ROI Estimator

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Welcome to the ROI Estimator, a tool designed to help you estimate the return on investment in programs. Demonstrating the value of various programs, whether they are cross-functional like executive leadership, specific functional areas such as supply chain management, or technical initiatives like cloud computing, is crucial for organizations. Program owners must communicate this value effectively to executives, stakeholders, and funders.
To use this tool effectively, it's essential to understand what ROI is. You'll need to identify factors across the conception, design, development, and proposed delivery of your program, and assess the extent to which each factor has been addressed. When completed, you will have estimated the ROI of your planned program or project. Now you are ready for implementation. Evaluate your program to determine the actual impact and ROI and what led to its success.
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There are many ways to show value. ROI is the ultimate value in the minds of the funders who support these programs. It is clearly visible by observing the chain of value that is present in any program that you conduct. These are the possible outcomes:
1. Reaction. This is reaction to the program in terms of its relevance to their needs, importance to their success, and is something they would use and recommend to others.
2. Learning. This is acquiring important knowledge and skills. This is absolutely necessary to make the program successful.
3. Application. This is routinely applying what participants learned and making sure that it is successful.
4. Impact. This is the consequence of application and often contains the measures already in the system focusing on productivity, quality, time, cost for hard data items, and engagement, teamwork, collaboration, and customer satisfaction in the softer categories.
5. ROI. This is a comparison of the monetary benefits from the program to the cost of the program. The formula is:
This is a common measure in the finance and accounting fields and is the ultimate outcome of any program. It is also a concept that most people think about in their daily lives and work as they purchase items: Are they getting enough benefit to justify the cost of the item?
Monetary benefits from a program come from the impact of the program. The impact measures are converted to money to create a benefit stream coming from the program. These monetary benefits are compared to all the total costs of the program to yield an ROI value.
An objective is the minimum acceptable performance. It may be helpful to have an objective for ROI. For most capital improvements, the ROI objective is between 12% and 16%.
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What is known from research is that a more expensive program does not always yield a smaller ROI. In fact, it has been demonstrated that data from a program conducted offsite and away from normal distractions in a place conducive to learning with access to expert faculty can actually increase the ROI. However, that is only one of several factors that can make a difference in the ROI.
This estimator will forecast the ROI based on the presence or absence of certain factors in the conception, design, development, and proposed delivery and support of this particular program. Research from ROI Institute has identified eight factors that can make a notable difference if they are present or the degree to which they are present. These eight factors are:
1. Involve participants with direct reports. (Direct Reports)
2. Align the program to business measures in the beginning. (Business Alignment)
3. Ensure that the proposed program is the right solution to improve the business measures. (Appropriate Solution)
4. Design for success at each outcome level. (Focus on Success)
5. Involve the right audience for the program. (Appropriate Audience)
6. Ensure that the program is valuable to participants. (Perceived Value)
7. Establish supportive partnerships with key managers. (Manager Support)
8. Minimize distraction and interruption with proper delivery. (Delivery)
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For each of these factors, a description of the factor follows, and then a definition of a rating scale from 1 to 5 that reflects the extent to which this factor has been addressed in the proposed program. Please use your best knowledge and judgment to make this assessment. It is important to be accurate with your rating so that the ROI Estimator can provide a true picture of the expected outcome of the program. The result will be an ROI estimation with a plus or minus error range, as well as some interpretation of the results.
The best way to receive value from this exercise is to clearly understand what causes the ROI to increase, and then think through the design, development, and implementation of your program to ensure that it can deliver a maximum ROI. Read the descriptions provided for each factor and choose the appropriate response. At the end of this exercise, you will see the estimated ROI and an interpretation of results to better understand how to design and deliver your program or project for success.
This estimator is provided purely for your internal assessment. Any data you input into this tool is available only to you and is not stored by ROI Institute for future access.
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The number of people reporting directly to the participants is an important factor. When individual contributors attend, the payoff is based on what the individual contributor delivers. For example, if an engineer or accountant attends a program, the improvement in terms of productivity, quality, and time improvements would be confined to just their work. However, when first-level managers with 15 direct reports attend a program where they learn skills to improve the entire team, the payoff is the team’s measures as compared to an individual’s measures. There is additional value added from leverage with program for supervisors, managers, executives, and administrators.
Select how many direct reports are part of your program:
1. Participants have no direct reports.
2. Participants have between one and five direct reports.
3. Participants have between six and 15 direct reports.
4. Participants have more than 15 direct reports.
5. The direct reports are the leaders.
Using the definitions above, please rate this factor using the 1-5 slider below.
