S t r

Strategic Recruiting – How to Win the
Talent War and Show the Lessons
Agenda
• Discuss steps to develop a results-based management system
• Explore the role of talent, talent management systems, and the chief
talent officer
• Explore how to measure talent management
• Explore how to measure recruiting effectiveness
• Discuss how talent management fits into human capital metrics
• Discuss the role of ROI in recruiting and talent management
Jack J. Phillips, Ph.D.
Phone (205) 678-8101 ƒ Fax (205) 678-8102
info@roiinstitute.net
www.roiinstitute.net
Increased Interest in the Value of Talent
Drivers:
• The increasing cost of human capital
• Consequences of improper or ineffective HR practices
• Linkage of human capital to strategic initiatives
• Increased accountability of all functions
• Top executive requirement for HR contribution, and human capital ROI
Profitability
BOTTOM LINE CONTRIBUTION
Balanced Scorecard
Vital Signs
Effectiveness
Strategic
Accountability
ROI
Shareholder Value
PERFORMANCE STANDARDS
Benefits vs Costs
ECONOMIC
PROGRAM IMPACT
VALUE ADDED
Value Based
Evaluation
The Measurement Landscape is confusing…
Talent Management Represents the Best Opportunity to :
•
•
•
•
Align with the business
Contribute financial impact
Drive improvement
Sustain profitable growth
1
The Changing Talent Management System
The Traditional Talent Management System
Acquire
Develop
Deploy
Retain
Source: Deloitte, 2004
The New Talent Management System
Analyzing Planning for
Talent Need
Talent
Attracting
Talent
Recruiting
Talent
Planning
Selecting
Talent
Employing
Talent
Acquiring
On-Boarding Preparing
Talent
new Talent
Developing
Talent
Educating
Talent
Developing
Managing
Talent
Performance
Rewarding
Talent
Managing
Retaining
Talent
Removing
Talent
Retaining
Source: Phillips, 2005
2
Competencies are the Common Ingredient
Planning
Competencies
Recruiting
Selecting
Preparing
Managing
Rewarding
Motivating
Removing
The CLO’s Role in Talent Management is Changing
System Components
Traditional
New
Talent planning and analysis
3
Attraction and recruiting
3
Selecting and employment
3
Orientation and on-boarding
3
Learning and development
3
Performance management
3
Rewards and recognition
3
Managing retention
3
Managing layoffs
3
3
The High Cost of Talent Departure
The Turnover Cost Categories
$
Attraction/Recruitment Costs
Selection Costs
Pre-Employment Training
Employment Costs
Orientation/Socialization
Initial Training Costs
On-the-Job Learning Cost
Production Loss
Quality Problems
Operation Problems
Customer Dissatisfaction
Loss of Knowledge
Management Time
Turnover Cost Ranges
(Percentage of Annual
Wage/Salary)*
Job Type/Category
Entry level – hourly, unskilled (e.g., fast food
employee)
30-50%
Service/production workers – hourly (e.g., courier)
40-70%
Skilled hourly – (e.g., machinist)
75-100%
Clerical/administrative (e.g., scheduler)
50-80%
Professional (e.g., sales representative, nurse,
accountant)
75-125%
Technical (e.g., computer technician)
100-150%
Engineers (e.g., chemical engineer)
200-300%
Specialists (e.g., computer software designer)
200-400%
Supervisors/team leaders (e.g., section supervisor)
100-150%
Middle managers (e.g., department manager)
125-200%
*Percentages are rounded to reflect the general range of costs from studies. Costs are fully loaded to
include all of the costs of replacing an employee and bringing him/her to the level of productivity and
efficiency of the former employee.
4
Measuring Success of Talent Management
Traditional
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•
•
•
•
•
•
•
•
•
•
3 Jobs groups defined as critical talent
6 Recruiting channels utilized
2,439 New employees recruited
Cost per hire reduced by 10% over last year
Time to fill jobs reduced 30% in two years
IDPs developed for 95% of high potentials
92% of managers and executives involved in 360° process
7 Formal talent development programs in place
5 Informal talent development programs in place
1,479 individuals involved in the talent development programs
Turnover rate below industry average
Emerging
•
•
•
•
•
•
•
•
•
•
Recruiting effectiveness increased by 30%
85% of IDPs completed within one year
Promotion readiness rating increased 42%
External hire ratio reduced by 35%
Performance ratings of newly promoted managers increased 36%
Manager/executive failure rate sliced in half
Avoidable turnover for three critical talent groups 30% below industry average
In sales and marketing, talent management system adds $15 million in sales
In IT, talent management system saved $2.3 million in costs
3 ROI studies in talent management completed with an average of 139%
5
Key Findings
from Mature Talent Management Organizations*
Know your company’s critical jobs and have processes
Have a meaningful percentage (e.g., 15 percent) of
in place to target potential gaps. Identify potential
employee satisfaction rating tied to year-end goals
successors; two levels of backup for succession are best.
and financial rewards.
