Before or After: Part 2 "The Process"
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
This will give you the numbers that you can plug into the Pro Forma ROI formulate.
“What might be
all the benefit, cost, and investment components”?
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.
- Controller for your
- 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
Until next time,
Article © 2006 Darryl
L. Sink & Associates, Inc.