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Title: Calculating ROI:


1
Calculating ROI
Ensuring OD/HR Initiatives Affect
the Bottom Line

April 28th, 2005
2
Agenda
3
Panelists
  • Anthony Chartrand
  • Viejas Casino, VP of HR
  • Wayne Darbeau
  • Port of San Diego,
  • VP of Administration
  • Sue Stevenson
  • Elan Pharmaceuticals, VP Global HR
  • Ken Ruggiero
  • Goal Financial, CFO

4
Commercial break
  • And now a brief message from one of our
  • trusted partners
  • Paul Drolson
  • Principal
  • Wealth Advisors

5
Calculating What YourRetirement Plan Will Provide
  • Many factors may affect the amount of money
    available to you during retirement
  • Current savings
  • Contribution level
  • Rate of inflation
  • Federal and state tax rate
  • Years until retirement
  • Rate of return on investments

6
Impact of ROI onRetirement Savings
  • 200,000 in savings
  • Saving 8,000 per year
  • Retiring in 20 years
  • Federal tax rate 25
  • State tax rate 9.3
  • Annual retirement income of 60,000 is needed in
    todays dollars assuming a 3.1 inflation rate

7
The Problem with ROI
  • MATH --- It is difficult to solve an equation
    with different units on each side of the
    equation Thus 8th grade algebra was invented
  • OD Initiatives --- Often the money you invest
    does not directly result in hard dollar savings,
    nor, revenues Rather the OD/HR initiative
    impacts or influences some behavior, process, or
    structure, which in turn can be correlated with a
    hard dollar cost savings or revenue increase.

8
Traditional Approach to ROI
Return on Investment (? Revenue ?Costs)
Inputs (Cost in Dollars)

When the units in A and B are expressed in
dollars
9
Our Approach to ROI
Influences/ Impact Variables (Quality, Time,
Cost)
Return on Investment (? Revenue
? Costs)
Inputs (Cost in Dollars)
10
  • Tony Chartrand
  • Viejas Casino
  • VP of Human Resource

11
Basic Elements of Measurement
  • Cost
  • Time
  • Quality
  • Satisfaction
  • Effects on business priority (i.e. Revenue)
  • TTP (Time-to-productivity)
  • Also used as an early warning system

12
Effects of Human Behavior on Business
  • U.S. Companies Lose
  • ½ their investors in 1 year
  • ½ their employees in 4 years
  • ½ their customers in 5 years
  • A 5 swing in customer retention can
  • result in a 25 swing in earnings
  • Frederick Reichheld The Loyalty Effect

13
Our Business The Entertainment Experience
  • Major Components of a Program
  • Branded Hospitality Extreme
  • Leadership
  • Communication
  • Guest Service Academy
  • Performance Management
  • Reward Recognition
  • Team Member Entertainment

14
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15
Measurement - ROI
  • Secret Shopper
  • Out of the Box
  • Bus Surveys
  • Balanced Scorecard service measures
  • Supervisor-observed behaviors
  • Training Value
  • Retention
  • Orientation TTP
  • Guest comment exits
  • Team Member Survey

16
  • Wayne Darbeau
  • Port of San Diego
  • VP of Administration

17
Board of Port Commissioners
Vacant, Sylvia Rios, Stephen Cushman
Jess E. Van Deventer
William Hall
Robert Spane
Michael Bixler

18
Satisfaction vs. Cultural
Is Driven by Leadership
Achievement Teamwork Stakeholder Input
Power Ego
LEADERS SHOULD DETERMINE IDEAL CORPORATE CULTURE
TO SUPPORT HIGH PERFORMANCE AND STRATEGY
19
Cultural Survey Culture Change Alignment
20
Culture and Performance
Kotter Heskett Study of 207 firms over an
eleven year periodas reported in their book
Corporate Culture and Performance
21
Creating a Values-Based Culture
Constructive Culture at the Port of San Diego
22
Port Leadership Tools for Culture Change
  • Clear Vision
  • Where are we going?
  • Clear Strategy
  • How we going to get there?
  • Clear Expectations
  • What do you expect of me?

