakeholder needs communicate to stakeholders that the program owner “gets it” – that he or she has paid attention to what is needed to support organization success.
Objectives also set the stage for program evaluation, ensuring the right measures are taken and that results important to stakeholders are developed. Developing powerful objectives that reflect stakeholder needs is imperative to achieving business alignment.
Evaluate the Program
The last phase in the alignment process is the evaluation process. Here data are collected and analyzed. The final result is a reporting of the chain of impact that occurs, as people are involved in a program.
For example, you may have decided to implement a green campaign. Based on the information provided through various channels including an e-learning program, employees report agreement that going green is relevant and important. They indicate they know what their role is, why turning off their computer is important, and how much money they can save the company. Three months after the campaign, you find that 90 percent of employees report they turn off their computer before leaving work. Upon checking the electric power bill, your organization’s facilities manager reports an average decrease of 5 percent in kilowatt-hours used per month based on three months worth of data. These findings are directly aligned with the stakeholder needs described earlier.
But there is still a question pending:
How much of that decrease in kilowatt-hours used is due to the green campaign?
Your decision to answer or not answer this question determines the credibility of your results.
While some people argue that you can’t isolate the effects of a program on results, others argue you can’t afford not to.
There are a variety of ways in which to isolate the effects of investments made in human capital. From control group arrangement, trend line analysis, and forecasting models to estimates adjusted for error. My husband, Jack Phillips, Ph.D. was first to introduce the practice of isolating the effects of programs on results to the human resources and training industries in the early 1970s. Today, some consulting practices build their entire branding campaign around this one crucial step.
If you want to ensure that you take the right measures, analyze the right data, and make a clear connection to the business results your purport, follow the three steps to business alignment. Not only will you generate meaningful data, but also you will improve your chances for a positive ROI.