By Patti Phillips
ROI, return on investment, is a metric fundamental to business and government alike. Executives and chief administrators recognize it, and business and operations managers appreciate it.
Misinformation and misuse cloud the value of this simple, yet powerful, metric. While its existence in performance improvement, learning and development, and human resources is not new, when reading much of the literature and comments made in conference sessions, one would think ROI is a new phenomenon, and one from which people should run.
ROI’s use in learning and HR began in the 1970s when my husband and business partner, Jack Phillips, conducted the first ROI study on a cooperative education program. It has been used for years in quality and productivity training. In more recent years, it has grown to be a standard metric for many leadership development and coaching programs, as well as other “soft” solutions. Yet the confusion around ROI remains.
The crux of the confusion lies in how and when to use ROI, and how to report it so stakeholders recognize the complete success of a program or project. Fear and angst around ROI exist, because like most investments, a negative ROI is inevitable for misaligned and poorly implemented programs. On the flip side, if the ROI is extraordinarily high, fear exists that the results will not be viewed as credible. This fear is unwarranted if you use a credible approach to develop it, follow sound standards, and apply it consistently across all types of programs.
Yet, too many people would rather listen to the naysayers than figure it out for themselves. We have published over 40 books with ATD and even more with other publishers, such as HRDQ Press, SHRM, Berrett-Koehler, McGraw Hill, and Wiley. These publications describe ROI’s use and importance in showing the contribution of programs and projects. They, along with many conference presentations and workshops, offer learning and development professionals opportunities to understand what ROI is, what it is not, and how to use it. Yet, many professionals still miss the bottomline.
Reported alone, ROI describes the economic impact of programs, projects, and processes. Reported in the context of other measures, it contributes to the complete story of program success and informs decisions about resource allocation.
To learn how to show the ROI of your programs, projects, and initiatives, register now for our upcoming webinar.
A recognized expert in measurement and evaluation, Dr. Patti Phillips is president & CEO of the ROI Institute. She serves as faculty for the UN System Staff College, a Professor of Practice for The University of Southern Mississippi’s Ph.D. in Human Capital Development program, and a Principal Research Fellow at The Conference Board. She is an award-winning author and editor of numerous books and articles, including The Bottomline on ROI 3rd Edition, Ten-Steps to Successful Business Alignment, Measuring ROI in Learning and Development: Global Case Studies, and Measuring the Success of Coaching.
This blog post was written by Dr. Patti Phillips and comes from the webinar, The Bottomline on ROI: How to Measure the Results of Your Training.