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Converting intangibles to tangibles 09
- 1. Converting Intangibles to Tangibles Quantifying Intervention Benefits Presented by: Jennifer Moss, Ph.D. Joe Hare, MS, PMP, CPLP
- 2. Summary What we’ll cover Human Capital Investment Case Study Intangible and Tangible Benefits Conversion Strategies
- 3. Learning and Development Investment U.S. organizations spent $134.39 billion on employee learning and development in 2007 Average direct learning expenditure per employee was $1,103 per employee in 2007 Increasingly, learning leaders are expected to articulate the benefits and quantify if possible Less than 5% of organizations actually measure intervention effectiveness
- 4. Case Study Human capital investments frequently have soft skill and technical skill components Couple recent examples
- 5. Intangible and Tangible Intangible – incapable of being perceived Tangible – treated as fact, real or concrete
- 7. Hard and Soft Data Tangibles Hard Data Traditional measures Objective Easy to convert to dollars Output Quality Cost Time Soft Data Often subjective Difficult to measure More difficult to convert to dollars Usually less credible and more contentious
- 8. Conversion Strategies Output to contribution Cost of high and low quality Convert using employee time Historical costs Expert estimates Industry data sources Participant estimates Linkage to other measures Supervisor estimates Training staff estimates
- 10. Summary What we covered WLP Investment Case Study Intangible and Tangible Benefits Conversion Strategies
- 11. Contact Information Bellevue University’s Human Capital Lab http://www.humancapitallab.org/ Jennifer Moss, Ph.D, Lab Director Jennifer.moss@bellevue.edu Joe Hare, PMP, CPLP, Research Analyst Joe.hare@bellevue.edu
Notas do Editor
- Maybe some open-ended overhead questions:– Why is it important to capture intervention benefits?What challenges have you experienced?How do you communicate the benefits?Who is the primary audience?
- Human Capital Investment can be – Tuition assistance, ERP, job design, job analysis,
- Information was obtained from the 2008 ASTD state of the industry report.
- Without attribution, we might share our recent conversation about the benefits of a leadership development program. Some desired benefits are soft skills and difficult to capture much less communicate to senior leaders.Some of the participant project benefits will be more concrete. However, there is the challenge of establishing meaningful performance metrics while maintaining the integrity of a learning experience. Effective learning may occur even if a project fails.Conventional wisdom indicates we get what we measure. KPI’s must reinforce the learning objectives and desired KSA’s. Unintended consequences should be considered. For example, a metric that requires individual excellence my erode teamwork, or a metric that focuses only on bottom-line results may negatively affect superior-subordinate relationships.Segue – generally benefits fall into two catagories…
- Definition of intangible: - nonmaterial: lacking material qualities, and so not able to be touched or seen- hard to describe: difficult to define or describe clearly, but nonetheless perceived- something unquantifiable: an unquantifiable quality or assetDefinition of tangible:- able to be touched: able to be touched or perceived through the sense of touch- actual: capable of being understood and evaluated, and therefore regarded as real- able to be realized: capable of being given a physical existence
- Flip chart activity – Capture intangible benefits on one flip chart and tangible on the other. This is a guided discussion with participants contributing benefits while the facilitators document their input. There may be some discussion about whether a benefit is intangible or tangible. We don’t want to go down that path too far, it will be part of the next activities.Segue – Often, what we think of as intagible benefits are really soft-data tangibles…
- Often, what we think of as intangible benefits are soft-data tangibles.Hard data examples:Output examplesUnits produced, tons manufactured, items assembled, money collected, items sold, forms processed, loans approved, inventory turnover, patients visited, applications processed, students graduated, tasks completed, output per hour, productivity, work backlog, incentive bonus, shipments, new accounts generatedQuality examplesScrap, waste, rejects, error rates, rework, shortages, product defects, deviation from standard, product failures, inventory adjustments, time card corrections, percent of tasks completed properly, number of accidents.Cost examplesBudget variances, unit costs, cost by account, variable costs, fixed costs, overhead cost, operating costs, number of cost reductions, project cost savings, accident costs, program costs, sales expenseTime examplesEquipment downtime, overtime, on-time shipments, time to project completion, processing time, supervisory time, break in time for new employees, learning time, meeting schedules, repair time, efficiency work stoppages, order response, late reporting, lost time daysSoft data examples:-Work habitsWork climate/satisfactionCustomer serviceEmployee developmentInitiative/innovation
- Top to bottom, left to right, most to least credible. Contribution is most credible, training staff estimates least credible.Output to contribution – For organizations operating on a profit basis, this value is usually the marginal profit contribution of an additional unit of production or unit of service. For example, a production team at an appliance manufacturer is able to boost production of small refrigerators as the result of a series of highly focused training programsCost of quality – If quality is measured with a defect rate, the value of the improvement is the cost to repair or replace the product. Another cost of quality might be scrap or waste generated by mistake.Convert using time – Reduction in time spent on tasks by employees is a common performance improvement objective. Value of time saved is an important measure of the program’s success and the conversion to monetary values is relatively easy.Historical Costs – A training program might be implemented to improve safety performance for a construction firm. Analysis would reveal there were 50 accidents in the preceding year at a cost of $1,000,000. If there were 20% fewer accidents the year after training, that would equal a savings of $200,000.Expert estimates-Internal and external experts will work but they must be credible. Individuals within the organization who are very knowledgeable about the situation and also have earned the respect of management often are the best prospects for expert input. The experts are asked to provide the cost or value of one unit of improvement.Industry data sources –Focuses on external databases that contain studies and research projects focusing on the cost of data items.Participant estimates- Appropriate where participants are capable of providing estimates of the cost (or value) of the unit of measure improved by applying the skills learned in the program. Percent attributable to the program and confidence level are multiplied by the value.This includes action plans. An action plan is a document developed by participants when they attend an intervention. It identifys the actions they will take when they return to work and the impact those actions have on their job.Linking to other measures – A feasible approach might be developing a relationship between the measure in question and some other measure that easily can be converted to a monetary value.
- We return to our flip charts of Intangible and Tangible benefits. Considering what we now know about soft-data tangibles and conversion strategies, can we convert some of the intangible benefits to soft-data tangibles?How do we define credible data?Try to convert all to some quantitative measure. There maybe a few that allude conversion. Emphasize that the intangibles that remain should be reported along with tangible benefits.