Build the skills of all managers using
Look for causal connections between leadership
feedback/communication techniques that can enhance the
competencies and business outcomes.
effectiveness of the talent mindset and interpersonal
TM
or dashboards provide useful
communications; use a clear leadership model to show
Balanced Scorecard
importance and focus on topics, such as appreciative
ways to include human capital measures in overall
inquiry.
performance evaluations.
Develop and communicate the specific behaviors
Share TM measures with the board of directors.
expected relative to the leadership model or leadership
Create diversity measures for critical functions (e.g.,
competencies; include behaviors at all levels.
leadership, high potentials) that strive to “raise the bar,”
as well as hit or exceed industry norms.
Determine ways to provide rotational assignments
across lines of business and geographies (although this is
Build up the percentage of employees who have
difficult).
performance development plans and documented
developmental conversations with their managers from
Evaluate annually for both performance and potential.
top down.
Inform employees of possible career paths; be clear on
the options and the value proposition for them and your
Establish measures to guide the “build vs. buy”
organization.
decisions. Track percentages of individuals in key
positions who are promoted from within versus those
Use talent management (TM) as a way to embed
who are hired.
workforce diversity and build a culture of inclusion.
Use Six Sigma methodologies to identity quantifiable
opportunities for improvement.
Use change management in tandem with talent
management.
Track the size of the talent pool and the likelihood of
Set retention goals per employee level (or band, if in use);
success if promoted within one year.
monitor, predict, and act to enhance retention.
Establish a central unit to measure TM
Use assessment center for critical, as opposed to all,
effectiveness, with a cross-functional and divisional
jobs.
perspective, to measure TM effectiveness. This helps
integrate various initiatives.
*Source: Talent Management Value Imperative
6
The Conference Board 2005
The HR Measurement Mix is Changing
Comparison of Approaches to Measure the HR Contribution
Approach
Measurement Focus
Relative
Cost
Relative Value of
Information
Feedback surveys
Attitudes / Perceptions
Moderate
Moderate
HR satisfaction
surveys
Attitudes / Perceptions
Moderate
Moderate
Human capital
measures
Value of skills, capabilities,
performance of employees
High
Moderate
HR auditing
Efficiency / Existence of
practices
Low
Low
HR case studies
Qualitative description with
data
Low
Low
HR cost monitoring
Program / Function / Activity
costs
Low
Low
Competitive HR
benchmarking
Performance measures/
practices
High
High
Key HR indicators
Program / Function
performance measures
Moderate
Moderate
HR macro studies
Multiple key indicators –
overall function
High
High
HR management by
objectives
Goal setting for HR
performance measures
Low
Moderate
HR profit centers
Profit contribution of programs
/services
High
High
ROI methodology
Benefits vs. Costs
High
High
Balanced scorecard
Balanced measures –
customer, financial, process
Moderate
Moderate
Questions for discussion:
1) Which approaches are you using now?
2) Which approaches are you planning to use in the future?
3) Which approaches are you planning to discontinue?
7
HR Accountability Progress
HR Accountability
ROI Methodology
ge
HR Profit Center
Ed es
g
h
in c
Balanced Scorecard
ad oa
Le ppr HR Macro Studies
A
Human Capital Measurement
elu
Va d s
Competitive
HR Benchmarking
lid de he
So Ad oac
HR Satisfactory Surveys
pr
HR Cost Monitoring
Ap
HR Key Indicators
HR Auditing
s
r ly h e
HR Case Studies
Ea oac
pr
Feedback Surveys
Ap
MBO in Personnel
1960’s
1970’s
1980’s
1990’s
2000
Leading Edge Approaches to Measuring the HR Contribution
•
•
•
•
•
Balanced Scorecards
HR Profit Center
Human Capital Measures
HR Macro Studies
ROI Methodology
Most promise as an immediate tool
Recommendations for Measurement Categories
Select an approach in each of these categories:
•
•
•
•
Attitudinal Data
Comparative Data
Human Capital Measures
Benefit/Cost Analysis (ROI)
8
Common Human Capital Measures*
1.
2.
3.
4.
5.
6.
Innovation and Creativity
• Innovation
• Creativity
Employee Attitudes
• Employee satisfaction
• Organizational commitment
• Employee engagement
Workforce Stability
• Turnover and termination
• Tenure and longevity
Employee Capability
• Experience
• Learning
• Knowledge
• Competencies
• Educational Level
Human Capital Investment
• HR department investment
• Total human capital investment
• Investment by category
Leadership
• 360° feedback
• Leadership inventories
• Leadership perception
7.
8.
9.
10.
11.
12.
Productivity
• Unit productivity
• Gross productivity
Workforce Profile
• Demographics
Job Creation and Recruitment
• Job growth
• Recruitment sourcing and
effectiveness
• Recruiting efficiency
Compensation and Benefits
• Compensation
• Employee benefits
• Variable compensation
• Employee ownership
Compliance and Safety
• Complaints and grievances
• Charges and litigation
• Health and safety
Employee Relations
• Absenteeism and tardiness
• Work/life balance
* Conference Board Europe webcast, Jack Phillips
How do these measures compare with your HR measures?
Q: How would you measure the following?
