Measuring Return on Investment - running the numbers

In today's episode of the Coaching Cafe, we continue our conversation around measuring the return on investment from coaching in the workplace. We all know that coaching works, but we have to be able to justify the investment and put clear measurements in place to support the workforce strategy or the business case. In our last webinar, we explored the qualitative measurements with particular focus on the Kirkpatrick model, and in this webinar, Joan Bridget as we explored the numbers site of ROI, by looking at some of the key numbers based metrics. Well, a great welcome to you all. Welcome to Friday, if you're listening to this webinar live. It's Natalie Ashton here with you from Overntool Coaching. And today, we are looking at measuring the return on investment and running the numbers. And we've just been having a bit of a laugh in the chat, because I ask everyone to just, you know, let me know if they can hear me okay and see the slides okay. And then I say hi to everyone and it feels like the old days were romper brewing if anyone remembers those. So we're kind of going way back as well. So anyway, so the key to introducing today's idea is around measuring return on investment and running the numbers in our cafe today. Before I begin, I'd just like to acknowledge your traditional owners, the custodians on the lands, on which we're all meeting today across Australia and internationally. Feel free to jump into the chat, tell us where you're dialing in from. And the traditional owners, the custodians on the lands, on which we're all meeting, and their continuing connection to the land and waters and communities of Australia. We pay our respects to them and to their elders past, present and emerging. Well, for those of you there I am in full zoom mode, but here I am as well. For those of you that have been following our coaching cafes over the last two or three weeks, we're going to continue out, we've been talking about building a coaching culture, the implementation of coaching culture into our organization. And we're going to continue that discussion today. I want to specifically continue our discussion around measuring return on investment. We've already done one webinar on return on investment. I want to follow that up today. And we want to run the numbers. So for those of you who will need a couple of props, you will need your oversized calculator. This oversized calculator is so old. It's even got my name on it from my early banking days when you had to write your name on like your stapler and your scissors. So people didn't knock them off. Or if you don't have a big one, use this one, which is a slightly smaller version. Or for those fancy people out there, yes, get out your fines, you can do it on your, you can run the calculations on your phones. But firstly, I like to use an oversized calculator for doing something about hitting those numbers is actually quite fun. Anyway, so we will be doing some numbers. You'll have to do some calculations with me today as we go. We are all about, so welcome. If you are new to the coaching cafe, we are all about creating a community. We come together every Friday at this time, 12 noon, nalbin time to create a shared learning experience, have thought provoking conversations. And I love the coaching cafe because our alumni is on the line. Everyone has come and joined OpenDore, done our programs over the years. There's an enormous wealth of knowledge and experience on the line. And so it's wonderful for you to all share that. And thank you, Carol, for paying your respects to the one jury elders past and present as well. So feel free to interact with us via the chat if you would like to. I can pick up your comments, your ideas there. So if you're new, welcome. If you're a regular, wonderful to have you. As you may know, this webinar has ICF-CCE use attached to it so you can get the CCE use certificate. And I will provide that at the end of the webinar. So I'll stop the recording, provide that at the end of the webinar. Unfortunately, you do have to listen to them live to receive CCE use, but we'll drop them in for you at the end of the webinar. All right, let's get into it, shall we? So we've been talking about the coaching cultural framework of last three or four weeks, which is OpenDore's coaching cultural framework. Featured in my book, bring out their best. Actually, the new framework will be featured in the new edition. And we've been focusing on that element of the enablers of the implementation of coaches so the evaluation feedback loop, that red box there, that red piece of the pie, where we think about return on investment. So all of these enablers, the bottom half of the of the framework, enable the workforce strategy, enable the strategy of implementation within the workplace. So it's nice to narrow down on just one of the elements and we've been talking about that, as I said, over the last three or four weeks. If you're interested in the past webinars, they are on our blog page. So I know it does our blogs, they look