4. Step 1. Presenting Problem to Real Problem
The first task of the practitioner is almost always analysis
Starts with a
“presenting”
problem – not a
“hunch” but a
problem … as it
presents itself
5. Step 1. Presenting Problem to Real Problem
Example…
Let's take an
example – higher
staff turnover for
Graduate
Engineers (let say
compared to an
industry standard)
The first question should not be, what skills and knowledge are required. It should be which
metric(s) are affected negatively.
6. Step 1. Presenting Problem to Real Problem
Example…
Cost to fill a vacant On boarding &
position Orientation cost
Cost of 'covering' a
vacant position
(Calculated costs of Cost of productivity
other employees ramp-up
'filling in' while the
position is vacant) Unit cost per
replacement
7. Step 1. Presenting Problem to Real Problem
1.1 Calculating benchmark employee cost
Nr Metric Element Description Example
1. Departing employee annual base N/a 100,000
salary
2. Calculated annual benefits cost Estimated at 20% of 20,000
base salary
3. Calculated monthly salary + benefits 10,000
4. Calculated daily salary + benefits Based on 230 (8hr) 522
working days
8. Step 1. Presenting Problem to Real Problem
1.2 Cost of 'covering' a vacant position (Calculated costs of other employees 'filling
in' while the position is vacant)
Nr Metric Element Description Example
1. Number of days until the vacant N/a 90
position is filled
2. Calculated daily cost of 'covering' a 33% of departing 522/3
vacant position employee's daily
salary + benefits
3. Total cost to 'cover' vacant position 15644
9. Step 1. Presenting Problem to Real Problem
1.3 Cost to fill a vacant position
Nr Metric Element Description Example
1. HR/Hiring manager's annual salary N/a 200,000
2. Calculated HR/Hiring manager's hourly rate Based on 230 (8hr) working 130
days and 20% fringe rate
3. Cost of advertising (online and/or print) Enter cost 3000
4. Cost of resume screening HR/Hire manager hours * 50*130=6500
hourly rate
5. Cost of interviews (telephone screening, 1st and HR/Hire manager hours * 50*130=6500
2nd) hourly rate
6. Cost of behavioural and skills assessments Enter cost 3000
7. Cost of background checks (criminal, credit, Enter cost 4000
reference, education)
8. Cost of travel/moving expenses (if applicable) Enter cost 5000
9. Total cost to fill a vacant position: 28,000
10. Step 1. Presenting Problem to Real Problem
1.4 On boarding & Orientation cost
Nr Metric Element Description Example
1. Trainer/Manager annual salary: N/a 100,000
2. Calculated trainer/manager daily rate Based on 230 (8hr) working 522
days and 20% fringe rate
3. Total training days Enter number of days 10
4. Total on boarding and orientation cost N/a 5220
11. Step 1. Presenting Problem to Real Problem
1.5 Cost of productivity ramp-up (During the first 3 months, an average new
employee performs at 50% productivity of a tenured top performing employ
Nr Metric Element Description Example
1. Daily employee cost (salary + benefits) N/a 522
2. Number of working days during first 3 months: Enter number of days (avg. 50
58 days
3. Cost of productivity ramp-up N/a 26100
12. Step 1. Presenting Problem to Real Problem
1.6 Unit cost for filling a vacancy
R 74964
Two important learning points:
I. Know your metrics
II. Negotiate, and even request help from your client to determine the right metrics. They are
closer to the business and at the same time you obtain by in for the intervention.
13. Step 1. Presenting Problem to Real Problem
1.7 Total cost of replacing graduate engineers
R 74964 x 6
= R 449784
Let's assume that we had to replace five graduate engineers the
past six months
14. Step 1. Presenting Problem to Real Problem
Now we can move on to analysis
We know now which
metrics are affected
Consultant speciality
Presenting Analysis and Identification of
Solution Intervention
Problem/ Definition of Performance Competence Gap
Generation Strategy
Opportunity Business Need Need
Non Training
Solution
15. Step 1. Presenting Problem to Real Problem
The basic tasks in analysis
1. Data
gathering
2. Data
consolidation
3. Data
analysis
4. Perspective and information
for decision making
16. Step 1. Presenting Problem to Real Problem
Two types of data
Quantitative
”The truth is in a number” –
however does not say much
about context
Data
” More about context, how
people experience in their
own words”.