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1
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“Start with the end in mind” was made popular by Stephen Covey as one of the key habits in his successful book, "The Seven Habits of Highly Effective People." It is logical to start with the particular outcome you want to deliver. For a program, the desired outcome success level is impact. This means that the program should start with the actual business impact in mind.
For some program, the desired “end” is clear. For example, if there is a sales team, the impact may be to increase sales with existing customers and to secure new accounts. For supply chain management, the “end” is cost savings, time savings, and maybe quality measures. But for leadership development, the impact will normally come from the leaders themselves when they are asked to identify the impact measure (or measures) that they want to improve. However, they must be able to improve it with their team using the content of the program. This is an important step to connect the program to a business measure in the beginning.
There can be varying degrees of how this factor’s presence is identified. This rating is based on different scenarios:
1. There is no presence of a business measure, business connection, and no business expectations are communicated.
2. The program is designed to improve an obvious measure. For example, if a program is focused on compliance, then the business measures are compliance discrepancies that can be prevented. No KPIs are set.
3. There is a moderate business connection because some communication has been made to create the understanding that this program should drive the business forward. KPIs and vague objectives are set, but not consistently reported.
4. One or more business measures are identified at the beginning of the program. KPIs and objectives are set.
5. The business measure will be the focus of the program. KPIs and specific objectives are set, and the program is adjusted depending on the success towards meeting business goals.
Using the definitions above, please rate this factor using the 1-5 slider below.
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1
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We have all heard at some point that a particular program is not the right solution, or it is not what the participant may need. In reality, participants may attend a program with a particular problem that needs to be solved. This problem is the business connection described previously. Or, it could be an opportunity they want to pursue. The problem or opportunity is expressed as a business measure. The key challenge is to ensure that the proposed program is the right solution to solve the problem or drive the opportunity. Sometimes, this is a loose connection that can be sharpened in the design and delivery of the program .
The rating scale for the appropriate solution is:
1. Nothing.
2. There have been minimal discussions about how this program can improve the organization and deliver an impact.
3. There are some logical connections between using the content from the program and the outcome expressed as a business measure.
4. There will be significant discussion with participants, including activities to help them reach the conclusion (before their participation) that this is the right content/skill set that they need.
5. There will be ample formal discussion with each participant which has led them to logically conclude that this is a solution that will at influence the business measure.
Using the definitions above, please rate this factor using the 1-5 slider below.
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1
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There is an old saying: If you expect success, you will have it. Expecting success means positioning the definition of program success at the impact level. The program is not successful until the impact has been achieved. To achieve this, it is important to set very specific objectives at all levels, beginning with the reaction objectives and including the learning, application, and impact objectives. These objectives should be presented to the participants, program designers, developers, facilitators, program owners, coordinators, support team, and participant managers. The entire team needs to be provided with these objectives. Essentially, everyone must focus on achieving success, which is now defined as the impact level.
The rating scale for focus on success is:
1. There are no objectives for the program.
2. Vague learning objectives have been developed.
3. Reaction and learning objectives are developed, to focus on the importance of the program to the participant.
4. Specific objectives for reaction, learning, and application levels have been developed.
5. Very specific objectives for reaction, learning, application, and impact levels have been developed.
Using the definitions above, please rate this factor using the 1-5 slider below.
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1
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Sometimes, the wrong person is involved in a program. The right audience means that the program is designed for a specific person in a specific role where they will have the opportunity to use the skill set that is offered through the program. If the wrong audience is involved in the program, the ROI is reduced. For each participant who does not have the opportunity to use the content, the ROI decreases. It is important to make sure that the right people are involved in the program and they have the opportunity to make it work.
The rating scale for the appropriate audience is:
1. Less than 70% of the participants in this program will have the opportunity to use the knowledge and skill from the program.
2. Between 70% and 80% of participants are in the right roles and will have an opportunity to use the knowledge and skills from the program.
3. Approximately 80% to 90% of participants are in the right role and will have an opportunity to use the knowledge and skills from the program.
4. Between 90% and 95% of participants are in the right role and will have an opportunity to use the knowledge and skills from the program.
5. More than 95% of participants are in the right role and will have an opportunity to use the knowledge and skills from the program.
Using the definitions above, please rate this factor using the 1-5 slider below.
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It is important for participants (and others involved in the program) to see that the program is valuable to them in terms of their work and their planned use of the program content. In short, it should be relevant to them and important to their success. They must see that the program offers something they will use and recommend to others. These are four important reactions from participants to ensure they will use what they learn to be positioned to achieve the desired impact. If these reactions are not present, it is difficult to achieve learning and the application of what was learned. High levels of these reactions often correlate with application, meaning they become predictors of application and, in essence, overall success.
