ROI on ODHR Initiatives by yurtgc548

VIEWS: 9 PAGES: 44

									  Calculating ROI:

Ensuring OD/HR Initiatives
  Affect the Bottom Line



             &

       April 28th, 2005      1
Agenda
7:30am Breakfast & Networking

8:00am Welcome & Introductions – Peter Leets
8:05am Calculating the ROI for HR/OD
       Initiatives – Michael Brainard
8:15am Panel Presentations

9:00am Question & Answer

9:25am Conclusion – Michael Brainard
                                           2
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
                                          3
Commercial break…
And now a brief message from one of our
trusted partners:


            Paul Drolson
              Principal
            Wealth Advisors


                                          4
Calculating What Your
Retirement 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   5
Impact of ROI on
Retirement Savings
•   $200,000 in savings    • Annual retirement income
•   Saving $8,000 per year   of $60,000 is needed in
•   Retiring in 20 years     today’s dollars assuming a
                             3.1% inflation rate
•   Federal tax rate – 25%
•   State tax rate – 9.3%
 Return on         Value in        Years of Income
Investment         20 Years        after Retirement
      4%            $546,057            4.9 Years
      8%            $836,760            8.3 Years
      12%          $1,289,239          16.8 Years
                                                      6
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….


                                                         7
Traditional Approach
to ROI



                                   Return on
        Inputs
    (Cost in Dollars)
                        ≤         Investment
                                   ( Revenue &
                                      Costs)




* When the units in A and B are expressed in dollars
                                                       8
Our Approach to ROI


                       Influences/              Return on
   Inputs                Impact                Investment
 (Cost in Dollars)      Variables              ( Revenue &
                     (Quality, Time, & Cost)       Costs)




                                                          9
Tony Chartrand
    Viejas Casino
VP of Human Resource


                       10
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

                                            11
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
                                           12
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
                                  13
14
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
                                          15
Wayne Darbeau
  Port of San Diego
 VP of Administration



                        16
Board of Port Commissioners
          Vacant, Sylvia Rios,
          Stephen Cushman
                                 Jess E. Van Deventer




                                                    William Hall
   Robert Spane




                                                        Michael Bixler




                                                                   17
Satisfaction vs. Cultural


                                         Achievement
                                          Teamwork
                                       Stakeholder Input




  Power & Ego

                LEADERS SHOULD DETERMINE IDEAL
                CORPORATE CULTURE TO SUPPORT HIGH
                PERFORMANCE AND STRATEGY
                                                    18
Cultural Survey:
Culture Change Alignment
            Align Systems to Vision/Strategy

Assess                                                     Future State
Current                                        Reward      Vision/Values
              Align           Build
 State                                          Value      Performance
            Leadership       Cultural           Based
                            Consensus
                                               Behavior




                              Cultural                        Vision
              Leadership                          LSI
 OCES                        Consensus                          &
                Impact                          Feedback
                              Building                        Values


                             IMAGINE 21

                                                                 19
   7-HABITS OF HIGHLY EFFECTIVE PEOPLE & Other P.I.P.E Programs
Culture and Performance
                               Defensive          Constructive
                                Culture             Culture

          Revenue                  166%                 682%

          Stock Prices              74%                 901%

          Net Income                1%                  756%

  Kotter & Heskett: Study of 207 firms over an eleven year period
   as reported in their book Corporate Culture and Performance      20
Creating a Values-
Based Culture




                     21
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?    22
Employee Performance is
Sustained by Culture
• Accountability
    Take responsibility to get the job done
• Initiative
    Self-motivated
    Self-managed
• Creativity/Innovation
• Integrity
• Teamwork
                                         23
Targeted OD Programs
Create Ideal Culture: P.I.P.E
Program Offerings                         Assessments/Surveys
   7 Habits of Highly Effective People    MBTI,     DISC, OCES, etc.
   Imagine 21: Fast Track to Change         Customer Satisfaction Survey
   Project Management                       Employee Satisfaction Survey
   Problem Solving & Decision Making        Organizational Culture Survey
   Focus                                    360º Feedback Instruments
   Ethics in the Workplace                  Leadership Impact (LI) Survey
   Writing Advantage Plus                   Executive Coaching
   The 4 Roles of Leadership
   Supervisory Training
   Meeting Management
   Presentation Skills-


                                                                      24
Measure for Impacts in
Key Performance Areas
• 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.”           25
  Findings
80.0%                                                                               76.0%
                                                        74.0%
                                                                      70.0% 69.4%                          70.0%
70.0%
                                           65.0%
                            60.0%
60.0%


50.0%               47.9%
                                                                                                   44.2%
            42.0%
40.0%


30.0%


20.0%


10.0%                  Use of Customer             Recommend – Good       Job Satisfaction   Feel Appreciated
                       Satisfaction Data             Place To Work
0.0%
        Use of Customer Satisfaction   Recommend - Good Place to        Job Satisfaction      Feel Appreciated
                    Data                      2001
                                               Work         2002        2004
                            “What gets fed back, gets done well.”                                          26
Port’s COMPASS Balanced
Scorecard Approach
                     What are our financial objectives
                    with respect to achieving our vision?