absolutely gorgeous. So feel free to jump on there and have a little look as well. Oh, and I did should mention also featured in our deployment of organizational coaching as well. So how do we measure return on investment? Let's get into the discussion. So we have different types of measurements. There could be cultural measurements, there could be transaction based measurements. So cultural measurements, I'm thinking about cultural surveys, pulse surveys, any kind of surveys that we do of our people, transaction based measurements, all those numbers and statistics that we're keeping if your organization has a transaction base. For example, things like a number of calls, customer service satisfaction levels, or any real transactions that you're actually processing. We've got customer based measurements as well, customer satisfaction rates, the service level standards, all sorts of things around those. So lots of numbers we can collect there. We've got financial measurements, so increase in profit, increase in anything, really the return on investment, the increase, any financial members measurements such as increase in the training dollar, all of those kind of things. And we know that we can measure return on investment and results at the individual team department, the whole of organization or the regional level. So one of the important things I've been talking about when it comes to return on investment is people often ask me, but how do you measure the return on investment from coaching? So the answer to that question is tell me what you're measuring now. So tell me what base lines, tell me what measurements you're collecting now, because then we can use those measurements as a baseline. We can gather those measurements as a baseline, do the coaching programs, implement the coaching over a period of time, and then come back in six months time or a years time or two years time or five years time and say how did we go? And by the way, I do like those checkpoints six months, one year, two years, five years to say how are we traveling? And probably the best example that you'll know about at the moment that we've been talking about also is Air Force, our Air Force where open doors involved in the implementation of coaching at Air Force, where five years on now and looking at the return on investment again. So it's important when you get put on the spot to say yeah, but how do you measure it? You go well, there is a lot of different measurements we can use. Let's talk about what we're measuring now. Let's talk about what outcomes do we want to see change? We're in what outcomes do we want to see change? What are we trying to achieve? But if we want to see a change, for example, some of our cultural measurements, we need to measure them now, then implement the coaching and then come back a measure. We can't just make up measurements because we need some form of baseline. So let's go back to what we're using. Feel free at any point, jump in, give you your ideas as we go along. Because I'm keen to hear about what do you measure in terms of specific numbers as well? So feel free to jump into the chat, tell me what numbers you're measuring at the moment and we'll see if we can use those to work up some examples together. Alrighty, so I've just got to get my chat in the right spot. There we go. Awesome. So in our previous webinar on return on investment, you can pick it up off our blog. We introduce you to the Kirkpatrick evaluation model. And the reason why I love Kirkpatrick, even though it's quite old, is that it was specifically designed to evaluate training programs. Pick this up from our previous webinar. But there's four levels that we actually discussed that you can evaluate training programs. And what we're interested in today is the behavioral level, which is the extent to which the behaviors changed and people are applying learning back into the workplace. And we're also interested in the results. So the debris to which the outcomes been measured. Now in our last webinar, we talked about more qualitative ways of measuring these two elements, the behavioral changes results. And I showed you some of the results that Air Force has given. Today, we want to turn it into the numbers. And this is always quite exciting for me. So I like to really think about what are the numbers. How can we actually gather the numbers and do the numbers so that we can then build that into a business case? You know that we're really passionate that it's not just about learning something on the programs, we want people to go away and actually implement. So what did the change of behavior look like? How can you turn that into some numbers? And what to what extent did the actual outcomes get achieved as well? There's the references there if you wanna actually look them up. All right, so by a show of hands or feel free to pop a message into the chat box, let's just who's good at maths? And we've got to need statisticians, or mathematics people, or just teachers, and people that are super good at maths. Come on, tell us who's good at maths because I'm gonna