The ROI Methodology: Measuring the Effect of Employee Engagement Programs

The ROI Methodology® serves as a crucial system for accountability in measuring the success of employee engagement programs. This methodology emphasizes the use of return on investment (ROI) as an effective measure for engagement by showcasing bottom-line results, drawing on its rich historical application, aligning with senior management language, generating attention among key stakeholders, and enforcing the strategic alignment of engagement initiatives with business needs. In the current business landscape, haphazard investment in human capital without evidence of its impact is no longer sustainable, making the ROI Methodology a foundational tool for engagement practitioners to rethink and implement in their projects.

In far too many situations, employee engagement programs are implemented without a complete picture of the reason for the program. Pursuing initiatives without knowing why or identifying clear performance and business needs upfront can be disastrous in today’s economic climate. Evaluation is too often an afterthought. The role of measurement and evaluation is crucial for establishing the impact and credibility of employee engagement. It is time for the field to fully endorse and implement this data-driven approach. Several factors make ROI an effective measure of engagement:

• ROI shows bottom-line results. Return on investment represents the ultimate range of measurement – a comparison of the actual cost of a project with its monetary benefits. This is done by using the same standard ratio that accountants have used for years to show the return on investment for a variety of investments, such as technology, equipment, and buildings.
• ROI has a rich history of application. The ROI Methodology is not a passing trend – it is a measure of accountability that has existed for centuries. When resources are invested to address a business need, the ROI Methodology shows the financial impact of the investment.
• Learn to speak the same language as senior management. Most managers have knowledge and skills for managing a business. These managers understand the need for a process to establish solid business cases and calculate a return on investment. They use ROI for various projects and are very interested in seeing the monetary results from large investments.
• ROI attracts stakeholders’ attention. Positive ROI outcomes create buzz and attention, particularly when the value exceeds expectations. Most stakeholders involved in employee engagement programs intuitively believe that the programs add value. Fortunately, they can use ROI as a credible and valid measurement tool to confirm this hunch.
• Using ROI Methodology promotes strategic alignment. By following the steps in the ROI Methodology, engagement will be more closely aligned with the strategic and operational needs of the business.

Gone are the days of broadly increasing investment in human capital without any evidence regarding its impact on the business. When budget cuts loom, human capital often rises to the top of the list, and engagement projects are no exception. Showing the value of investments can protect your projects and programs.