At what internal processes
                               Financial
must we excel in order to
  satisfy our customers?

     Internal                                            Learning &
     Processes
                         Vision & Strategy                 Growth
                                                 What must we do to develop
                                                our internal resources in order
                                                 to excel at these processes?
                              Customer

                       At what customer measures do
                       we need to excel to produce the
                       desired financial performance?
                                                                        27
The Business
Analysis Process




                   28
Sue Stevenson
 Elan Pharmaceuticals
VP of Human Resource



                        29
Research
•   HRPS Survey
•   UK DTI and CIPD
•   Royal Bank of Scotland
•   Sears




         ………….Conclusions………..
                                 30
80%
           Performance Distribution Guidelines
           Performance Distribution
70%
           Merit Distribution
           Cash Bonus Distribution
60%        Equity Distribution

50%


40%


30%


20%


10%


0%
           1                     2                   3                      4                         5
           0                    0-2                 3-5                    6-8                       8-10
         0-50                  51-89              90-110                 111-150                   151-200
         0-50                  51-89              90-110                 111-150                   151-200




                BENCHMARKING COST CHALLENGE
                  Total Headcount Opportunity by Operating Company
                                       Estimated possible saving
      Headcount
           1200
                                                                                                                  GS&O   CPSV
                                                                                         Estimated
           1000
            800                                                                          Theoretical               21%    7%
            600
            400
            200
                  0                                                                                                TM
                      France   UK      Germany   Spain     Italy   Benelux     Nordic        CSR
                                                                                                                  18%       R&D
                      926      1103     834      384       444      82             380       276         4679 *
                      678       692     484      237       294      73             258       184         3150 *             54%

                                                                                                                                  31
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
                                  32
Challenges –
Calculating ROI
Benefits-Cost/Expense = ROI
• Identifying Costs √
• Quantifying Costs √

• Identifying Benefits √
• Quantifying Benefits ….!!

Yet need to ensure that initiatives impact the
Bottom Line                                      33
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. It’s a belief that actions
will result in success.

                                           34
Ken Ruggiero
   Goal Financial
Chief Financial Officer



                          35
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 (>75% in call center)
• 40,000 sf facility in San Diego & 5,000 sf
  facility in Alexandria, VA                   36
         Cumulative Loan Origination
         Volume and Borrowers
                      150,000                                                                                                                                                                                                                                                      $5,000,000,000

                      140,000                           # Borrowers                                                        Student Loans Originated
                      130,000
                      120,000                                                                                                                                                                                                                                                      $4,000,000,000
                      110,000




                                                                                                                                                                                                                                                                                                    Student Loans Originated
                      100,000
Number of Borrowers




                       90,000                                                                                                                                                                                                                                                      $3,000,000,000

                       80,000

                       70,000
                       60,000                                                                                                                                                                                                                                                      $2,000,000,000

                       50,000

                       40,000
                       30,000                                                                                                                                                                                                                                                      $1,000,000,000

                       20,000

                       10,000

                           0                                                                                                                                                                                                                                                       $0
                                08          10          12          02          04          06          08          10          12          02          04          06          08          10          12          02          04          06          08          10          12
                                   -   01      -   01      -   01      -   02      -   02      -   02      -   02      -   02      -   02      -   03      -   03      -   03      -   03      -   03      -   03      -   04      -   04      -   04      -   04      -   04      -   04
                                                                                                                                                                                                                                                                                            37
                                                                                                                                            Time Line
“Definition” of OD
to Participants

   Organization
   Development




                     38
“Definition” of OD for
Financial Executives




                         39
Goal’s 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                40
ROI = Relies On Intuition
    OD INITIATIVE                         ROI
Team Building
                         • Know your teammate = Faster
  Behavior Testing       Decisioning
  Mission, Vision, and
  Values                 • Smarter hiring decisions
  Goal Setting Models    • Increased efficiency of company