need you to audit my numbers as I go. Tell us who's good at maths, anyone, anyone good at maths? Well, the good news is that for what we're doing today, you don't actually have to be good at maths. And I looked at this picture and I just wanna shout out to all of those mums and dads at the moment who are trying to teach their kids maths during lockdown. So unfortunately, that is not me because my child is at a teacher level of maths now that it's way beyond me. But shout out to all the mums and dads that are teaching their kids maths when we're in lockdown and you're trying to do your own work at the same time. Elizabeth, can you say you're not put at maths? Well, guess what? I think you'll be okay. Just get that oversized calculator and you'll be okay. We're gonna work this together. Here we go. All right, so we're gonna calculate the financial return on investment and with return on investment, by the way, it's a financial measurement. It's out there in the world, used all the time. It's actually used to evaluate the efficiency of an investment to compare different investments. So for example, if I had $1,000 to spend, should I spend it on three people on our leader as coach program or should I buy copies of, bring out their best? So I've got $1,000 to spend, which investment is going to give me the better return on investment, that's what we're really looking for. And so that's the way it's used in commercial practice, but the way we use it is to go, what did we achieve? What is the return? So this is the actual formula. It's not hard. I know it off by heart. There's a couple of formulas that I just know off by heart, I can punch out the numbers. And you can really start to do this all as well if you're not already doing it. So return on investment, it's the calculated gain from the investment minus the cost. You divide that by the cost of the investment and then you times it by 100 to get a percentage. So the gain minus the cost, divide it by the cost, times the by 100 to get the percentage. Now that the work that we have to do mostly is to get the gain. So we have to be able to think about what we've achieved in our coaching and how do you translate that into a number. That's the main work you've got to do because after that it's simple to actually do the calculations. So let's have a think about it. Say I coached a person and because of that they didn't go on sick leave or they say I coached a person who was having unplanned absenteeism. So they're not at work, but I still have to continue to pay them and say that I coach them and over time they were able to come back to the workplace 'cause they feel more psychologically safe or whatever it might have been. We can take the cost. Now I'm cutting all of the human emotion out of this. We're just doing the numbers today, okay? So I hope I don't come across like a cold hard, you know what? But we're just running numbers today. That's how purpose. So you can think about what is the cost of having someone at home not working and on sick leave? What's the cost of the sick leave? And then you can start to think about well if I coached the person, what's the gains that I'm actually getting? Or for example, if you increase number of sales, what's the gain that we're actually achieved? If you increase the number of customer satisfaction, then if customer satisfaction, if people are getting their issues solved in the first time they speak to you, so numbers of calls are going down or the calls have been transferred to, they've been transferred to people that actually need it. So customers are going upset, satisfaction levels are going up because more calls have been answered but they're not being re-answered if that makes sense. So there's a lot of different ways you can think about what are the numbers that we're measuring and what's the actual gain? So calls are going up in the customer service center but the repeat calls are not and that's a good thing. So we've got some gains there. This scene with examples, so let's run some examples to get a get-at-a-calculator as you can try them with me. Please just ask any questions as we go along as well 'cause it's a bit of a rapid introduction to the idea. So let's run some numbers. Let's talk about a level three behavioral change, okay? And these are some actual examples that we've worked on. So let's take a senior associate at a large law firm. They're charge out rates about $500 per hour plus or minus. Let's use that as the number 'cause it's easy. And they have spent a lot of time, so we're talking about a senior associate at a law firm and they spend a lot of time needing to rework the junior lawyers' work. So rather than coaching them, they're just doing it themselves. It's easier to do it myself. Now that happens across all our organizations. I worked with a large government organization where this was the major issue they had. All of the senior people where their charge out rates are really high are reworking the junior lawyers' work. It's just easy to do it myself, red pen the thing, rather than do the coaching. Now you and I know