Innovation
Learning
Leadership
Gross Productivity
9
Managing Retention is Critical
Step 8
Make
adjustments and
continue
Step 1
Measure and
monitor
turnover and
retention data
Step 2
Develop fully
loaded costs of
turnover
Step 7
Calculate ROI of
retention solutions
Step 6
Forecast value of
retention solutions
Step 3
Diagnose causes and
needs for retention
improvement
Step 5
Match
solutions to
needs
Step 4
Explore range
of solutions
Tools to Diagnose Turnover Problems
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Demographic analysis
Diagnostic instruments
Focus groups
Probing interviews
Job satisfaction surveys
Organizational commitment surveys
Exit interviews
Exit surveys
Nominal group technique
Brainstorming
Cause and effect diagram
Force field analysis
Mind mapping
Affinity diagrams
. . . and the list continues
10
Ten Reasons Why Talent is Critical to Success
1.
We cannot be successful without talent.
2.
Talent adds to the market value.
3.
Talent executes the ideas.
4.
Talent is the last source of competitive advantage.
5.
Great workplaces attract and retain talent.
6.
The most successful and admired companies have great talent.
7.
The cost of competent talent is high.
8.
The cost of turnover of talent is high.
9.
The competitive environment has created a retention crisis.
10. Retention can be managed.
Projected Job Growth and Workforce Growth in United States
180
170
161,000,000
160
Projected Job Growth 14%
7 Million Labor Shortfall
150
154,000,000
140
Projected Workforce Growth 12%
130
1998
2003
2008
11
The Good Workplace Guide
American Undergraduates’ Ideal Employers
Company
2005
2004
BMW
1
2
PricewaterhouseCoopers
2
4
Ernst & Young
3
6
Boeing
4
7
Johnson & Johnson
5
17
Deloitte
6
8
Coca-Cola
7
5
Microsoft
8
1
CIA
9
14
FBI
10
138
Merrill Lynch
11
12
IBM
12
11
Apple Computer
13
41
KPMG
14
16
J.P. Morgan Chase
15
18
The Shifting Strategies of Recruiting
Old Recruiting Strategies
New Recruiting Strategies
Grow all your own talent
Recruit talent at all levels
Recruit only for vacant positions
Search for talent all the time
Go to a few traditional sources
Tap many diverse sources of talent
Recruiting is limited to a few individuals
Every employee is a recruiter
Advertise to job hunters
Find ways to reach passive candidates
Specify a compensation range and stay
within it
Break the compensation rules to get the
candidates you want
Recruiting is about screening
Recruiting is about selling as well as
screening
Hire as needed with no overall plan
Develop a recruiting strategy for each
type of talent
Keep a low profile except during
employment growth
Create and brand an employer of choice
12
Shift in Recruiting Methods
Traditional Recruiting Methods
Job service agencies
Recruiting ads
Professional recruiters
Campus recruiting
Internships
Employment support groups
Community recruiting
Job fairs
Walk-in applicants
Trade and professional associations
Employment hotline
Non-Traditional Recruiting Methods
Web resources
Open houses
Receptions at conferences
Information seminars
Diverse profile candidates
Military recruiting
Employee talent scouts
Networking
Employee referrals
Monitoring current events
Pre-employment programs
Shift in Selection Methods
Traditional Selection Methods
Non-Traditional Selection Methods
Resumes
Background checks
Reference checks
Testing
Physical exams
Drug testing
Interviews
Behavioral interviews
Job simulation
Pre-employment training
Assessment center
Work samples
Referral profile
eHR
13
Selection System for Commercial Banking Officer
Review Resume
(Recruiter)
Reject
Campus Interview
(Recruiter)
Reject
Background/Reference Check
(Human Resources)
Job-Related Interview
(Human Resources)
Reject
Test
Job Simulation
Job-Related Interview
(Branch Manager)
Decision Making
Reject
Job Offer
E-Recruiting Systems
•
•
•
•
•
•
•
Processes large numbers
Website is the key
Online screening
Online job posting
Informing the applicant
Online Testing
E-recruiting systems may have an adverse impact
14
E-Recruiting Example
Candidates
Top
Performers
Behavior
Profile
Ideal Profile
Behavior matched with
ideal
Assessment
within
seconds
Recruiting and Selecting Costs
Cost Per Hire
CPH = AC + AF + EC + RB + TC + RE + RC + NC
H
Where
AC = advertising cost
AF = agency fees
EC = e HR cost
RB = referral bonus
TC = travel cost
RE = relocation
RC = recruiter costs
NC = unsolicited no-cost resumes
Consider: Source cost per hire
Internal cost per hire
Interviewing cost per hire
Source: Jac Fitz-enz
15
+ 10%
Recruiting and Selection Time
Response Time
RT = RD – RR
Where
RT = response time
RD = date first qualified candidates was referred for an interview (e.g., September 4)
RR = Date of receipt of job requisition (e.g., September 4)
Time to Fill
TTF = RR – OD
Where
TTF = time to have an offer accepted
RR = date the requisition is received (e.g., September 4)
OD = date the offer is accepted (e.g., October 20)
Time to Start
TTS = RR – SD
Where
TTS = Time until the new hire starts
RR = date the requisition is received (e.g., September 4)
SD = Date the new hire starts work (e.g., November 10)
Source: Jac Fitz-enz
Recruiting and Selection Efficiencies
Referral Factor
RF =
R
O
Where
RF = referral factor, relationship of candidates to openings
R = number of candidates referred for an interview (e.g., 134)