Qualitative
17. Step 1. Presenting Problem to Real Problem
Data gathering
I. Questionnaires
II. Surveys
III. Tests
IV. Interviews
V. Focus groups
VI. Observation
VII. Performance records
VIII.Knowledge and skills testing
IX. Program follow up
X. Project assignments
18. Step 1. Presenting Problem to Real Problem
Data gathering
I. Target population/participants;
II. Supervisors of target
population/participants;
III. Subordinates of target
population/participants;
IV. Peer Group;
V. HRD Staff;
VI. Documentation:
• Organizational Performance
Records:
• Disciplinary records;
• Safety records;
• Scorecards
19. Step 1. Presenting Problem to Real Problem
Contextual factors to consider when selecting data collection methods
I. Time for participants to respond;
II. Costs;
III.Amount of disruption of normal
activities;
IV. What is the level of certainty that
you will achieve with the result;
V. Practicality;
VI. Culture/Philosophy – example the
10% syndrome.
20. Step 1. Presenting Problem to Real Problem
Requirements for effective data collection instruments and techniques
I. Construct validity ( methods,
techniques and test instruments
should be evaluated in terms of its
theoretical grounding);
II. Predictive validity (methods,
techniques and test instruments
should be evaluated regularly in
terms of its ability to predict what it
purport to predict);
III. Face validity – for line management
very important!
21. Step 1. Presenting Problem to Real Problem
Requirements for effective data collection instruments and techniques
Reliability:
I. Produce consistent results
over time, that differentiates
effectively, and are
independent of the
assessor/data collector, or
context.
22. Step 1. Presenting Problem to Real Problem
Data consolidation
Data Consolidation Techniques are
Wide and Varied
Descriptive statistics
Qualitative description, using organizational
and other models and concepts
23. Step 1. Presenting Problem to Real Problem
Data analysis
Data Analysis Varies According to
Situation
Descriptive and inferential statistics
Qualitative decisions about the situation,
based on decision making and techniques
24. Note the following !
• Because this toolkit does not aim to transfer knowledge about
analysis as such the previous slides provides a brief and high level
overview, for the sake of a clearity… for the sake of the toolkit we
assume that the analysis provided clarity about the problem….
25. Step 1. Presenting Problem to Real Problem
Brief Exposition of Problem
Our analysis shows that the HR and line
managers involved in selection decisions do
interviews in a haphazard and nonscientific
Lets assume
fashion this based
on the core
Solution example
Following discussions with consultants, HR
experts and line all agreed we need to
implement competency based interviewing
26. Step 1. Presenting Problem to Real Problem
The training department is instructed to
develop an appropriate program and put all
line and support staff through training – they
however indicate that a change in results is
required quickly and that ROI for the training
need to be justified soon after
implementation…
Lets assume this
based on the core
example
27. Presenting Problem to Real Problem
So we have addressed this even before we asked any questions about training – and
now we can move on to the next step
Starts with a
“presenting”
problem – not a
“hunch” but a
problem … as it
presents itself
29. Step 2a: Planning the Intervention (With ROI in Mind)
When we plan an intervention – considering that we want to measure ROI- we really reverse
engineer (or start with the end in mind) – We use the Kirkpatrick Model to achieve this
4. Impact
What is the business impact we need to achieve (refer step 1
where we got a firm grip on the metric that must change)
3. Transfer
What is the work place behaviour that must change
2. Learning
What knowledge, skills and attitudes need to be acquired
1. Reaction
What is the required reaction of the learner to the
intervention
30. Step 2a: Planning the Intervention (With ROI in Mind)
Back to our case study to show how we plan “backwards” – remember these objectives and
measures for clarification, based on our core example/case study (re graduate engineers)
Kirkpatrick Level Objectives Measures
Impact Train target population (define) in behaviour based 25% reduction in total cost of filling
interviewing techniques, with the aim to: vacancies for graduate engineers
a. Improve predictive validity of selection decisions
b. Driving down cost of filling vacancies for graduate
engineers
Transfer Correct application of behaviour based interviewing Expert observation with the aid of
techniques by target populations during selection checklists show that all involved in
interviewing selection interviews use the correct
interviewing structure (agenda) and
questioning techniques at least 85%
of the time. Observation is
conducted for two months following
the initial training and corrective
coaching is implemented where
required, following interviews.