it's better to coach, don't we? But they haven't come around to that yet. Have a look at this. They attend the leaders of coach workshop. It was about $395. For these lawyers, we did a two hour session 'cause that's all we could get them for as well, okay? So they start, you can see the return on the investment already, can't you? They attend a $395 leader as coach workshop a two hour investment of their time. They're charging out at $500 an hour. This becomes a no brainer straight up. But anyway, let's do the numbers. So they start coaching the junior lawyers and those junior lawyers produce better quality work. So we could measure the return on the investment of the uplift in better quality work from the junior lawyers. For example, instead of taking 10 hours to write a brief, they now only take six hours, okay? The return on the investment is the four hours of saving. We can now charge them out at whatever rate they are. And so we'd save money, we could charge them out. We're looking good in terms of our return in investment. So we could take a look at the lift in productivity on the junior lawyers, but we could also say, well, the senior associate gets back their productive time as well. So the intended leader has coached program. They've gone away and started coaching the junior lawyers. They get back more of their productive time. Are you with me? Outcome the calculators, let's have a look at it. So the gain from the investment minus the cost of investment, divided by the cost of investment. So let's say that the senior associate get back five hours more productive work. Okay, so they're five hours, they get back five hours of time. And those five hours we can charge out to another client because they're more productive. So here we go, the charge out rate, do it with me. It's so easy, $500. And I like the click class, we've got a click class. $500 times five is $2,500, which is the gain from the investment as we're going to charge them out, minus $3.95, I'm nervous just in case it's done the wrong thing here. So minus $3.95 is $2,105 divided by, hit the right number, $3.95 equals $5.3. Now, then you time for $500 and you get $532. Can you see that? $532%. So what we have got is a $532 return on the investment. The investment that was made was $395, $395 investment. We've got a 500% return on investment, five times the amount return on investment. Now, for me, that's a total no-brainer. Why wouldn't you put your senior associate on a two hour workshop if you can get uplifting junior lawyer productivity and uplifting senior associate activity? And in fact, that's what our clients have done. Now, ask any questions that you might like to ask at this point. Hope you're getting it. Did you run those numbers? Don't just sit back and let me do all the hard work. (laughs) Make sure you run those numbers as well. Okay, Sebastian, I'm just wondering whether anyone might go hang on a second, hang on a second. Sebastian said the cost of the investment [BLANK_AUDIO] minimum of 1395 because we need to include their time on the training and you may also need to include the amount of time they spend on coaching the juniors. Thank you very good pickup. That's right. So we do have to go hang on a second. Let's just take a look at this. What about, here you go. I was already ready for your Sebastian. Thank you for picking it up. What about the cost of having the lawyer attend the training. Good point. I'm glad you mentioned it. Well, the cost of them the training was $1,000 as Sebastian picked up not getting anything passed you. So the charge out rate was 500 bucks. We're not going to be able to claim that because they're on training. Two times 500 is a thousand bucks. Add it to the bottom line again. What number did you get Sebastian? 79% right. So if we do these numbers you can just do them very quickly. So 2500. Do it together like minus now we're up to 1395 as right. That's right. 1,105. Oh, oh, what have I done? 2500 minus 339 equals. Oh, oh, have I done this right? Yeah, divided by 1395 equals 1.2. I've made a mistake somewhere. Okay, good pickup. That's what we need to do it together. 9 is 1395 equals divided by 1395. I know equals 79. Yeah, times by 179%. So we are still getting our return on investment. It's a lower thank you. So that's 79% is right. I'm glad we've got our auditor on the line. Yeah, so 79% is correct. This is live by the way as you can tell. 70% is that's a still a good return on investment. Okay, so we're going to say to the chief financial officer. Let me take these people out of the workplace for two hours. We're going to coach them. They're going to go back into their workplace and coach will get you a 79% return on investment or going well just on these basic numbers. How do you feel about that? How do you feel about signing off the budget? Okay, now if you compare that return on investment to other things that they could do, then we can actually compare which is the better activity for them to do. Now Carol, thank you for picking that up. You are absolutely right. There's an ongoing benefit. Absolutely. We're