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Vol. 2, No. 3      February 07, 2006    

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Contact DSA
Darryl L. Sink & Associates, Inc.
One Cielo Vista Place
Monterey, CA 93940
Phone: 831.649.8384

Voicemail: 800.650.SINK (7465)
Fax: 831.649.3914
Workshops: Jane Sink, Vice President of Marketing

 

Today's Tip
ROI Before or After: Part 2 "The Process"

DSA thanks Ray Halagera, President and COO, Career Systems, Intl., who started us thinking about Pro Forma ROI and came up with this handy tool.

In the previous “tips column” we discussed the idea of Pro Forma ROI and that decision makers want to know before they invest what the return will be for learning or other performance interventions. We provided some definitions, a formula and a spread sheet calculating tool for calculating Pro Forma ROI.

In this Tips column we will describe the Pro Forma ROI Process and provide sample checklists on common learning and performance intervention benefits, costs, and investments for you to use.

The process for a Pro Forma ROI on any contemplated learning and or performance intervention is to list the benefit and cost components and then estimate the value of each in quantitative terms. Next, we estimate the investment in the learning and/or other performance intervention again in quantitative terms.

Click to view larger image...

This will give you the numbers that you can plug into the Pro Forma ROI formulate.

Pro Forma ROI (Click for larger image . . . )

“What might be all the benefit, cost, and investment components”? Click here for a handy checklist on each of the three component categories. Now, armed with the checklist and the calculator for Proforma ROI from the last tips column, you are all set. Well — not quite!

How will you get the actual numbers on salaries and benefits or facilities cost etc. to plug into the formula?

This is where you need to see someone associated with the financial information for your organization. They will have the real data to allow you to plug in accurate numbers in the formula. Here are a few possible sources.

  • Financial analyst
  • Controller for your area
  • Purchasing
  • Vendors
  • Your manager

Remember Proforma ROI is an estimate. Come as close as you can, but usually you don’t have to go too far before you can have a good idea of the value of one intervention over another. Stay practical, and have fun with the process.

Until next time,

Darryl

Article 2006 Darryl L. Sink & Associates, Inc.

Learning and Performance Tips

Welcome to Learning and Performance Tips
, a DSA newsletter for Instructional Designers and Performance Consultants. Each issue will include at least one proven tip to help you get the most out of your development and consulting efforts.

Did you miss out on a past issue? For access to all tips newsletters, send us your top "Tip" to jane@dsink.com.

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Copyright, Darryl L. Sink & Associates, Inc.
Monterey, California

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