31. Step 2a: Planning the Intervention (With ROI in Mind)
Back to our case study to show how we plan “backwards” – remember these objectives and
measures a merely examples
Kirkpatrick Level Objectives Measures
Learning Using Blooms Taxonomy of Learning Objectives here are 100% compliance with the Bloom
a few examples of the objectives that will be outlined Taxonomy, alignment with SAQA Unit
here: Standards and also SAQA guidelines
a. The learner should demonstrate that they can and requirements for assessment
analyse a CV, with the aim to develop behaviour and moderation;
based questions for an interview; Learners score 75% on theoretical
b. The learner should demonstrate the ability to paper to pass and 80% on practical
develop interview questions according to the simulation interview.
behavioural interview format
c. Etc. etc…
Remember this is a
snapshot – there is a
whole learning map and
course development
process underlying
these objectives
32. Step 2a: Planning the Intervention (With ROI in Mind)
Back to our case study to show how we plan “backwards” – remember these objectives and
measures a merely examples
Kirkpatrick Level Objectives Measures
Reaction The reaction to the learning material, environment, Using a Likert type scale participants
perception of preparation, facilitator style and rate the following on average no less
than “agree”:
a. Preparation
b. Facilitator style
c. Learning environment
d. Participation
e. General expectations met
33. Step 2a: Planning the Intervention (With ROI in Mind)
What have we achieved by planning the intervention this way?
ROI ?
Results
A path – trail linking the
business need with the
intervention
Results
Results
Results
34. Step 2a: Planning the Intervention (With ROI in Mind)
We can also go some steps further and plan where we will get the information to evaluate
the intervention and how…
Kirkpatrick Level Objectives Measures Where Will We Find In What Format
Information For
Evaluation
Impact See previous slides See previous HR Budget vis Actual Business Report
slides Staff Turn Over Records
HR Report
Transfer See previous slides See previous Audit/Observation results Possibly checklists
slides
Learning See previous slides See previous Test scores Tests papers and
slides Practical simulation answer sheets
scores Simulation checklists
and grading papers
Reaction See previous slides See previous Survey results Possibly tabulated
slides and presented in
graphs
36. Step 2b: Planning the Intervention (With ROI in Mind)
Usually once we have done the planning and developed the training intervention we are
ready to implement…
b. We need to determine what
technique(s) we will use to show
that the intervention actually had
an impact
a. With ROI in mind our planning
needs to go some steps further…
37. Step 2b: Planning the Intervention (With ROI in Mind)
We need to determine what technique(s) we will use to show that the intervention actually
had an impact – but our dilemma is this…
External Factors
Management
Attention OR
SOMETHING
AND YES THERE IS Incentives ELSE?
IMPROVEMENT
Systems/Procedures
AFTER
Changes
PROGRAM
Here is our training IS IT THE
program TRAINING
PROGRAM?
38. Step 2b: Planning the Intervention (With ROI in Mind)
We have to isolate the effects of our intervention!
I. Isolating the results/effect of our intervention is the most difficult and also most
important element of building the case for value (ROI);
II. Because of this, value at the higher levels is seldom determined;
III. However, the credibility not only of your study to show value, but also the training
function is based on this element.
39. Step 2b: Planning the Intervention (With ROI in Mind)
We have to isolate the effects of our intervention!
I. The complexity of isolating the effect, is a function of the variables that are in play
at any moment in time in an organization;
II. The analyst should however always try to prove a causal relationship to an
acceptable degree of accuracy;
III. Acknowledging the forces that influence individual, group and business
performance is the first step in this process.
40. Step 2b: Planning the Intervention (With ROI in Mind)
We have to isolate the effects of our intervention!
Remember that we are trying to isolate the effect of out intervention to an acceptable
degree of accuracy – this makes very important to involve and agree with the client:
a. What metrics should change as result of the intervention (see step 1)
b. What isolation technique will be used (because they differ in terms of accuracy)
Let’s consider the isolation techniques…
41. Step 2b: Planning the Intervention (With ROI in Mind)
Let's look at the techniques!
a. Trend line analysis of performance
data;
With these b. Control groups;
techniques we
try to isolate the c. Participant’s estimation of impact;
effects of our
intervention d. Supervisor’s estimation of impact;
e. Management’s estimation of impact;
f. Use of previous studies
g. Subordinate’s report of other factors;
h. Estimating the impact of other factors;
i. Use of customer input.
42. Step 2b: Planning the Intervention (With ROI in Mind)
Let's look at the techniques!
a. Trend line analysis of performance
data;
b. Control groups;
c. Participant’s estimation of impact;
d. Supervisor’s estimation of impact;
With these
e. Management’s estimation of impact;
techniques we
try to isolate the
f. Use of previous studies
effects of other
interventions
g. Subordinate’s report of other factors;
and then declare
the rest as due
h. Estimating the impact of other factors;
to our effort
i. Use of customer input.
