PERFORMANCE
MASTERY
Understanding your needs. Delivering results.
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Measuring Performance Improvement Initiatives How do you measure the effectiveness of your performance improvement intervention? Several methods of measuring performance improvement were discussed at the annual conference of ASTD, the American Society for Training and Development. Five of those methods were Time to Competence, Benefit-to-cost Ratio, Return on Investment (ROI), Number of Performance Gaps, and Productivity Ratio. Time to competence. Compare the time to competence before your performance improvement intervention and after your intervention. How much faster does an employee become competent in his or her role as a result of your performance improvement intervention? Does the time savings substantiate your performance improvement intervention? Benefit-to-cost Ration (BCR). This ratio compares total program benefits divided by total program costs. For example, let's say your intervention had a $500,000 total benefit and $125,000 in total costs. The BCR = $500,000/$125,000 = 4. This 4:1 ratio of savings costs means your company received $4 in return for each $1 spent on your intervention. Return on Investment (ROI). What ROI would decision-makers like to see from your performance improvement intervention? A simple formula for ROI = [(Total benefits - Total costs)/Total costs] x 100. Using the example above, where your intervention had $500,000 in total benefits and $125,000 in total costs, the ROI% = [($500,000 - $125,000)/$125,000] x 100 = 300% return on investment. Again your organization receives $4 in return for each $1 spent, because a 300% return is equal to a ratio of 4:1. Number of performance gaps. Did the number of performance gaps decrease as a result of your intervention? Better yet, did all of the performance gaps disappear? Productivity ratio. What is the productivity ratio of employees who have participated in your intervention compared to employees who have not participated in your intervention? For more information on how to measure your own performance improvement initiatives, feel free to email me or call me at (317) 791-0570. |
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