At Booz Allen Hamilton, the McLean, Va. consulting firm, calculating return on investment (ROI) of a training program isn't the end of the line. ROI data becomes a component of the firm's value of investment measurement methodology.
Value of investment links value, risk and cost criteria to provide an extended cost/benefit and business-case analysis that addresses otherwise hard-to-quantify results. Once in place, the calculation serves as the foundation for making solid business decisions, managing those decisions and evaluating the results.
After determining the ROI of its executive coaching program, for example, Booz Allen Hamilton's Center for Performance Excellence (CPE) proceeded to a value of investment study. Scoring was assigned to intangibles, including certain service- and employee-satisfaction measures. The study answered such questions as: How effective was the CPE in offering support and information to those executives wanting a coach? Were the employees who report to those executives more satisfied with their leadership after the coaching?
The results validated the CPE's approach of combining external coaches with an internal program. "A higher qualitative value was placed on having an external executive coach rather than one of our internal coaches because of the assumed objectivity and because of the perception that the external coach is bringing a variety of experience to the table," says Ed Cohen, senior director of the CPE. "Having an internal program office was valued because of the ease of access to coaches and the support to both the executives and their supervisors in helping to understand when a coach is needed."
According to Cohen, setting up an initiative for a value of investment calculation generally takes about six weeks and costs about $20,000, assuming you're already collecting the information and conducting ROI analyses. Data from scorecards and other measurements feed directly into the calculation, requiring little additional investment of resources. —K.E.