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ROI Basics: The Same Only Better

Monday, December 9, 2019
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Today’s environment of all things data and analytics calls for a reset on the fundamentals of measurement and evaluation, particularly ROI. While the acceptance and use of ROI continues to grow, so is the misuse and misunderstanding around this simple metric and the process that leads to it. That is why ROI Basics 2nd Edition is so timely.

The ROI Methodology is a comprehensive evaluation process. Jack Phillips developed it in 1973 when asked to demonstrate the ROI of a co-operative education program. While the five-level evaluation framework is the basis for categorizing data, the ROI methodology, with its 12 guiding principles, is the operational process that ensures data collected and categorized within the framework are reliable. More than that, it is a process that enables talent development, and other functions within the organization, to do their jobs—that is, drive value within their organizations.

Use of ROI and the ROI Methodology has grown beyond learning and development. In fact, some of our most exciting work is with nongovernmental organizations, faith-based organizations, and the First Nation community where we have worked with the American Indian Fund to demonstrate the value of tribal colleges. Never before have we seen such an interest in designing programs, processes, initiatives, and institutions to drive results that matter to employees, students, stockholders, taxpayers, and communities. The good news is the process to do this hasn’t changed—it’s the same, only better. Better in terms of the techniques to collect, analyze, report, and optimize data. With greater use, broader adoption, and advances in technology, we continue to learn and apply that learning in our work.

But the fundamentals are the fundamentals—they are foundational and unchanging. They are what make the ROI Methodology work and why it continues to be the most applied and documented approach to demonstrating impact and ROI for non-capital investments.

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So why an update on a book about fundamentals?

Demonstrating the ROI of programs remains critical to how organizations allocate resources to future programs. Senior executives want to know this information. Yet, we keep hearing the same story: Organizations spend millions of dollars on talent development, but the business measures that matter are not improving. That suggests a continuing gap in connecting how a program performs and whether it delivers value. To help better close this gap, the second edition includes:

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  • more content on alignment, as in connecting programs to the business—this includes identifying payoff needs and specific business measures that need to improve, and a variety of techniques to identify the most feasible solution given the business need
  • a shout-out to a few technologies that are fundamental tools or new tools that are sure to take measurement to new levels
  • reference to new applications of the process to talent development, demonstrating its increasing use.

We wrote ROI Basics for practitioners who are new to measurement and evaluation and who have been challenged to implement a comprehensive evaluation process. It is also for those who are taking a proactive approach to accountability. Individuals with more advanced skills in measurement and analytics may also find the book helpful in answering basic questions. Talent development managers will also benefit; by understanding the basics, managers can better serve as champions for robust measurement and evaluation, including ROI.

For those of you who want to learn more, join us December 16 for our upcoming webcast, What's It Worth: Demonstrating the ROI of Your Programs, hosted by ATD. You can find more information here.

Good luck with your measurement journey. Let us know how we can help. And, remember, all roads lead to ROI.

About the Author

Jack J. Phillips, PhD, is chairman of the ROI Institute and a world-renowned expert on measurement and evaluation. Phillips provides consulting services for Fortune 500 companies and workshops for major conference providers worldwide. Phillips is also the author or editor of more than 100 articles and more than 75 books, including Measuring the Success of Leadership Development: A Step-by-Step Guide for Measuring Impact and Calculating ROI (ATD Press). His work has been featured in the Wall Street Journal, Bloomberg Businessweek, Fortune, and on CNN.

About the Author

Patti Phillips is president and CEO of the ROI Institute and is the ATD Certification Institute's 2015 CPLP Fellow. Since 1997, she has worked with organizations in more than 60 countries as they demonstrate the value of a variety of programs and projects. Patti serves on the board of the Center for Talent Reporting, as Distinguished Principal Research Fellow for The Conference Board, and as faculty on the UN System Staff College in Turin, Italy.

Patti has written and edited numerous books and articles on the topics of measurement, evaluation, and ROI. Recent publications include Measuring the Success of Leadership Development, Making Human Capital Analytics Work, Measuring the Success of Learning Through Technology, Measuring the Success of Organization Development, and Measuring Leadership Development: Quantify Your Program's Impact and ROI on Organizational Performance.

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