just talking about then coach you say one junior associate. What about the ongoing benefits? So the juniors are now more productive. We could calculate how the benefit we're getting from there. And as you mentioned beautifully there, Carol, it's an ongoing benefit with all the new lawyers. So we've got one lawyer getting a 79% of return on investment, but there's an ongoing benefit. That might be five hours more productive this week. What about next week? So the numbers start to really roll here and these are actual figures that we've used with clients as well. You like it? It's not hard. You can really do this. And if you have a trouble just for just all course of action, you can help us out. Okay, here's another example. That was the behavioral change. What's the return on investment from the behavioral change that we've actually seen? Have a look at a level four. Now level four Kirkpatrick was all about the outcomes. So how do we measure a change in the outcomes? So let's, this is an actual example. I coached a group of executive assistants. The outcomes that they wanted from that coaching program were to be more valuable to the organization to be recognized by the organization to to up their profile within the organization. So that more valuable to the organization is very important to them. So we did a workshop. We talked about what does it mean to be more valuable? What does that even mean? And then we did some exercises together. Have a look at this. They attended a coaching workshop. Say we charged them $3,000. Okay, we charged them $3,000 for the workshop. And what happened as a result of that workshop, the innovations that they they they focused on innovation during that workshop? Where could they provide more value? They renewed the credit card processing of the company. How the credit, how the company was processing credit cards, the use of corporate cards and the processing of the credit cards. And they found a savings in the order of $35,000 in terms of fees that were being paid, the processing, the paperwork, $35,000 cost saving in the credit card, you know, corporate cards processing. I think they changed vendors as well as part of that cost saving. Let's have a look at it. You can see it's a no brain or already, can't you? $35,000. Minus for $3,000 that they spent on the coaching program divided by the $3,000. Get you a $1,000 percent return on investment. Now, the crazy thing here is right. We can't go around banding and around going, oh, I just made a $1,000 return on investment. Why not? Because nobody will believe you. Nobody will believe you. So it's part of our deployment program. And if you get a hold of bring out their best in the book, we show you how you need to discount that rate because nobody will believe you. So there's a couple of discount factors you can apply. But I hear Sebastian. I hear him in my head. What have you offered us here? Even if the initial and ongoing investment, ED, the hour was spent by the seniors on the coaching is more than initial gain. The return could be realised over time. So we want to talk to the business about return on investment over months and years. So we might not see the return on investment because they've got to invest their time as well. You're right. So if we cost up all of the imports, all of the costs, then we're going to probably see that return over investment over a longer period of time. So thank you. And here again, okay, we've got a cost. We've sunk costs. What about the EA's having to attend the training program? I just picked a figure. I don't know what they cost per day. But say 12 people attend as a program and it cost the organization $12,000. So $12,000 for those people to attend that program for the day. Okay? I'm not sure how much it costs. Let's pick that up. Are we, oh, so what's the question here as well? Are we only charging for one person? What about the cost for all in 10Ds? Thank you. So if you there you go that answers your question. So you're right. We see previous example, we could have cost it up the total cost for everyone as well. Here I've done that. So we've got 12 people attending the program. They cost about $1,000 a day, for example. You could say they cost $2,000 a day. You're still going to come out quite significantly with your return on investment here. Now the other thing we'll have to add in terms of cost is they've got a go away and investigated and implemented. So there's cost of their work. After the program to actually implement this change to do what they need to do in terms of business cases, et cetera, et cetera. So we are going to cost it up, aren't we? In terms of adding additional expenses here. But if we just take the 12,000, we take 35,000 minus 3,000 minus the 3,000. Do it with me. Minus, oops, I hate it when you put it in. You've got to go back again because I've got my numbers one. 35,000 minus the 3,000 minus the 12,000 gives you 20,000 divided by 3,000 gives you still a very significant over 600% return on investment. Now the accountants and our CFOs are going to say, no, no, no, no, it's not as simple