43. Step 2b: Planning the Intervention (With ROI in Mind)
Trend Line Analysis
I. Draw a trend-line using previous
performance data as a base;
II. When intervention is conducted,
actual performance is plotted and
compared to the trend line;
III. Improvement in actual performance
over what the trend line predicted
can then be reasonably attributed to
the intervention.
44. Step 2b: Planning the Intervention (With ROI in Mind)
Trend Line Analysis- Advantages and Disadvantages
Advantages Disadvantages
I. Show quick results I. Uses only one factor to isolate the effect
of the intervention (time- before and
II. Easy to calculate
after implementation)
III. Easy to understand
II. Thus less accurate and client could be
IV. Inexpensive
sceptical to accept only an analysis of
V. Not difficult to organize (basically just the trend line.
monitor changes in metrics)
VI. A good first order analysis
45. Step 2b: Planning the Intervention (With ROI in Mind)
Example- Not from our central case study…
Effect of the
intervention
COMPLAINTS
Average
Pre Program 55
Average
Sexual
Post Program 35
Harassment
Prevention Program
O N D J F M A M J J A S O N D J F M A M J J
A S O TIME
46. Step 2b: Planning the Intervention (With ROI in Mind)
Control Groups Technique
I. Similar to classical research the control group method, involves an experimental group and a
control group;
II. The so called experimental group will be the target of our intervention;
III. The control group would be a group that is paired with the experimental group, but would
not undergo the intervention;
IV. Important things to remember with this method are:
a. Paring need to be thought about carefully so as not to dilute the impact of the
intervention;
b. Although not as rigid as classical research key factors that could dilute the impact or
assessment of the impact of the intervention need to be controlled.
47. Step 2b: Planning the Intervention (With ROI in Mind)
Control Groups- Advantages and Disadvantages
Advantages Disadvantages
I. More accurate than most techniques I. More complicated
II. If the pairing and control of variables are II. Require more planning, negotiation,
agreed with the client the outcome has high control and monitoring
level of credibility
III. As result of above many practitioners are
III. With this control groups, given the level of unwilling to use this technique
accuracy it is possible to benchmark the ROI
IV. Requires absolute agreement with the
of certain interventions given a
client environment that variables will be
predetermined set of variables
kept constant for the duration of the ROI
evaluation.
48. Step 2b: Planning the Intervention (With ROI in Mind)
Schematic Explanation of control groups design
1. Pairing
2.
Control
Variables
Control
M1 M2
Group
Experimental
M1 Intervention M2
Group
*M = measurement
49. Step 2b: Planning the Intervention (With ROI in Mind)
Looking at pairing and control of variables
PAIRING
Note:
I. Too small then meaningful pairing is not
possible – too big then you are not going
to be able to control the variables during
and after the implementation of your
Select your intervention;
experimental and control group II. Remember we go for reasonable
carefully accuracy therefore you pair the major
elements and also control the major
variables!!
III. The above makes it very important to
agree upfront with your client
environment what how pairing will be
VARIABLES done and which variables will be
controlled.
50. Step 2b: Planning the Intervention (With ROI in Mind)
So what do you typically pair?
Pair for (Primarily)
General demography
Performance level
Leadership stype
Nature of work
Size
Negotiate creafully
51. Step 2b: Planning the Intervention (With ROI in Mind)
So what do you typically try to control?
Changes in: Changes in:
Systems and procedures
Recognition and reward
General demography
Performance level
Leadership stype
Nature of work
Turn over
structure
Function
+
Size
Negotiate creafully Negotiate creafully
52. Step 2b: Planning the Intervention (With ROI in Mind)
Remember your decision about pairing and control of variables….
= (f) (your knowledge and
judgement) + agreement with
the client environment +
practicability
53. Step 2b: Planning the Intervention (With ROI in Mind)
Estimation of impact by third parties ( this technique can include an estimation of the
perceived impact of the intervention, by participants, participants supervisors, participants
managers)
This technique provides participants with a questionnaire, and based on the
improvement ask them to respond to the following:
I. What percent of this improvement can be attributed to the application of
skills/techniques/knowledge gained in the training program?
II. What is the basis for this estimation?
III. What confidence do you have in this estimate, expressed as a percentage?
IV. What other factors contributed to this improvement in performance?
V. What other individuals or groups could estimate this percentage or determine
the amount?
54. Step 2b: Planning the Intervention (With ROI in Mind)
Estimation of impact by third parties – how do you increase the confidence level for this
technique?
