ROI in Mentoring Programs

I can't remember where I stumbled across this, but it was interesting.

PART TWO: Return on Investment in Mentoring Programs – Myth or Reality?

Catherine Mossop, FCMC

Part One of this article was published on June 19, 2008. Read Part One now . . .

The following provides an introduction to the final 2 steps of outcome measurement for mentoring programs. The five step process incorporates:

Step 1: Background

Conduct a background assessment

Review the business strategy or corporate mission

Step 2: Review business issues and tactical plans

Review the human capital strategy and people issues

Step 3: On the job performance and individual learning goals

Step 4: Define and identify performance outcomes

Step 5: Determine program impact and ROI

Step 4: Define and identify performance outcomes:

Stakeholders will identify what performance outcomes are important to them. These may include:

Improvements in:

• Revenue & profit
• customer retention and expansion of products or services provided
• product quality
• employee engagement and retention

Reductions in:

• expenses/costs
• complaint escalations
• lost time
• absenteeism

Having a set of indicators that can be used to demonstrate progress during the investment years will serve to address the needs of funders and set the design guideline for program coordinators.

Step 5: Evaluation

Evaluation processes can be delivered by paper surveys, interviews, focus groups and on-line. The following provides samples of survey questions and concludes with the Phillips Method of calculating Return on Investment.

Sample survey questions - Mentoring for Leadership Development:

	As a result of mentoring:	Strongly disagree		Neutral		Strongly agree
a	I have a better understanding of my impact on others
b	I am more effective in performing my job
D	I have improved in my relationship management capabilities – manage interpersonal conflict effectively; member of a team
F	I have developed in core competencies for our organization

Please rate the impact of Mentoring on Organizational results:

		No impact		Neutral		High impact
a	Cost reduction
b	Improved job satisfaction
C	Improved student/teacher/work/client relations
E	Improved relations with stakeholders
F	Improved team work
G	Increased organizational commitment
H	Increased retention of staff
I	Improved productivity

Phillips Method to determine Return on Investment5
The Phillips Method is a comprehensive and credible method of determining return on investment for development. It comprises several steps and calculations to convert performance to financial values and does require measurable learning objectives to be identified at the onset of the program.

The Formula:

(Raw Value (A) X Confidence Factor (B)) X Direct influence factor (C) = Attributed Benefits

(The Sum of all Attributed Benefits (D) / all attributed costs (E)) X 100% = ROI

A – Raw Value: the attributed annual value of savings or gains before reductions to achieve a realistic value.

B – Confidence Factor: assign a confidence value that addresses the question: How confident am I that the raw value number is accurate and record in a _ %

C – Direct Influence Factor: the degree to which the program directly influenced the savings or gains in _ % (other factors that are taken into consideration might include an overall company mandate to change, a change in the business or other processes that may have influenced the outcome)

D – Attributed Benefits: The sum total of all adjusted and Attributed Benefit values for all participants in the program

E – Attributed Costs: The total of all Attributed Costs for the program – including design, facilitation, hourly rate of participants off the regular work, facilities etc.

(AXB) XC = Attributed Benefits (D)

S?D = Net Program Benefits

Net Program Benefits X 100 = ROI

Attributed Costs

Summary
Demonstrating the value and Return on Investment for mentoring and development programs assures ongoing investment to sustain the programs. The companies that develop their people build value for their organizations. This value is seen in innovation, improved decision making, producing better products and services, as well as recruiting higher caliber of talent, retention, and overall business performance. Within the not-for-profit sectors, funding agencies appreciate and are increasingly asking that service providers provide a strong business case for their investments. By demonstrating measurable outcomes, the business case is strengthened and demonstrates how the program truly makes a difference in the lives of people and communities.

Measure what you can, when you can to demonstrate the value of development.

Resources:

1. Fortin, J. 2003,Evaluating a Mentoring Program, Québéc, Les éditions de la fondation de l’entrepreneurship

2. Kirkpatrick, D.L. 1998, Evaluating training programs: The four levels, San Francisco, Berrett-Koehler

3. Kirkpatrick, D.L. & Kirkpatrick, D.J. 2005, Transferring learning to behavior: Using the four levels to improve performance. San Francisco, Berrett-Koehler

4. Peterson, D.B. 2002, Management Development: Coaching and mentoring programs, in K. Kraigner (ed), Creating Implementing, and managing effective training and development: state-of-the-art lessons for practice (pp. 160-191), San Francisco, Jossey-Bass

5. Phillips, JJ 2003, Return on Investment in training and performance improvement programs 2nd edition, Boston, Butterworth-Heinemann

6. Stober, D. R & Grant, A San Francisco (Eds.). Evidence based coaching handbook: Putting best practices to work for your clients. Hoboken, NJ. Wiley

About the Author:

Catherine Mossop, FCMC with nineteen years professional experience in Management Consulting specialized in succession and talent pool development, transition management and mentoring programs, launched Sage Mentors Inc in 2004 with the goal to make formal mentoring accessible to people in the workplace. She recently launched the first in Canada 12-month professional mentoring program for early identified leaders. During the many years leading Mossop Cornelissen & Associates, she earned the Fellow designation of The International Board for Career Management Certification (USA), was honoured for her contribution to the career development field with the Hall of Fame Award and was named Fellow of the Institute of Certified Management Consultants - one of only five women in Canada to receive such honour.

Contact:

Catherine Mossop, FCMC, Sage Mentors Inc.,