Is ROI the end?

Ganpati Bappa is here and will be with us for 11 days. Visiting pandals, observing the rituals, the delicacies and the prasad that we get is super.

In one such pandal I happen to meet a gentleman who was the VP HR of one of the Multi National Company. When I mentioned that our firm specialises in ROI, he raised his eyebrows; ROI that is very technical he said. Indeed it is I mentioned.

Following conversation took place...

VP HR: Our company spends a lot on training and HR activities. Yet they have never insisted on ROI. So there is no big deal about it. What will happen if we do not calculate the ROI?

ME: (Probing further). Spends! Why do you call it spending? What is the main objective of any company?

VP HR: Well, aa..., Don't know (silent). Of course the main objective of any company is to make profits.

ME: Here lies your answer you see. Your company perceives all the budget allocation as spending. When do you feel your company will perceive that all these are investments and not costs?

VP HR: Well when we start showing the returns.

Me: And when do we call it as returns?

VP HR: When we show the ROI.

ME: That is good. So now you have given the answer to your question- what will happen when you do not calculate the ROI.

VP HR: So how do we initiate the process. (In the midst of the Ganpati rituals our converation was getting very technical).

ME: 2 things need to be done with immediate effect
       1st - Top management buy-in
       2nd - Total cultural change, where every one in the department; that includes HR, L&D or training, admin, finance, marketing, sales, legal,purchase, production is tune in with the ROI process. Where every single person is aware that a company makes huge investment in them and they are bound to give measurable returns so set a multiple ROI.

Once the above things are done, setting ROI process is very easy...

VP HR: So we are getting somewhere.

ME: Of course you are. Unless the HR is convinced that ROI is the need of the hour and that HR can become a profit center, it is difficult to get a management buy-in. As there is no management interest, budgets are not allocated. We get trapped in the viscious cycle and every thing is considered as costs.

I left him with a couple of questions to probe on...

Do you ponder on such questions.... Do write to me on wagle.sonali@gmail.com

Do You Take into Account Fully Loaded Costs

In one of my interview, one HR professional remarked. "It is hard to justify the costs incurred". Costs, the enemy of HR and training professionals.

In today's blog we divide the section into two parts. Today I will cover part A.

HR professionals go through a lot of internal conflict when it comes to costs. They are not able to understand that all the money that goes in HR is it a costs or an investment.

They try to argue that the management considers all HR activities as costs. And I counter argue that management will not consider HR activities as costs unless you show the monetary returns.

And unless you prove the monetary returns, all work that HR does will be considered as activities.

Let me ask you a question

Make a list of all things you consider as costs for a training program?

Now compare them with the following costs ...

Costs are divided into 4 categories
1.  Analysis costs
2.  Development costs
3.  Delivery costs
4.  Evaluation costs

1.  Analysis costs: These include, all the costs that is incurred for analysis of the intervention. Salaries of HR and managers involved, travel costs, any other miscellaneous expenses, consultant's involvement if any.
2.  Development costs: Such costs include salaries of people involved to develop the intervention, development of training material, printing, cost of stationary, travel costs, miscellaneous expenses.
3.  Delivery costs: Salaries of HR involved, consultant/ agency fees, salaries of participants, venue, overheads, travel costs, miscellaneous expenses.
4.  Evaluation costs: This includes salaries of HR doing evaluation of the interventions, managers salaries, agency fees if any, travel costs, miscellaneous expenses.

In my experience, most of the HR professionals take into account only delivery costs. Please note in any ROI evaluation, there are many costs that are incurred, and we want to leave no stone unturned or the management questioning us why a certain cost is not taken into account.

Once you fit the ROI process, you will be amazed to see the results and the returns, that the costs that is incurred for any intervention will be negligible.

For details of costing keep watching my next blog...

Do write to me for any feedback or queries on wagle.sonali@gmail.com

Happy investing....

www.exponentialadvisory.co.in

Where Can We Use the ROI Process

Dear Colleague

My inbox is flooded with inquiries as to which areas can we use the ROI process. I thought to write on the same.

ROI process can be adapted as per the needs of the company. Though it germinates through HR, ROI process can be easily adapted and implemented by other departments also.

It can be used in HR, sales, marketing, production, legal, purchase, customer service, etc. or in any other department and industry.

ROI has been expanded to more than 20 fields.

• Coaching
• Sales
• Leadership
• Mentoring
• Communication
• Conflict management
• Consulting
• Meetings and events
• Conferences
• Policy making
• HR processes
• Employee engagement activities
• Surveys
• Customer relationship
• Human capital analytics
• Recrutiment
• Retention
• E-learning
• Technology implementation
• Recruitment
• Compensation and benefits
• Paroll

And many more....

The one thing required is a ROI culture where there is a management buy in and passionate HR people who want to prove the value of the department, rest all will fall in place...

Thank you

Sonali Wagle

How to Get the Best out of Hiring ROI Consultants

Dear Colleagues

Completed five years with Exponential Advisory. It has been a great experience to be associated with like minded HR professionals.

Today I share my experience of being a consultant.

Many a times HR professionals ask, how does it benefit us hiring you or any other consultant.

I tell them it is a call every company has to take. There are many aspects to it and questions to ponder

1.  Why does a company want to hire a consultant? Is it a need or a want?

2.  Does the company have the requisite skills? Eg. Do we have skilled people in the area of ROI, HR audit or HR analytics.

3.  Is there a plan in place on how do we recognize the right qualified and experience consultant?

4.  Once that person is on board how best can the company utilize his/ her presence.

5.  Is there a road map to follow?

6.  How much time do we give the consultant to check if this association is working?

7.  Is the consultant charging one time professional fee or will the consultant be on a monthly retainer. If it is monthly, then what must be the monthly outgoing?

8.  Last but not the least what is the ROI on this consultant?

ROI Objectives to Hire Consultants

Reaction level

• Does the consultant give the company value addition
• Are the people working with him comfortable
• Will you recommend the consultant to other departments or other professionals
• Does the consultant give confidence to apply the techniques

Learning level

• Do we understand what the consultant is trying to say
• Is he able to transfer his knowldege 
• Are we able to gain specific knowledge and skills from him
• Is the consultant training employees enough so that we have the confidence to apply the skills learnt

Application level

• Employees apply the tools explained by the consultant
• Employees do the tasks themselves 
• Employees set the process
• Employees follow the process set 

Impact level

• Increase revenue
• Improve productivity
• Reduce attrition
• Better processes in place

Degree of Consultant Involvement 

Consultants can be involved in varying degrees depending on the task and the budget of the company. 

Consultants can be divided into 3 categories 

1.  Consultants as advisers: Here the consultant provides only advise and provide next steps solutions.

2.  Consultants as working partners: Here the consultant works with the concerned department as a team.

3.  Consultants as performers: Here the consultant performs all the tasks on his/ her own. Please note that the third category of consultants is very costly. And unless there is a radical change to be made, better it is to go for the second category. Here they work as a team, so there is a lot to learn and  implement.

Signing off

Lv

Sonali Wagle 

www.exponentialadvisory.co.in