O = number of openings (e.g., 19)
Job-Posting Response Rate
JPR =
A
PJ
Where
JPR = job posting response rate
A = number of applications received at the job-posting desk (e.g., 212)
PJ = number of posted jobs (e.g., 43)
Job-Posting Hire Rate
JPH = H
JP
Where
JPH = percentage of jobs filled through hob posting
H = number of hires made from internal applicants (e.g., 36)
JP = number of jobs posted (e.g., 212)
Source: Jac Fitz-enz
16
Recruiting and Selection Effectiveness
Offer Acceptance Rate
OAR = OA
OE
Where
OAR = percentage of offers that result in a hire
OA = offers accepted (e.g., 48)
OE = offers extended (e.g., 60)
Recruiter Effectiveness
RE = RT + TTF + CPH + OAR + QH
N
Where
RE = overall recruiter effectiveness
RT = response time (e.g., 9 days)
TTF = time to fill (e.g., 34 days)
CPH = cost per hire (e.g., $884)
OAR = offer acceptance rate (e.g., 80%)
QH = quality of hire (e.g., 71.7%)
N = number of indices used (e.g., 5)
Quality of Hire
Quality of Hire
QH =
PR + HP + HS
N
Where
QH = quality of people hired
PR = average job performance rating of new hires (e.g., 4 on a 5-point scale, or 80
percent)
HP = percentage of new hires promoted within 1 year (e.g., 36%)
HS = percentage of new hires retained after 1 year (e.g., 70%)
N = number of indicators used (e.g., 3)
17
Recruitment and Selection ROI Case Studies
Case Study 1
A hotel in Singapore is concerned about high turnover in the early stages of
employment. The turnover in the first sixty days of employment was 45% on an annual
basis, much too high for hotel management. When analyzing the causes of the early
turnover, a lack of culture fit between employee and hotel philosophy was uncovered.
Consequently, the hotel used a culture instrument to better predict success of the
employee. After the instrument was implemented the turnover in the first sixty days of
employment was reduced to 21% on an annual basis, yielding a 121% ROI.
Case Study 2
A large Metropolitan Transit system was experiencing excessive absenteeism for city
bus drivers. This was causing operational problems, excessive cost, and customer
dissatisfaction. The bus system had to staff a driver pool to have bus drivers ready
when there was an unexpected and unplanned absence. As part of the solution, the
Metropolitan Transit system implemented a new selection process to pinpoint
absenteeism problems before employees are selected. Using a series of questions to
track the absenteeism habits of the potential employees through high school yielded
much better selection and a reduction in absenteeism. The absenteeism dropped from
8.7% to 4.8% with roughly 28% being contributed directly to the change in selection
system. The result was a 114% ROI.
Case Study 3
A technology federal contractor was experiencing significant delays in recruiting
engineers. The time to start was 52 days, much too long for a company management.
This delay was resulting in lost revenues. Project time could not be billed until the
engineers were on the job. Two solutions were implemented, one involved changing
recruiting channel to a web based process and the other eliminating one step in the
selection process (the executive interview). The two changes resulted in moving the
time to 25 days and yielded a 231% ROI.
Case Study 4
A large department store chain was having difficulty getting jobs filled with an
economical basis. Previous recruiting was achieved through newspaper advertising and
direct communication to perspective audiences. Because of the excessive cost, the
company switched to employee referrals with a referral bonus. Employees were
prepared to become recruiters and were briefed on what type of employees were
needed. The current employees were actually engaged in the recruiting process. The
result was a 42% reduction in the recruiting cost for an amazing 281% ROI.
18
Key Issues with This Level of Analysis
•
•
•
•
•
•
Credibility of data
Consistent methodology
Standards
Use of data
Cost of process
Fear of data
The ROI Process Generates Six Types of Data
1.
2.
3.
4.
5.
6.
Reaction to an HC project or program
Learning skills / knowledge
Application / Implementation progress
Business impact related to the project or program
Return on investment
Intangible benefits
. . . and includes a technique to isolate the effects of the program.
ROI by the Numbers
•
•
•
•
•
•
•
Process refined over a 25-year period
5,000 impact studies are conducted each year
100 case studies have been published on ROI
3,000 individuals are certified to implement the ROI methodology
15 ROI books have been developed by ROI Institute authors
A 600-member professional network has been formed to share information
The ROI methodology has been adopted by over 2,000 organizations in
manufacturing, service, non-profit, and government settings in over 40 countries
19
Applications
•
•
•
•
•
•
•
•
•
Talent Development
Career Development Programs
Competency Systems
Diversity Programs
E-Learning
Executive Coaching
Executive Education
Gain Sharing Programs
Leadership Development
•
•
•
•
•
•
•
•
•
Organization Development
Orientation Systems
Recruiting Strategies
Safety & Health Programs
Self-Directed Teams
Skill-Based/Knowledge-Based
Compensation
Technology Implementation
Total Quality Management
Wellness/Fitness Initiatives
Any surprises here?
