Calculating ROI:

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Calculating ROI
Ensuring OD/HR Initiatives Affect
the Bottom Line

April 28th, 2005
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Agenda
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Panelists

• Anthony Chartrand
• Viejas Casino, VP of HR
• Wayne Darbeau
• Port of San Diego,
• VP of Administration
• Sue Stevenson
• Elan Pharmaceuticals, VP Global HR
• Ken Ruggiero
• Goal Financial, CFO

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Commercial break

• And now a brief message from one of our
• trusted partners
• Paul Drolson
• Principal
• Wealth Advisors

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Calculating What YourRetirement Plan Will Provide

• Many factors may affect the amount of money
  available to you during retirement
• Current savings
• Contribution level
• Rate of inflation
• Federal and state tax rate
• Years until retirement
• Rate of return on investments

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Impact of ROI onRetirement Savings

• 200,000 in savings
• Saving 8,000 per year
• Retiring in 20 years
• Federal tax rate 25
• State tax rate 9.3

• Annual retirement income of 60,000 is needed in
  todays dollars assuming a 3.1 inflation rate

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The Problem with ROI

• MATH --- It is difficult to solve an equation
  with different units on each side of the
  equation Thus 8th grade algebra was invented
• OD Initiatives --- Often the money you invest
  does not directly result in hard dollar savings,
  nor, revenues Rather the OD/HR initiative
  impacts or influences some behavior, process, or
  structure, which in turn can be correlated with a
  hard dollar cost savings or revenue increase.

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Traditional Approach to ROI
Return on Investment (? Revenue ?Costs)
Inputs (Cost in Dollars)

When the units in A and B are expressed in
dollars
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Our Approach to ROI
Influences/ Impact Variables (Quality, Time,
Cost)
Return on Investment (? Revenue
? Costs)
Inputs (Cost in Dollars)
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• Tony Chartrand
• Viejas Casino
• VP of Human Resource

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Basic Elements of Measurement

• Cost
• Time
• Quality
• Satisfaction
• Effects on business priority (i.e. Revenue)
• TTP (Time-to-productivity)
• Also used as an early warning system

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Effects of Human Behavior on Business

• U.S. Companies Lose
• ½ their investors in 1 year
• ½ their employees in 4 years
• ½ their customers in 5 years
• A 5 swing in customer retention can
• result in a 25 swing in earnings
• Frederick Reichheld The Loyalty Effect

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Our Business The Entertainment Experience

• Major Components of a Program
• Branded Hospitality Extreme
• Leadership
• Communication
• Guest Service Academy
• Performance Management
• Reward Recognition
• Team Member Entertainment

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(No Transcript)
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Measurement - ROI

• Secret Shopper
• Out of the Box
• Bus Surveys
• Balanced Scorecard service measures
• Supervisor-observed behaviors
• Training Value
• Retention
• Orientation TTP
• Guest comment exits
• Team Member Survey

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• Wayne Darbeau
• Port of San Diego
• VP of Administration

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Board of Port Commissioners
Vacant, Sylvia Rios, Stephen Cushman
Jess E. Van Deventer
William Hall
Robert Spane
Michael Bixler

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Satisfaction vs. Cultural
Is Driven by Leadership
Achievement Teamwork Stakeholder Input
Power Ego
LEADERS SHOULD DETERMINE IDEAL CORPORATE CULTURE
TO SUPPORT HIGH PERFORMANCE AND STRATEGY
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Cultural Survey Culture Change Alignment
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Culture and Performance
Kotter Heskett Study of 207 firms over an
eleven year periodas reported in their book
Corporate Culture and Performance
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Creating a Values-Based Culture
Constructive Culture at the Port of San Diego
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Port Leadership Tools for Culture Change

• Clear Vision
• Where are we going?
• Clear Strategy
• How we going to get there?
• Clear Expectations
• What do you expect of me?

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Employee Performance is Sustained by Culture

• Accountability
• Take responsibility to get the job done
• Initiative
• Self-motivated
• Self-managed
• Creativity/Innovation
• Integrity
• Teamwork

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Targeted OD Programs Create Ideal Culture P.I.P.E

• MBTI, DISC, OCES, etc.
• Customer Satisfaction Survey
• Employee Satisfaction Survey
• Organizational Culture Survey
• 360º Feedback Instruments
• Leadership Impact (LI) Survey
• Executive Coaching

Assessments/Surveys
Program Offerings

• 7 Habits of Highly Effective People
• Imagine 21 Fast Track to Change
• Project Management
• Problem Solving Decision Making
• Focus
• Ethics in the Workplace
• Writing Advantage Plus
• The 4 Roles of Leadership
• Supervisory Training
• Meeting Management
• Presentation Skills-

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Measure for Impacts in Key Performance Areas
THE PORT'S "ROI" METHOD

• Organizational Assessment Program (OAP) 1999
• Conducted in conjunction with Port Staff,
  Employee Vision Committee, and Walsh Associates
• 76 Response Rate
• Employee Satisfaction Survey 2001
• Conducted by ViewPoint America
• 67 Response Rate
• Employee Satisfaction Survey 2002
• Conducted by e-Perception
• 87 Response Rate
• Organizational Culture Effectiveness Survey
  2004
• Conducted by The Pacific Institute and Human
  Synergistics with 87 Response Rate

What gets measured, gets done.
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Findings
Develop Findings
Use of Customer Satisfaction Data
Recommend Good Place To Work
Job Satisfaction
Feel Appreciated
2001
2002
2004
What gets fed back, gets done well.
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Ports COMPASS Balanced Scorecard Approach
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The Business Analysis Process
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• Sue Stevenson
• Elan Pharmaceuticals
• VP of Human Resource

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Research

• HRPS Survey
• UK DTI and CIPD
• Royal Bank of Scotland
• Sears

.Conclusions..
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Measuring Efforts

• HR Measurement
• Operational Efficiency of HR
• Human Capital Health
• Financial Valuation methods
• Cost-based approaches
• Market-based approaches
• Income-based approaches

And of course ROI
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Challenges Calculating ROI

• Benefits-Cost/Expense ROI
• Identifying Costs v
• Quantifying Costs v
• Identifying Benefits v

• Quantifying Benefits .!!

Yet need to ensure that initiatives impact
the Bottom Line
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Return on Intuition?

• Confidence How Winning Streaks and Losing
  Streaks Begin and End
• Prof. Rosabeth Moss Kanter
• Defines confidence as an expectation of a
• positive outcome. Its a belief that actions
• will result in success.

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• Ken Ruggiero
• Goal Financial
• Chief Financial Officer

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Goal Financial, LLC - Quick Facts

• Established in January 2001
• Privately held Company
• 10th largest holder of Federal Student Loans
• 5 billion of Federally guaranteed student loans
  to over 142,000 students
• Experienced management team
• 200 employees (gt75 in call center)
• 40,000 sf facility in San Diego 5,000 sf
  facility in Alexandria, VA

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Cumulative Loan Origination Volume and Borrowers
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Definition of OD to Participants
Organization Development
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Definition of OD for Financial Executives
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Goals Investment in Organizational Development

• Team Building
• Behavior Testing
• Mission, Vision, and Values
• Goal Setting Models
• Coaching
• C Level
• VPs
• Directors
• Selection Methodology and Testing
• Executives
• Call Center Agents

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ROI Relies On Intuition
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The ROI on any OD Initiative is Simply
Calculated
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Return on Investment the MATH Approach
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• Question Answer