                         • Retention/Improvement of Key
Coaching                 Employees

Selection Methodology
   Executives            • Measures fit with Executive team
                         • Decreased Attrition, Increased
  Call Center Agents     Productivity
                                                              41
The ROI on any OD Initiative
is Simply Calculated……
                                  MARKETING CAMPAIGNS                                                                   WEEKLY VOLUME STATISTICS
                                                                                 CLOSING %                               APPLICATIONS
Campaign         Solicitations    Resp Rate Net MO Rate      ABI        % S2S   DOE    GOAL     Responses MailOuts     DOE    GOAL / 2nd     TOTAL     FUNDED #      FUNDED $          LCS
      1/6/2005          469,451        1.25%         0.19%     41,000     39%     51%     33%         6,879    1,230     179           518       697           876        29,742,650         52
     1/13/2005          764,952        1.64%         0.42%     41,000     46%     38%     58%         7,656    1,686     237           776     1,013           607        29,742,650         40
     1/20/2005          625,279        1.04%         0.18%     41,000     40%     39%     49%         7,788    1,659     337           736     1,073           852        29,742,650         40
     1/27/2005          782,728        0.88%         0.16%     41,000     44%     37%     46%         9,859    1,737     352           842     1,194           450        29,742,650         40
      2/3/2005          990,072        0.67%         0.13%     41,000     37%     22%     77%         9,100    1,626     300           776     1,076           562        23,174,330         39
     2/10/2005          950,819        0.69%         0.19%     41,000     56%     30%     59%         8,763    1,630     311           726     1,037           747        30,088,037         39
     2/17/2005          993,430        0.79%         0.19%     41,000     56%     38%     42%         7,835    1,606     292           729     1,021           784        29,358,634         37
     2/24/2005          866,214        0.82%         0.25%     41,000     76%     46%     44%         5,224    1,191     244           611       855           560        17,115,264         37
      3/3/2005        1,244,446        0.52%         0.18%     41,000     43%     45%     42%         6,762    1,491     241           733       974           965        29,246,490         37
     3/10/2005        1,162,351        0.48%         0.18%     41,000     55%     46%     50%         7,643    1,663     308           674       982         1,011        33,400,531         37
     3/17/2005        1,462,836        0.57%         0.19%     41,000     66%     47%     92%         7,663    2,416     334           678     1,012           436        12,880,248         43
     3/24/2005          956,655        1.18%         0.32%     41,000     66%     49%    105%         8,012    2,651     411           564       975           853        25,331,239         47
     3/31/2005          487,985        0.73%         0.23%     41,000     67%     45%     80%         8,405    2,619     504           609     1,113           742        20,906,580         53
      4/7/2005          527,464        1.11%         0.27%     41,000     65%     45%     68%         8,921    2,696     620           654     1,274           600        22,583,479         53
     4/14/2005        1,362,273        0.75%         0.27%     41,000     65%     45%     50%         7,640    2,340     579           686     1,265           574        32,614,799         52
     4/21/2005          825,000        1.05%         0.34%     41,000     65%     45%     50%         7,384    1,588     686           699     1,385           577        23,657,928         52
     4/28/2005          825,000        1.45%         0.34%     41,000     65%     45%     50%         8,843    3,089     655           760     1,415           595        24,399,251         69
      5/5/2005          925,000        0.70%         0.27%     41,000     65%     45%     50%         9,169    2,998     665           874     1,539           619        25,391,608         67
     5/12/2005          925,000        0.34%         0.16%     41,000     65%     45%      0%        10,002    2,842     730           982     1,712           651        26,700,513         66
     5/19/2005          956,000        0.93%         0.34%     41,000     65%     45%     50%         7,824    2,578     783         1,027     1,810           703        28,825,755         60
     5/26/2005          956,000        0.55%         0.23%     41,000     65%     45%     50%         5,755    2,168     790         1,049     1,839           779        31,923,249         50
      6/2/2005          956,000        1.29%         0.45%     41,000     65%     45%     50%         7,028    2,615     760         1,063     1,823           853        34,974,764         61
      6/9/2005        1,050,000        0.42%         0.19%     41,000     65%     45%     50%         6,898    2,641     739         1,102     1,841           906        37,162,407         61
     6/16/2005        1,050,000        0.69%         0.28%     41,000     65%     45%     50%         8,873    3,276     749         1,158     1,908           942        38,603,739         76
     6/23/2005        1,050,000        0.38%         0.19%     41,000     65%     45%     50%         6,745    2,675     790         1,186     1,976           972        39,834,424         62
     6/30/2005        1,050,000        1.23%         0.42%     41,000     65%     45%     50%         6,580    2,711     819         1,173     1,992         1,008        41,330,089         63
      7/7/2005        1,050,000        0.53%         0.27%     41,000     65%     45%     50%         5,996    2,572     816         1,141     1,957         1,045        42,853,904         60
     7/14/2005        1,050,000        0.42%         0.21%     41,000     65%     45%     50%         9,105    3,422     798         1,150     1,949         1,067        43,735,201         80