______________________________________________________________________
______________________________________________________________________
Basic Elements
An Evaluation
Framework
Case Applications
and Practice
How many of these elements
do you have in place?
_________________________
_________________________
_________________________
Implementation
_________________________
A Process
Model
Operating
Standards and
Philosophy
_________________________
_________________________
HC Evaluation Levels
Level
1. Reaction & Planned
Action
Measurement Focus
Measures participant satisfaction with the HC program
and captures planned actions, if appropriate.
2. Learning
Measures changes in knowledge, skills, and attitudes
related to the HC project.
3. Application
Measures changes in on-the-job behavior or actions as
the HC project is applied, implemented, or utilized.
4. Business Impact
Measures changes in business impact variables.
5. Return on Investment
Compare project benefits to the costs.
20
THE ROI PROCESS ™
Calculating the Return on Investment
of Performance Solutions
¾
¾
¾
¾
¾
¾
EVALUATION PLANNING
DEVELOP/REVIEW
OBJECTIVES
OF SOLUTION
HR Solutions
Training Solutions/E-Learning
Major Projects
Technology Solutions
Organization Development Solutions
Change Initiatives
DATA COLLLECTION
DEVELOP
EVALUATION
PLANS AND
BASELINE DATA
DATA ANALYSIS
COLLECT DATA
DURING
SOLUTION
IMPLEMENTATION
1. SATISFACTION/
REACTION
2. LEARNING
ROI
=
Program /Project Costs
Costs of pro gra m/pro ject $230,000
$430,000 - $230,000
$230,000
CONVERT
DATA TO
MONETARY
VALUE
3. APPLICATION/
IMPLEMENTATION
4. BUSINESS IMPACT
EVALUATION FRAMEW ORK
Level
M easurem ent Focus
1. Reaction, S atisfaction
& Plann ed Action
Measures p articip ant satisfaction with th e
prog ram/project and captu res plann ed action.
2. Learn ing
Measures ch ang es in kn owledg e, skills,
and attitud es.
3. Application
Measures implem entation and ch ang es in
beh avior in the p erform ance setting.
4. Busin ess Imp act
Measures ch ang es in busin ess im p act
variables.
5. Retu rn on In vestm ent
Comp ares b en efits to th e costs.
Benefits of pro gram/proje ct (1st yea r) $430,000
ROI =
ISOLATE
EFFECTS
OF SOLUTION
COLLECT DATA
AFTER SOLUTION
IMPLEMENTATION
ROI Calculation - Exam ple
Net Program /Project Benefits
CAPTURE
COSTS OF
SOLUTION
= 0.87 x 100 = 87 %
21
REPORTIN G
CALCULATE
THE RETURN ON
INVESTMENT
5. ROI
IDENTIFY
INTANGIBLE
MEASURES
IN TANGIBLE
BENEFITS
GENERATE
IMPACT STUDY
REPORT
Guiding Principles
W hen a higher level evalu ation is conducted, data
must be collected at lower levels.
2. W hen an evaluation is planned for a higher level,
the previous level of evaluation does n ot have to be
comprehensive.
3. W hen collecting and an alyzing data, use only the
most credible sources.
4. W hen analyzing d ata, select the most conservative
alternative for calculations.
5. At least on e method must be used to isolate the
effects of the solution/project.
6. If no improvement data are available for a
population or from a sp ecific source, it is assumed
that little or no improvement has occurred.
7. Estimates of improvements shou ld be adjusted for
the potential error of the estimate.
8. Extrem e data items and unsupported claims should
not be used in ROI calculations.
9. Only the first year of b enefits (annual) should b e
used in the ROI analysis of short term solutions.
10. Costs of a solution, project, or program should b e
fully load ed for ROI an alysis
11. Intangible measu res are defin ed as m easures that
are purposely n ot converted to monetary valu es.
12. Th e results from the ROI meth odology must be
communicated to all key stakeh old ers.
THE ROI PROCESS
1.
22
A comprehensive measurement and evaluation process
that generates six types of measures:
¾
Reaction, Satisfaction, and Planned Action
¾
Learning
¾
Application and Implementation
¾
Business Impact
¾
Return on Investment
¾
Intangible Measures
This balanced approach to measurement includes a
technique to isolate the effect of the program or solution.
Results-based Solutions
¾ Performance solutions/projects are initiated, developed and
delivered with the end in mind.
¾ Participants understand their responsibility to obtain results with
programs/solutions.
¾ Support groups (management, supervisors, co-workers, etc.)
help to achieve results from performance solutions.
¾ A comprehensive measurement and evaluation system is in
place for each program/project.
¾ Variety of approaches are utilized to measure contribution,
representing a balanced viewpoint.
¾ Follow-up evaluations (Application, Impact and ROI) are
developed for targeted solutions/projects and results are
reported to a variety of stakeholders.