The rating scale for perceived value is:
1. No.
2. At least 30% of participants will perceive this program as valuable.
3. At least 50% of participants will perceive this program as valuable.
4. At least 70% of participants will perceive this program as valuable.
5. At least 90% of participants will perceive this program as valuable.
Using the definitions above, please rate this factor using the 1-5 slider below.
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A key challenge facing progam designers, developers, and facilitators is that much of the learning is not transferred directly to their work. If learning is not transferred to their work, then participants will not use what they have learned. If they do not use the skills, there is no impact, and a negative ROI. Manager support is the principal influencer of this transfer.
However, if managers of participants support the program, participants use the skills they learn. Managers become a barrier if they do not support the program and an enabler if they do support it; they can either be the most powerful barrier or most powerful enabler in the process. The most influential action a manager can take is to create a positive expectation before the program. The second most powerful action is to follow up with the participants to make sure that they have followed through with applying the content they learned.
The rating scale for manager support is:
1. No.
2. There is minimal manager support. There is some expectation that managers understand the program, but there are no official measures of this.
3. There is moderate manager support. Managers of participants have been informed about the program and their role in making the program successful.
4. There is a significant amount of manager support. Managers of participants have been asked to take a more active role in ensuring that participants are prepared for the program and the subsequent follow-through.
5. There is a very significant amount of manager support. Managers will meet with the participants before the program to set goals, and then after the program to confirm the learning. Then, managers set expectations for use and are available as a coach when necessary.
Using the definitions above, please rate this factor using the 1-5 slider below.
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1
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Minimizing distractions is essential for effective program delivery. Conducting programs in a live format within a designated space is beneficial, ensuring uninterrupted focus during the session. However, onsite programs may face interruptions as participants move in and out, disrupting the learning process. Similarly, online programs conducted during work hours can lead to multitasking, hindering learning outcomes. To optimize learning and focus, it's advantageous to utilize venues specifically designed for educational purposes. These venues offer an environment conducive to learning, free from distractions commonly encountered in regular work settings. By removing individuals from their typical work activities and disruptions, participants can fully immerse themselves in the learning experience, enhancing motivation and knowledge retention. Additionally, having access to expert faculty adds value to the learning experience, providing participants with guidance and insights to maximize their learning potential.
Select your method of delivery:
1. An online learning program conducted during work hours.
2. An online learning program conducted in a distraction-free environment (e.g., logged out of all work programs, such as emails).
3. A blended/hybrid learning with facilitator-led program.
4. In-person in a dedicated classroom.
5. An off-site training course led by an expert facilitator.
Using the definitions above, please rate this factor using the 1-5 slider below.
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Your ROI is in the range of:
(+/- 22%), which means that the estimated ROI could be 22% more or 22% less. In this case, it is:
This error range is based on the potential error in determining these factors. If the assessments for the eight factors are accurate, there is a 95% confidence that the value will be in this range.
Your ROI is:
-80%
This means, for every dollar invested...
for a positive ROI, you receive the $ plus an additional:
for a negative ROI, you do not recover the $, you actually lose:
If your score is less than what you would like for it to be, there are opportunities to improve it. Here is a list of the ratings that you provided.
Direct Reports1
Business Alignment1
Appropriate Solution1
Focus on Success1
Appropriate Audience1
Perceived Value1
Manager Support1
Delivery1
As you observe this list, consider those rated 1, which essentially removes that factor from the analysis (i.e., it did not add to the ROI at all). The best opportunity for improvement is to work on those items. The second best opportunity is to consider those factors rated 2, and the third best opportunity is to consider the factors rated 3. Usually, if the factor is rated 4 or 5, there is not much opportunity for improvement, although there is some difference between a 4 and 5 rating.
If the number is less than what you expected or would like to see, please review what can be done for each factor rated 1, 2, or 3 to improve the rating. If it is possible to take some action that was not planned, this is the time to think about that action. When changes have been made to the ratings, it will be helpful to go through the process again to see what the new ROI would be. If it is still less than what you want, go through another iteration to see what must be changed to reach your goal. This can continue until you have the ROI near what you expected it to be. This is the value of using the ROI Estimator - it helps you improve your program to make sure they deliver the value that you want. This is the important takeaway from this exercise.
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Now that you have estimated the ROI of your planned program or project, you are ready for implementation. Evaluate your program to determine the actual impact and ROI and what led to its success.
ROI Institute can help you with your evaluation study in one of the following three ways:
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