23
Employee Performance is Sustained by Culture
  • Accountability
  • Take responsibility to get the job done
  • Initiative
  • Self-motivated
  • Self-managed
  • Creativity/Innovation
  • Integrity
  • Teamwork

24
Targeted OD Programs Create Ideal Culture P.I.P.E
  • MBTI, DISC, OCES, etc.
  • Customer Satisfaction Survey
  • Employee Satisfaction Survey
  • Organizational Culture Survey
  • 360º Feedback Instruments
  • Leadership Impact (LI) Survey
  • Executive Coaching

Assessments/Surveys
Program Offerings
  • 7 Habits of Highly Effective People
  • Imagine 21 Fast Track to Change
  • Project Management
  • Problem Solving Decision Making
  • Focus
  • Ethics in the Workplace
  • Writing Advantage Plus
  • The 4 Roles of Leadership
  • Supervisory Training
  • Meeting Management
  • Presentation Skills-

25
Measure for Impacts in Key Performance Areas
THE PORT'S "ROI" METHOD
  • Organizational Assessment Program (OAP) 1999
  • Conducted in conjunction with Port Staff,
    Employee Vision Committee, and Walsh Associates
  • 76 Response Rate
  • Employee Satisfaction Survey 2001
  • Conducted by ViewPoint America
  • 67 Response Rate
  • Employee Satisfaction Survey 2002
  • Conducted by e-Perception
  • 87 Response Rate
  • Organizational Culture Effectiveness Survey
    2004
  • Conducted by The Pacific Institute and Human
    Synergistics with 87 Response Rate

What gets measured, gets done.
26
Findings
Develop Findings
Use of Customer Satisfaction Data
Recommend Good Place To Work
Job Satisfaction
Feel Appreciated
2001
2002
2004
What gets fed back, gets done well.
27
Ports COMPASS Balanced Scorecard Approach
28
The Business Analysis Process
29
  • Sue Stevenson
  • Elan Pharmaceuticals
  • VP of Human Resource

30
Research
  • HRPS Survey
  • UK DTI and CIPD
  • Royal Bank of Scotland
  • Sears

.Conclusions..
31
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32
Measuring Efforts
  • HR Measurement
  • Operational Efficiency of HR
  • Human Capital Health
  • Financial Valuation methods
  • Cost-based approaches
  • Market-based approaches
  • Income-based approaches

And of course ROI
33
Challenges Calculating ROI
  • Benefits-Cost/Expense ROI
  • Identifying Costs v
  • Quantifying Costs v
  • Identifying Benefits v
  • Quantifying Benefits .!!

Yet need to ensure that initiatives impact
the Bottom Line
34
Return on Intuition?
  • Confidence How Winning Streaks and Losing
    Streaks Begin and End
  • Prof. Rosabeth Moss Kanter
  • Defines confidence as an expectation of a
  • positive outcome. Its a belief that actions
  • will result in success.

35
  • Ken Ruggiero
  • Goal Financial
  • Chief Financial Officer

36
Goal Financial, LLC - Quick Facts
  • Established in January 2001
  • Privately held Company
  • 10th largest holder of Federal Student Loans
  • 5 billion of Federally guaranteed student loans
    to over 142,000 students
  • Experienced management team
  • 200 employees (gt75 in call center)
  • 40,000 sf facility in San Diego 5,000 sf
    facility in Alexandria, VA

37
Cumulative Loan Origination Volume and Borrowers
38
Definition of OD to Participants
Organization Development
39
Definition of OD for Financial Executives
40
Goals Investment in Organizational Development
  • Team Building
  • Behavior Testing
  • Mission, Vision, and Values
  • Goal Setting Models
  • Coaching
  • C Level
  • VPs
  • Directors
  • Selection Methodology and Testing
  • Executives
  • Call Center Agents

41
ROI Relies On Intuition
42
The ROI on any OD Initiative is Simply
Calculated
43
Return on Investment the MATH Approach
44
  • Question Answer
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