Selected ROI Studies in Talent Management*
ROI Study On:
Recruiting
Technology Firm
Selection
Singapore
Hotel Chain
First Level
Manager
Development
Retail Car Company
Coaching
Global Hotel
Chain
Executive
Development
Large Canadian Bank
Promotion
Restaurant Chain
Leadership
Development
European Financial
Services Company
Situation:
ROI
Value:
Changed recruiting strategies radically, resulting in
increased quality of resumes, shorter time to fill
jobs, and less cost for recruiting.
231%
Implemented a new selection system to match
frontline employees with the culture of the hotel.
Result: early turnover rate reduced by 48%.
121%
Implemented a new leadership program for firstlevel supervisors. The program focused on key
leadership skills needed for this critical job in the
organization.
105%
Implemented coaching for executives to improve
profits, operational efficiencies, customer
satisfaction, and retention.
221%
Initiated an executive development program to
radically transform the bank; the comprehensive
program took almost 18 months to complete. The
payoff was derived through improvement in
retention, individual projects, and team projects.
62%
Initiated a program to develop new store managers
(critical talent). The most important part of the
program was a performance management
workshop where newly selected managers tackled
operational projects in their particular store. The
reaction to this evaluation was so significant that all
future groups were evaluated at this level.
298%
Implemented a 360° process for all leaders and
managers. Two years after the program was
initiated observed ratings had changed, bringing
the actual leader behavior in line with the expected
behavior.
150%
* All studies use the Methodology described in this presentation.
23
ROI Best Practices*
1.
The ROI methodology is implemented as a process improvement tool and
not a performance evaluation tool for the HR staff.
2.
ROI impact studies are conducted very selectively, usually involving 510% of HR programs.
3.
A variety of data collection methods are used in ROI analysis.
4.
For a specific ROI evaluation, the effects of HR are isolated from other
influences.
5.
Business impact data are converted to monetary values.
6.
ROI evaluation targets are developed, showing the percent of programs
evaluated at each level.
7.
The ROI methodology generates a micro level scorecard.
8.
ROI methodology data are being integrated to create a macro scorecard
for human capital.
9.
The ROI methodology is being implemented for about 3-5% of the HR
budget.
10.
ROI forecasting is being implemented routinely.
11.
The ROI methodology is used as a tool to strengthen/improve the HR/HC
process.
*Based on benchmarking with over 200 organizations using ROI routinely.
24
Sample of Published ROI Studies
Case Study Name
Measuring the ROI:
Key Impact Measures:
ROI
Cracker Box
Performance Management
(Restaurant Chain)
A variety of measures, such as
productivity, quality, time, costs,
turnover, and absenteeism
298%1
Federal Information
Agency
Internal Graduate Degree
Program (Federal Agency)
Retention, individual graduate projects
153%4
Healthcare, Inc.
Sexual Harassment
Prevention (Health Care
Chain)
Complaints, turnover, absenteeism, job
satisfaction
1052%2
Imperial National Bank
Executive Leadership
Development (Financial)
Team projects, individual projects,
retention
62%2
International Car Rental
First Level Leadership
Development (Auto Rental
Company)
Various measures – at least two per
manager
105%7
MetroTransit
Absenteeism
Control/Reduction Program
(Major City)
Absenteeism, customer satisfaction
882%2
Midwest Electric
Stress Management
Program (Electric Utility)
Medical costs, turnover, absenteeism
320%2
National Crushed Stone
Skill-Based Pay
(Construction Materials
Firm)
Labor costs, turnover, absenteeism
805%2
National Steel
Safety Incentive Plan (Steel
Company)
Accident frequency rate, accident
severity rates
379%2
Nations Hotel
Executive Coaching (Hotel
Chain)
Cost reduction, sales growth, operating
efficiency, retention, and customer
satisfaction
221%5
Nextel Communications
Diversity (Communications
Company)
Retention, employee satisfaction
163%6
Southeast Corridor Bank
Retention Improvement
(Financial Services)
Turnover, staffing levels, employee
satisfaction
258%3
United Petroleum
E-Learning (Petroleum)
Sales
206%2
VA Sunshine Healthcare
Network
Competency Development
(Veteran’s Health
Administration)
Time savings, work quality, faster
response
159%4
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References for Published Studies
1. In Action: Measuring Return on Investment, Volume 3. Patricia P. Phillips, Editor; Jack
J. Phillips, Series Editor. American Society for Training and Development, Alexandria,
VA, 2001.
2. The Human Resources Scorecard: Measuring the Return on Investment. Jack Phillips,
Ron D. Stone, Patricia P. Phillips. Butterworth-Heinemann, Woburn, MA, 2001.
3. In Action: Retaining Your Best Employees. Patricia P. Phillips, Editor; Jack J. Phillips,
Series Editor. American Society for Training and Development and the Society for
Human Resource Management, Alexandria, VA, 2002.
4. In Action: Measuring ROI in the Public Sector. Patricia P. Phillips, Editor. American
Society for Training and Development, Alexandria, VA, 2002.