I. Individuals who do not respond to the questionnaire or provide non- usable data
on the questionnaire are assumed to report no improvement/impact;
II. Extreme data and unrealistic claims are omitted from the analysis;
III. Only annualized values are used, it is assumed that there are no benefits from
the program after the first year of implementation;
IV. The confidence level, expressed as a percent, is multiplied by the improvement
value to reduce the amount of the improvement by the potential error;
V. If value is expressed it is also factored by the confidence value.
55. Step 2b: Planning the Intervention (With ROI in Mind)
Estimation Of Impact By Third Parties - Advantages And Disadvantages
Advantages Disadvantages
I. Easy to implement; I. Less accurate than control groups
II. Based on the assumption that participants II. Based on perceptions – could be
are capable of determining or estimating
regarded as Return on Expectation
impact;
rather than ROI
III. Although an estimate, this value will usually
III. Could become victim of “group think”
have considerable credibility with
management because participants are at the
centre of the change or improvement;
IV. High face validity.
56. Step 2b: Planning the Intervention (With ROI in Mind)
Example from an actual coaching intervention- Not from our central case study…
Participants
and
management
agreed which
All indicators the respective
were pre groups will
agreed with the rate
client
57. Step 2b: Planning the Intervention (With ROI in Mind)
So now we can complete our plan
Kirkpatrick Objectives Measures Where Will We In What When Purpose of
Level Find Information Format Data
For Evaluation Collection and
Analysis
Impact See previous See HR Budget vis Business Six months ROI and
slides previous Actual Report after final Training
slides Staff Turn Over course was Evaluation
Records HR Report presented
Transfer See previous See Audit/Observatio Possibly Period of three Training
slides previous n results checklists months Evaluation
slides following
training
Learning See previous See Test scores Tests papers Within one Training
slides previous Practical and answer week following Evaluation
slides simulation scores sheets training
Simulation
checklists and
grading papers
Reaction See previous See Survey results Possibly Within one Training
slides previous tabulated and week following Evaluation
slides presented in training
graphs
58. Step 2b: Planning the Intervention (With ROI in Mind)
Note – because the techniques related to isolating the impact of other factors are
not used often it is only referred to in this toolkit…
a. Trend line analysis of performance
data;
b. Control groups;
c. Participant’s estimation of impact;
d. Supervisor’s estimation of impact;
With these e. Management’s estimation of impact;
techniques we
try to isolate the f. Use of previous studies
effects of other
interventions g. Subordinate’s report of other factors;
and then declare
the rest as due h. Estimating the impact of other factors;
to our effort
i. Use of customer input.
60. Implementation and Data Gathering (With ROI in Mind)
Referring back to our original example (turnover in graduate engineers) – let us assume the
following:
Correct Correct
pairing pairing
Correct Correct
control of control of
variables variables
Agreement Agreement
Mine A on metrics
Mine B on metrics
Control Experiential
We opted for a control group
evaluation method
61. Implementation and Data Gathering (With ROI in Mind)
Referring back to our original example (turnover in graduate engineers) – let us assume the
following:
Impact
Transfer
-Evaluation completed Six months after the
intervention the
need for
Learning -Evaluation completed replacement of
graduates were
down by 50% in the
experimental
Reaction – Evaluation group
completed
62. Implementation and Data Gathering (With ROI in Mind)
Referring back to our original example (turnover in graduate engineers) – let us assume the
following:
Impact
Transfer
-Evaluation completed
In the control group the
need for replacement of
graduate engineers also
Learning -Evaluation completed down by 10%...possibly
because of anticipation
of changes in HR
approach
Reaction – Evaluation
completed
63. Implementation and Data Gathering (With ROI in Mind)
Referring back to our original example (turnover in graduate engineers) – let us assume the
following:
Impact
Transfer
-Evaluation completed
In the control group the
need for replacement of
graduate engineers also
Learning -Evaluation completed down by 10%...possibly
because of anticipation
of changes in HR
approach
Reaction – Evaluation
completed
64. So because to the method we used we can assign the
change in te metric to our intervention, mainly because we
controlled major variables. We do this as follows…
65. Step 4
Converting the Change As Result of the
Intervention to Value and Calculating ROI
66. Step 4.a Converting the Change As Result of the
Intervention to Value
Referring back to our original example (turnover in graduate engineers)…this is how it is
dome…
Identify the unit of In our case study: Value per unit =
improvement Number of R 74964 (see slide 12
replacements of AND 13
graduate engineers in
the past six months
Determine the Original replacements = Original cost of
performance level 6 replacement
change Six months after the R 449784
intervention = 3 Our latest cost of
Improvement of 50% replacement following
intervention
R 224892
Calculate the 50% saving R 224892
performance
improvement
67. Step 4.a Converting the Change As Result of the
Intervention to Value
Because this is such a vast area to know here is some additional input re calculating the value
of change in a metric..
