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FIVE STEPS TO DATA CONVERSION

When it has been decided to convert a measure to monetary value and you've chosen the technique that you are going to use to calculate the monetary value, follow the five steps to complete the data conversion process.

1. Focus on the unit of measure. The first step is to review one unit of the measure under investigation. For example, if evaluating a measure of productivity, and the output is one more credit card account, then one credit card account is the unit of measure.

2. Determine the value of each unit. In determining the value of each unit, use standard values or one of the other operational techniques. For example, if one new account is worth $500 and that figure is based on standard values using profit contribution, the value is $500 in profit.

3. Calculate the change in the performance of the measure. Step three is actually taken during the evaluation process. For example, change in performance or the improvement in the number of credit card accounts is determined during the Level 4 evaluation. How many new credit card accounts were due to the program? For this example, assume that an average two new credit card accounts were sold per month (after isolating all other factors).

4. Determine the annual improvement in the measure. Annualize the improvement in the measure. Remember that Guiding Principle 9 says that for short-term programs, report only first-year benefits. You do not necessarily need to wait one year to see exactly how many new credit card accounts are achieved due to the program. Rather, pick a point in time to obtain the average improvement to that date and, then, annualize that figure. In the credit card account example, the unit of measure is one account and the value of the unit is $500. After establishing that the change in performance of the measure due to the program (after isolating the effects) is averaging two new accounts per month, determine the annual improvement in the measure by simply multiplying the change in performance by 12 months. So, two new accounts per month multiplied by 12 months equals 24 new accounts due to the program.

5. Calculate the total monetary value of the improvement. Take the number from step four, annual improvement in the measure (24 in the example), and multiply it by the value of each unit using the standard profit margin ($500 per credit card account in the example). This provides a total monetary value of improvement of $12,000. This annual monetary benefit of the technology-based learning is the value that goes in the numerator of the equation.

FULLY LOADED COSTS

The next step in the move from Level 4 to Level 5 is tabulating the fully loaded cost of the program, which will go in the denominator of the ROI equation. When taking an evaluation to Level 4 only, this step is not necessary; although, regardless of how the learning programs are evaluated, it should be common practice to know the full costs of them. Fully loaded costs mean everything. Table 4-4 shows the recommended cost categories for a fully loaded conservative approach to tabulating and estimating costs.

Table 4-4. Project Cost Categories

Cost Item

Prorated

Expensed

1 Initial analysis and assessment +
2 Development of solutions +
3 Acquisition of solutions +
4 Implementation and application +
Salaries/benefits for L&D team time +
Salaries/benefits for coordination time +
Salaries/benefits for participant time +
Program materials, if applicable +
Hardware/software +
Travel/lodging/meals, if blended +
Use of facilities, if blended +
Capital expenditures, if appropriate +
5 Maintenance and monitoring +
6 Administrative support and overhead +
7 Evaluation and reporting +
 
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