5. ROI at Work: Best Practice Case Studies from the Real World. Jack J. Phillips and Patti
P. Phillips, Editors. American Society for Training and Development, Alexandria, VA,
2005.
6. In Action: Implementing Training Scorecards. Lynn Schmidt, Editor; Jack J. Phillips,
Series Editor. American Society for Training and Development, Alexandria, VA, 2003.
7. The Leadership Scorecard, Jack J. Phillips and Lynn Schmidt, Butterworth-Heinemann,
Woburn, MA, 2004.
Additional Reading
Investing in Your Company’s Human Capital: Strategies to Avoid Spending Too Much or
Too Little. Jack J. Phillips, New York, NY: Amacom 2005.
Proving the Value of HR: Why and How to Measure ROI. Jack J. Phillips and Patricia P.
Phillips. Society for Human Resource Management, Alexandria, VA, 2005.
Return on Investment in Training and Performance Improvement Programs,2nd Edition,
Jack J. Phillips. Butterworth-Heinemann, Woburn, MA, 2003.
Project Management Scorecard. Jack J. Phillips, Tim Bothell, G. Lynne Snead. ButterworthHeinemann, Woburn, MA, 2002
The Bottomline On ROI. Patricia P. Phillips, Center for Effective Performance, 2002.
How to Measure Training Results: A Practical Guide to Tracking the Six Key Indicators.
Jack J. Phillips, Ron D. Stone. McGraw-Hill Publishing, New York, NY, 2002.
The Consultant’s Scorecard. Jack J. Phillips, McGraw-Hill Publishing, New York, NY, 2000.
HRD Trends Worldwide: Shared Solutions to Compete in a Global Economy. Jack J.
Phillips. Butterworth-Heinemann, Woburn, MA, 1999.
A New Vision for Human Resources. Jac Fitz-enz and Jack J. Phillips. Crisp Publications,
San Francisco, CA, 1998.
Accountability in Human Resource Management. Jack J. Phillips. Butterworth-Heinemann,
Woburn, MA, 1996.
In Action: Measuring Intellectual Capital. Patricia P. Phillips, Editor, Jack J. Phillips, Series
Editor. American Society for Training and Development, Alexandria, VA, 2002.
In Action: Performance Analysis and Consulting. Jack J. Phillips, Editor & Series Editor,
American Society for Training and Development, Alexandria, VA, 1999.
In Action: Coaching for Extraordinary Results. Darelyn J. Mitch, Editor; Jack J. Phillips,
Series Editor. American Society for Training and Development, Alexandria, VA, 2002.
26
The ROI Fact Sheet
Origin/Development
• The ROI Methodology™ was developed by Dr. Jack J. Phillips in the 1970s, refined through application
and use in the 1980s, and implemented globally during the 1990s.
• First impact study – 1973, Measuring the ROI in a Cooperative Education Program, for Lockheed-Martin
• First public presentation on the methodology – 1978, ASTD Annual Conference
• First book published to include methodology – 1983, Handbook of Training Evaluation and Measurement
Methods, Gulf Publishing (this was the first USA book on training evaluation)
• First one-day public workshop –1991, Birmingham, Alabama
• First two-day public workshop –1992, Johannesburg, South Africa
• First case study book published – 1994, Measuring Return on Investment, ASTD
• First international partnership established – 1994, Indonesia
• First public certification workshop – 1995, Nashville, Tennessee
• ROI Network organized - 1996
• First ROI Network Conference –1997, New Orleans, Louisiana
• First international ROI Network conference – 2002, Toronto, Canada
• First ROI in Government Conference – 2003, Gulfport, Mississippi, Co-sponsored by the University of
Southern Mississippi
• First ROI software release – 2003, KnowledgeAdvisors
• On-line ROI certification launched – 2006, University Alliance
• ROI Certification offered as part of Masters and Ph.D. degree – Capella University, 2006.
Use
• Over 3,000 organizations are using the ROI methodology, through planned implementation.
• 2,000 organizations have formally implemented the methodology through ROI Certification™ conducted by
the ROI Institute.
• approximately 5,000 impact studies are conducted annually in learning and development and human
resources.
• At least 200 public sector governmental units are using the methodology.
• ROI implementation was first pursued in manufacturing, then moved to service, healthcare, non-profits,
governments, and is now in educational systems
Applications
Typical applications include:
•
•
•
•
•
•
•
Apprenticeship
Career Management
Competency Systems
Diversity
E-Learning
Coaching
Information Assurance
•
•
•
•
•
•
•
Gainsharing
Meetings and Events
Management Development
Leadership Development
Organization Development
Orientation
Recruiting
• Safety & Health Programs
• Self-Directed Teams
• Skill-Based/KnowledgeBased Compensation
• Technology Implementation
• Total Quality Management
• Wellness/Fitness Initiatives
Articles and Publicity
• Over 60 articles have been published on the ROI methodology in major publications in 20 countries.
• The ROI methodology has been a cover story on at least 15 publications, magazines, and journals.
• At least 50 interviews in major global business and professional publications
• Over 25 radio and TV interviews in different countries
© 2006, ROI Institute, Inc.