as that. Well, guess what? It is actually for me as simple as that starting point. Add in the cost of them going away to actually do the exercise. And then I had someone say, what about the sunk cost of the photocop here and the gas and the heating and the lighting? I'm like, you know what, you're already paying for that. You're already paying for all of those sunk costs. You're already paying for superannuation, et cetera, et cetera. Add that in if you're masked. But really what we're talking about here is a significant gain. We introduced the Coaching Program. They went away and did this exercise together. There was a significant gain of $35,000, which is going to be actually achieved year on year on year. Okay, so we can say, well, all right, let's just take two years, $70,000 return on investment, that kind of thing. Got the idea? Oh, well, thank you. I didn't do that. Sebastian's fixed it for us. He says you have to add 12,000 to the denominator. And that makes it a hundred and sixty. Thank you. Tonight, my slides do that. No, it didn't come. Thank you, well done, good pick up. All right, so here's the important thing too. If you're running the numbers like this, like I am just running random numbers, make sure we've got someone who's actually ordering our figures before we put them in the business case. And gee, before you actually present it to a national audience. (laughs) But anyway, that's a good pick up. Yes, so add it to the bottom line there, and then we get the best is that 133% per feet. Alrighty, so hopefully that's giving you some ideas. I'm really trying to encourage you if you're not doing this. Just let's just do it simply and do it easily together. And we can really start to have a good think about what is the return on investment from the programs or the one-on-one coaching that we're doing. Now, people could easily say, people could easily say yes, but they might have gone away and done that anyway. Okay, so let's do the naysayers. They could have said, look, those executive coaches, those executive assistants, they could have done that review and come up with that innovation and that idea without coaching workshop. I'm like, you're absolutely right, they could have. But guess what? As an outcome of that discussion that they had on that workshop, that's actually what they achieved. One of the things they achieved, by the way. So we can hear the naysayers and I'm okay with the naysayers. Discount the figure. Sebastian's got us at 133% return on investment. You could say, well, you could put any kind of discounts on that. Maybe they were doing something already. Let's discount it by 50%. We still got a 50% return on investment and that's very significant. So we can apply these discounts if we need to. All right, we're right on time. I'll try people at energize by the numbers. We definitely need you on the line Sebastian, thank you. Numbers, our friend, that is the key message. So we want to be running the numbers. And if you're interested, our diploma of organization coaching features this, our coaching culture, so to be bit features that and bring out the best. Now I haven't told my team this, but I am going to give away a copy of bring out their best to anyone who sends me at Natalie at OpenDawCoaching.com.au. Send me your example of running the numbers, okay? It's an incentive for you to actually run your numbers. We'll give away a copy of bring out their best. You might already have one. Just give it to a friend. Chapter 10 on return on investment. So if you send me an example of how you've run the numbers like this, we'll bring them together. Put them on our blog. We'll send you a copy of bring out their best. So that's an additional incentive. Yes, Natalie at OpenDawCoaching.com.au. All right, everyone. Thank you for a great energizing presentation. Sorry, Michelle, you've got one more thing for us. I think I've also heard you mentioned the past, the professional development investment in people can result in returning to investment in regard to people staying in an organization later, along the right. It's harder to measure the savings of recruitment and developing new staff would be significant. You're absolutely right. So because of coaching, people stayed with the organization rather than leaving. Michelle, I'm not sure if you've got the paper, but we did that with Air Force. We calculate, I can send it to you. So I can show you some of the return on investment numbers. We did there just in case you haven't received it. Alrighty. So hopefully you got fired up about the numbers. Hopefully you have a wonderful Friday. Enjoy your coaching. Send me your pay studies on running the numbers I'll send you a copy of Bring Out Their Best. And for those that you have been awaiting, here comes the CCU Tobigate. You can download it. Enjoy your coaching, everyone. (upbeat music) Thanks for listening to this episode of the coaching cafe podcast. You can watch the full video from this episode on our website. I'll put a link in the show notes. We'll see you at the next coaching cafe. Bye for now. (upbeat music)