A Short Note on ROI Methodology

Our purpose in using needs identification, objectives setting, and outcome measurement and evaluation is to ensure improvements align with the business needs.

We demonstrate the learning and improvement function’s contribution to the organization.

By identifying ROI drivers, we develop program objectives at multiple impact levels and achieve business alignment at all levels.

By measuring and evaluating outcomes, we show how programs, processes, and projects connect to results clearly, precisely, and logically.

To discern the value generated by the learning and development program, we generate data linking learning impact to business impact (performance) and business value.

The impact chain can be broken at any point between the levels due to barriers to success at any level.

The preferred method is to obtain real data, which may not always be readily available or become too time-consuming or expensive to obtain. This is a valid reason to use estimates when records are not readily available or in a forecast situation to estimate the improvement amount, isolate the effect of a program, or convert effects into monetary values.

The credibility of estimates is to be improved by using preferred methods accepted by stakeholders.

The most challenging issue is to isolate the program’s effects from other factors. Obtaining data directly related to the program or project can become itself a project contributing to a significant cost increase. When estimates are used, the data should be adjusted for the error of the estimate.

ROI methodology is a process improvement tool capturing deficiencies, weaknesses, and strengths in the process, revealing success barriers and enablers.

Projects that are very expensive, strategic, operationally focused, highly visible, involve large target audiences, and have management attention in their accountability should be evaluated through to the fifth level of evaluation. Evaluating short programs, information-sharing programs, entry-level programs, new-to-the-job issues, and programs intended to align the individual with the organization should not be evaluated all the way through to ROI.

The data generated in the ROI study should be used properly to drive improvements; this lowers the reluctance to the ROI methodology. The data should not be used as a performance evaluation measure but to drive process improvement. Proper data communication ensures improvements are generated and the data is not misused.

To ensure data is collected objectively, analyzed, and reported completely, necessary steps should be taken, if possible, by the involvement of an independent party.