Phone: 205-678-8101 ∗ Fax: 205-678-8102
Email: info@roiinstitute.net
27
The ROI Fact Sheet
Books
• Sixteen books have been published on the ROI methodology and its application (www.roiinstitute.net)
• Primary reference – Return on Investment in Training and Performance Improvement Projects, 2nd
Edition, Jack J. Phillips, Butterworth-Heinemann, Woburn, MA, 2003 (originally published in 1997)
• Award winning book – Bottomline on ROI, Patti P. Phillips, CEP Press, Atlanta, GA, 2002 (received ISPI
award)
Case Studies
• Over 100 case studies published in books, journals, and industry publications
• Four-volume set published by ASTD in 1994, 1997, 2001, and 2005
• First public sector case book – 2002, published jointly by the International Personnel and Management
Association and the American Society for Training and Development
• First International case book – 2005, Ireland published by Skillnets
• International case studies under development in 12 countries
Workshops (One-Day, Two-Day, and Three- Day)
• Approximately 200 one-day workshops conducted with over 8,000 participants
• Approximately 500 two-day workshops conducted with more than 15,000 specialists and managers
attending (offered in almost every major international city)
• Routine schedules of one-day, two-day, and three-day workshops offered in the USA by ASTD
(www.astd.org) and through partners around the world
ROI Certification™
• Five-day workshop plus two work products lead to certification for ROI implementation
• Over 3,000 professionals have attended certification, representing over 2,000 organizations in at least
50 countries
• Certifications offered routinely about 25 times per year both internally and publicly by the ROI Institute
(www.roiinstitute.net)
• On-line certification begins every month-six months duration (www.roiinstituteonline.com)
Global Implementation
• First implementation of the ROI methodology outside the USA – 1992, South Africa
• First certification in non-English language – 1995, Italy
• Implementation is accomplished through partners in various countries
• Implementation is currently occurring in 44 countries, with additional implementations planned in other
countries
• Books published in 28 languages
ƒ Twelve international case study books in development or in the planning stages
Phone: 205-678-8101 ∗ Fax: 205-678-8102
Email: info@roiinstitute.net
28
Jack J. Phillips, Ph.D.
As a world-renowned expert on accountability, measurement and evaluation, Dr. Phillips provides consulting
services for Fortune 500 companies and major global organizations. The author or editor of more than 50
books, Phillips provides workshops and conference presentations throughout the world.
His expertise in measurement and evaluation is based on more than twenty-seven years of corporate
experience in five industries (aerospace, textiles, metals, construction materials, and banking). Phillips has
served as training and development manager at two Fortune 500 firms, senior HR officer at two firms,
president of a regional bank, and management professor at a major state university.
His background led Phillips to develop the ROI Methodology⎯a revolutionary process that provides bottomline figures and accountability for all types of learning, performance improvement, human resources,
technology, and public policy programs.
Phillips regularly consults with clients in manufacturing, service, and government organizations in 44 countries
in North and South America, Europe, Africa, Australia, and Asia
Books most recently authored by Phillips include Investing in Your Company’s Human Capital: Strategies to
Avoid Spending Too Much or Too Little, Amacom 2005; Proving the Value of HR: How and Why to Measure
ROI, SHRM 2005; The Leadership Scorecard, Elsevier Butterworth-Heinemann 2004; The Human Resources
Scorecard: Measuring the Return on Investment, Elsevier Butterworth-Heinemann 2001; Building a Successful
Consulting Practice, ASTD 2002; The Consultant’s Scorecard, McGraw-Hill 2000; Managing Employee
Retention, Elsevier Butterworth-Heinemann, 2003; Return on Investment in Training and Performance
Improvement Projects, 2nd Edition Elsevier Butterworth-Heinemann 2003; The Project Management Scorecard,
Elsevier Butterworth-Heinemann 2002; How to Measure Training Results, McGraw-Hill 2002; and Performance
Analysis and Consulting, ASTD 2000. Phillips served as series editor for ASTD’s In Action casebook series,
one of ASTD’s more ambitious publishing projects with 30 titles. Now, he serves as series editor for Elsevier
Butterworth-Heinemann’s Improving Human Performance series and Pfeiffer’s new series on Measurement
and Evaluation.
Phillips has received several awards for his books and his work. The Society for Human Resource
Management gave him its highest creative award for an ROI study and an award for one of his books. The
American Society for Training and Development gave him its highest award, Distinguished Contribution to
Workplace Learning and Development. Meeting News named Phillips one of the 25 most influential people in
the Meetings and Events industry, based on his work on ROI for the industry.
Phillips has undergraduate degrees in electrical engineering, physics, and mathematics; a master’s degree in
decision sciences from Georgia State University; and a Ph.D. in human resource management from the
University of Alabama.
Jack Phillips has served on several boards of private businesses – including two NASDAQ companies – and
several non-profits and associations, including the American Society for Training and Development. He is
Chairman, ROI Institute, Inc. and can be reached at (205) 678-8101, or by e-mail at jack@roiinstitute.net.
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