October 23, 2007
MEASURING ROI AT PROCTER & GAMBLE
by Bill Martin, Senior Leader of Interactive Media at Procter & Gamble
Procter & Gamble (P&G) Senior Leader of Interactive Media, Bill Martin, discusses the various approaches to measuring the return on investment (ROI) of learning and development.
At P & G, management believes that the closer an individual is to the business, the easier it is to make evaluations since evaluation points should be in the context of business operations. Therefore, P&G breaks out their ROI evaluations into two different sections:
- Collocated
- Non-Collocated
Management also believes that it is very difficult to perform a single ROI assessment that will cover both the entire corporate learning environment and the plant learning environment. This is because there are many different factors that are involved in identifying types of performance, and many cannot be reduced to a clear, numeric value such as the cost of travel.
When applying the collocated model, P&G began to notice that many of the savings associated with training could be better defined. For example, without having to purchase manuals, there is a clear reduction in the training budget. Furthermore, if there is one person focused on the creation of web-based training, then costs will disappear relating to having individuals in classrooms.
It is also much easier to measure ROI more effectively in the collocated environment in cases such as machine downtime, overtime, and instructor and material reduction. In the past, P&G had to shut a plant down twice a month for two hours, just to conduct all the mandatory safety training. By developing a strategy to avoid shut downs they were able to save $500,000 in lost production time alone. Recently, another plant just reduced their overtime and downtime costs by about $450,000 using similar strategies.
P&G has also been measuring the ROI around reducing employee time in classrooms. Bill Martin used to lead the Creative Innovative Learning Solutions course, which quarterly would involve a total of 80 students. He realized that, by looking at the following factors, if they could eliminate just one person from the classroom, they would save $1937.50:
- How many people traveled and from where did they travel?
- What is the average cost of the hotel, rental car, and dinner?
- What is the cost of the classroom and all the materials required?
Martin noted that “it’s not an ROI in the classroom, but it’s whether I do it one way or another.”