Primary Measurements
of Improvement
68. Step 4.a Converting the Change As Result of the
Intervention to Value
Always try to link to a metric –
alternatively use the method of
Estimation Of Impact By Third Parties –
See slide 55 and 56 (this method is also
referred to as Return on Expectation)
69. Step 4.a Converting the Change As Result of the
Intervention to Value
See whether one can link tangible values to these?
OUTPUT TIME
Units Produced Equipment Downtime
Tons Manufactured Overtime
Items Assembled Time to Project Completion
Money Collected Processing Time
Items Sold Break in Time for New Employees
Forms Processed Learning Time
Loans Approved Meeting Schedules
Inventory Turnover Repair Time
Patients Visited Work Stoppages
Applications Processed Order Response
Tasks Completed Late Reporting
Output Per Hour Lost Time Days
Productivity QUALITY
New Accounts Generated Scrap
COSTS Waste
Budget Variances Rejects
Unit Costs Error Rates
Cost By Account Rework
Variable Costs Shortages
Fixed Costs Product Defects
Overhead Cost Deviation From Standard
Operating Costs Product Failures
Number of Cost Reductions Inventory Adjustments
Project Cost Savings Time Card Corrections
Accident Costs Percent of Tasks Completed Properly
Sales Expense Number of Accidents
70. Step 4.a Converting the Change As Result of the
Intervention to Value
And these….
WORK HABITS CUSTOMER SERVICE
Absenteeism Customer Complaints
Tardiness Customer Satisfaction
Visits to the Dispensary Customer Dissatisfaction
First Aid Treatments Customer Impressions
Violations of Safety Rules Customer Loyalty
Number of Communication Break-downs Customer Retention
Excessive Breaks Customer Value
Follow-Up Lost Customers
EMPLOYEE DEVELOPMENT/ADVANCEMENT
WORK CLIMATE/SATISFACTION Number of Promotions
Number of Pay Increases
Number of Grievances Number of Learning Programs Attended
Number of Discrimination Charges Requests for Transfer
Employee Complaints Performance Appraisal Ratings
Job Satisfaction Increases in Job Effectiveness
Employee Turnover
Litigation INITIATIVE/INNOVATION
Organization Commitment Implementation of New Ideas
Employee Loyalty Successful Completion of Projects
Increased Confidence Number of Suggestions Implemented
Setting Goals and Objectives
New Products and Services Developed
New Patents and Copyrights
71. Step 4.a Converting the Change As Result of the
Intervention to Value
Or determining value on a case by case basis using historical data
Legal fee;
Actual cost
Settlement
from records
cost
Total of Cost
35 complaints R 285,000
Estimated Staff time;
additional Management
from staff time
R 285,000/35 = Cost per complaint
Cost of Sexual Harassment Complaint
72. Step 4.a Converting the Change As Result of the
Intervention to Value
In our case example we did determine the value of
the change and can therefore now move on to
calculate cost benefit and therefore also ROI
73. Step 4.b Calculating ROI
First thing to do now is to determine the cost of the intervention – again back to our main
example …
Cost element Notes ZAR value (for the sake of our example)
Development Costs If you use more than one trainer or one R50,000
trainer on more than one project – pro-rate
Program Materials R10,000
Instructor/Facilitator Costs If you use more than one trainer or one R10,000
trainer on more than one project – pro-rate
Facilities Costs R10,000
Travel and lodging R10,000
Salaries and time loss of participants Will need to consult HR and line and pro-rate R50,000
Administration costs R5,000
Evaluation costs R 5,000
Total cost of the intervention R150,000
74. Step 4.b Calculating ROI
First thing to do now is to determine the cost of the intervention – again back to our main
example …
Net Program Benefits (R224892- R150,000)
Benefit/Cost Ratio =
Program Costs (R150,000)
Ratio = 0.499928
75. Step 4.b Calculating ROI
First thing to do now is to determine the cost of the intervention – again back to our main
example …
Net Program Benefits (R224892- R150,000) X 100
Benefits ROI =
Program Costs (R150,000) 1
Benefit ROI = 50% thus for
every R1 I spent on this
program you got your money
back through saving as well
as an additional 50 cents.