Chapter 6: Converting Business Measures to Monetary Values
Traditionally, leadership impact studies stop with a tabulation of business impact, which is a Level 4 evaluation. In those situations, a leadership development program is considered successful if it produced improvements such as productivity increases, quality enhancements, absenteeism reductions, or customer satisfaction improvements. While these results are important, it is more insightful to convert the data to monetary value and show the total impact of the improvement. The monetary value is essential to compare the cost of the program to develop the ROI for the leadership scorecard. This is the ultimate level of evaluation. This chapter shows how leading organizations are moving beyond just tabulating business results and are adding another step of converting business measures to monetary value.
Preliminary Issues
Sorting out Hard and Soft Data
After collecting performance data, many organizations find it helpful to divide data into hard and soft categories. Hard data are the traditional measures of organizational performance. They are objective, easy to measure, and easy to convert to monetary values. Hard data are often very common measures, achieve high credibility with management, and are available in every type of organization. They are destined to be converted to monetary value and included in the ROI formula.
Output | Time |
Units produced | Equipment downtime |
Items assembled | Overtime |
Items sold | On time shipments |
Forms processed | Time to project completion |
Loans approved | Processing time |
Inventory turnover | Cycle time |
Patients | Meeting schedules |
Applications processed | Repair time |
Productivity | Efficiency |
Work backlog | Work stoppages |
Shipments | Order... |