     7/21/2005        1,050,000        0.36%         0.22%     41,000     65%     45%     50%         7,073    3,045     821         1,200     2,021         1,067        43,728,799         71
     7/28/2005        1,050,000        1.21%         0.41%     41,000     65%     45%     50%         5,356    2,616     865         1,226     2,091         1,059        43,401,177         61
      8/4/2005        1,050,000        0.76%         0.30%     41,000     65%     45%     50%         5,250    2,673     861         1,227     2,088         1,065        43,657,356         62
     8/11/2005        1,050,000        0.33%         0.21%     41,000     65%     45%     50%         9,058    3,509     828         1,254     2,082         1,086        44,517,331         82
     8/18/2005        1,050,000        0.34%         0.23%     41,000     65%     45%     50%         7,870    3,149     853         1,290     2,144         1,104        45,271,873         73
     8/25/2005        1,050,000        1.13%         0.39%     41,000     65%     45%     50%         5,257    2,547     938         1,295     2,233         1,117        45,804,901         59
      9/1/2005        1,050,000        0.92%         0.35%     41,000     65%     45%     50%         4,900    2,533     935         1,279     2,214         1,135        46,536,799         59
      9/8/2005        1,050,000        0.34%         0.23%     41,000     65%     45%     50%         8,458    3,330     839         1,285     2,124         1,154        47,318,015         77
     9/15/2005        1,050,000        0.34%         0.24%     41,000     65%     45%     50%         8,685    3,433     809         1,330     2,139         1,163        47,686,235         80
     9/22/2005        1,050,000        0.89%         0.36%     41,000     65%     45%     50%         5,806    2,894     859         1,358     2,217         1,165        47,763,105         67
     9/29/2005        1,050,000        0.70%         0.26%     41,000     65%     45%     50%         5,021    2,791     887         1,357     2,245         1,175        48,168,740         65
     10/6/2005        1,050,000        0.88%         0.36%     41,000     65%     45%     50%         7,094    3,153     865         1,347     2,212         1,197        49,061,464         73
    10/13/2005        1,050,000        0.34%         0.24%     41,000     65%     44%     50%         7,088    2,913     856         1,318     2,174         1,215        49,830,928         68
    10/20/2005        1,050,000        0.44%         0.22%     41,000     65%     44%     50%         7,217    3,109     858         1,307     2,166         1,222        50,099,513         72
    10/27/2005        1,050,000        0.60%         0.25%     41,000     65%     44%     50%         5,406    2,793     860         1,305     2,165         1,217        49,904,283         65
     11/3/2005        1,050,000        0.99%         0.31%     41,000     65%     44%     50%         5,377    2,656     853         1,303     2,156         1,206        49,437,578         62
    11/10/2005        1,050,000        0.29%         0.18%     41,000     65%     43%     50%         6,625    2,845     832         1,286     2,118         1,197        49,094,553         66
    11/17/2005        1,050,000        0.28%         0.16%     41,000     65%     42%     50%         8,188    3,067     813         1,288     2,101         1,193        48,908,190         71
    11/24/2005        1,050,000        0.36%         0.19%     41,000     65%     40%     50%         5,742    2,655     815         1,288     2,102         1,188        48,714,251         62
     12/1/2005        1,050,000        0.89%         0.29%     41,000     65%     38%     50%         4,517    2,325     816         1,275     2,091         1,181        48,436,560         54
     12/8/2005        1,050,000        0.55%         0.24%     41,000     65%     36%     50%         5,344    2,545     788         1,246     2,034         1,177        48,275,336         59
    12/15/2005        1,050,000        0.29%         0.18%     41,000     65%     37%     50%         8,431    3,214     752         1,239     1,991         1,173        48,090,927         75
    12/22/2005        1,050,000        0.28%         0.16%     41,000     65%     41%     50%         7,302    3,047     767         1,254     2,021         1,163        47,673,868         71
    12/29/2005        1,050,000        0.93%         0.30%     41,000     65%     44%     50%         5,198    2,604     810         1,254     2,064         1,149        47,116,547         61
                     51,514,955        0.72%         0.26%                                                                                                  49,104     1,973,561,388



                                                                                                                                                                              42
 Return on Investment –
 the “MATH” Approach
       OD INITIATIVE                     RETURN ON INVESTMENT
Team Building
   Behavior Testing             • Retain 1 executive team member, >$50,000 in
                                  savings (search fees and relo)
   Mission, Vision and Values

   Goal Setting Models          • Increase efficiency in business. Less surprises
                                  during performance reviews - PRICELESS
Coaching
                                • Retains 1 executive - >$50,000 in savings
                                  (search fees and relo)
                                • Increase leadership and communication skills of
                                  director level and above - PRICELESS
Selection Methodology
   Executives                   • Save one placement fee plus relo >$50,000 in
                                  savings (search fees and relo)
   Call Center Agents           • $175,000 savings on training and recruiting
                                • 10% lift in application production = $10.7MM
                                                                                 43
Question & Answer



                    44

								
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