Show Me the Money , livre ebook

SHOW ME THE MONEYOther Books by the Authors
Proving the Value of Meetings and Events: How and Why to Measure
ROI (with Monica Myhill and James B. McDonough)
How to Build a Successful Consulting Practice
Investing in Your Human Capital
Return on Investment Basics
Proving the Value of HR: How and Why to Measure ROI
ROI at Work
Make Training Evaluation Work
The Leadership Scorecard (with Lynn Schmidt)
Return on Investment in Training and Performance Improvement
Programs, 2nd EditionSHOW ME THE
MONEY
How to Determine ROI in
People, Projects, and Programs
Jack J. Phillips PhD
Patricia Pulliam Phillips PhD
BK
BERRETT-KOEHLER PUBLISHERS, INC.
San FranciscoShow Me the Money
Copyright ©2007 by Jack J. Phillips and Patricia Pulliam Phillips
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First Edition
Hardcover print edition ISBN 978-1-57675-399-6
PDF e-book ISBN 978-1-57675-523-5
2007-1
Book Producer: Publication Services, Inc. Production Manager: Susan Yates; Book
Designer: Foti Kutil; Production Coordinator: Megan Timian, Copyeditor: Dave Mason and
Jennifer Putman; Indexer: Nancy GerthTo:
Sarah Ryan, Jessica Ferry, Amanda Ryan,
Ashley Crowder, Brandon Crowder
The next generation—
May you enjoy your life’s work as much as we do.This page intentionally left blank CONTENTS
Preface ix
Acknowledgments xv
Chapter 1 The Value Evolution 1
Chapter 2 The ROI Methodology:
A Brief Overview 13
Chapter 3 Project Needs and Objectives:
Ensuring Business Alignment 35
Chapter 4 Reaction and Perceived Value 59
Chapter 5 Learning and Confidence 69
Chapter 6 Application and Implementation 83
Chapter 7 Impact and Consequences 95
Chapter 8 Isolation of Project Impact 117
Chapter 9 Show Me the Money:
Converting Data to Money 137viii • CONTENTS
Chapter 10 The Intangible Measures 161
Chapter 11 Project Costs and Calculating ROI 183
Chapter 12 The Business Case:
Forecasting Value, Including ROI 199
Chapter 13 Results Reporting 223
Chapter 14 Implementing and Sustaining ROI 243
Notes 259
Index 263
About the Authors 267PREFACE
The Need
In recent years, we have witnessed change in organizational accountability,
especially toward investment in people, programs, projects, and processes.
Project sponsors and those who have responsibility for project success have
always been concerned about the value of their initiatives. Today this
concern translates into financial impact—the actual monetary contribution
from a project or program. Although monetary value is becoming a critical
concern, it is the comparison of this value with the project costs that captures
stakeholders’ attention—and translates into ROI.
“Show me the money” is the familiar response from individuals asked to
invest (or continue to invest) in organizational efforts. At times, this response
is appropriate. At other times, it may be misguided; measures not subject
to monetary conversion are also important, if not critical, to most projects.
However, excluding the monetary component from a success profile is
unacceptable in this age of the “show me” generation. The monetary value is
often required before a project is approved. Sometimes, it is needed as
the project is being designed and developed. Other times, it is needed after
project implementation.
This issue is compounded by concern that most projects today fail to live
up to expectations. A systematic process is needed that can identify barriers to
and enablers of success and can drive organizational improvements.x• PREFACE
The challenge lies in doing it—developing the measures of value,
including monetary value, when they are needed and presenting them in a
way so that stakeholders can use them
• Before the project is initiated
• During design and development, to plan for maximum value
• During implementation, so that maximum value can be attained
• During post-analysis, to assess the delivered value against the
anticipated value
Show Me the Money is a guide that addresses all four scenarios.
A Guide to Showing the Money
Show Me the Money is a basic guide for anyone involved in implementing
major projects—human capital programs, technology implementations,
systems integration, new processes, Six Sigma, product design, new policies, and
procedures, or any other type of project where significant expenditures of time
and money are at stake. Strategies to assist in forecasting the value of the
project in advance and in collecting data during and after project implementation
are presented. This book uses a results-based approach to project
implementation, focusing on a variety of measures that are categorized into six data types:
1. Reaction and Perceived Value
2. Learning and Confidence
3. Application and Implementation
4. Impact and Consequences
5. Return on Investment
6. Intangibles
Show Me the Money is a step-by-step guide to identifying, collecting,
analyzing, and reporting all six types of data in a consistent manner that leads to
credible results.
Credibility Is Key
Show Me the Money focuses on building a credible process—one that will
generate a balanced set of data that are believable, realistic, and accurate,
particularly from the viewpoint of sponsors and key stakeholders. More
specifically, the methodology presented in this book approaches credibility
head-on through the use ofPREFACE •xi
• Balanced categories of data
• A logical, systematic process
• Guiding principles, a conservative set of standards
• A proven methodology based on thousands of applications
• An emphasis on implementing the methodology within an
organization to ensure that the process is sustained
• A procedure accepted by sponsors, clients, and others who fund projects
The book explores the challenges of measuring the hard to measure
and placing monetary values on the hard to value. It is a reference that
clarifies much of the mystery surrounding the allocation of monetary values.
Building on a tremendous amount of experience, application, practice, and
research, the book draws on the work of many individuals and organizations,
particularly those who have attained the ultimate levels of accountability
using the ROI methodology. Developed in an easy-to-read format and
fortified with examples and tips, this is an indispensable guide for audiences who
seek to understand more about bottom-line accountability.
Audience
The primary audience for this book are managers and executives concerned
with the valuation of projects, programs, processes, and people. Executives
generally are strongly committed to their projects; however, they need to see
value in terms they can appreciate and understand—money.
This book is also intended for professionals, analysts, and practitioners
who are responsible for evaluating the success of a project. It shows how the
various types of data are collected, processed, analyzed, and reported.
Another audience includes consultants, researchers, and professors who
are dedicated to unraveling the value mystery, trying to understand more
about the difficult and demanding challenges of developing measures and
values for a variety of target areas.
Target Areas
Show Me the Money is geared toward a variety of functional areas in
organizations. These areas include (but are not limited to)
• Human resources, human capital
• Learning and development, performance improvement
• Technology, IT systemsxii • PREFACE
• Meetings and events
• Sales, marketing
• Public relations, community affairs, government relations
• Project management solutions
• Quality, Six Sigma
• Operations, methods, engineering
• Research and development, innovation
• Finance, compliance
• Logistics, distribution, supply chain
• Public policy initiatives
• Social programs
• Charitable projects
The Difference
While other books attempt to address accountability in these and other
functional areas, Show Me the Money presents a methodical approach that can be
replicated throughout an organization, enabling comparisons of results. The
process described in this book is the most documented method in the world,
and its implementation has been phenomenal, with over three thousand
organizations currently using it in one function or another. While many
books tackle accountability in a certain function or process, this book shows
a method that works across all types of processes, ranging from leadership
development to the implementation of new technology and from educatio