ROIAnalysisforaWeekLongProgram

KevinJenson
ColoradoStateUniversity
December16,2014

ProgramDescription
InanattempttobeginapplyingsomeofthetheoriesIhavedevelopedoverthe
pastseveralmonths,Iamdevelopingaworkshopthatteachesthebasictoolsoflearning
toadultsthatareoccupiedbyworkoreducation.Whilethedetailsoftheprogramarestill
inprocess,thereareafewintendedresultsthatcanbemeasuredintermsoffinancial
benefittoparticipants.
Inshort,theprogramtakesplaceoverasingleweekorlessintenselyoverafour
weekperiodoftime.Duringthistime,participantsreceivepracticalknowledgeoftwoor
morelearningtools,anoverviewoftheirpersonalstrengths,weaknesses,andinterests,
practicewithleadership,practicewithgrouplearning,andcoachingindevelopinga
learningcontractwiththemselves.Participantsinthisprogramlearnhowtolearn.When
theyleave,theyshouldhaveaplanforcontinuingtheireducationthroughrelationshipin
aparticularfieldorproblemareaofpassionorrelevance.
Becauseofitsshorttermnature,thereturnonstudentsinvestmentinthisprogram
canbeexpectedtooccurwithintheweekofparticipationorshortlythereafter.Anyhabits
notformedduringthistimeorresultsnotseenareunlikelytoappearwithoutsomeother
externalinput.Nevertheless,habits,mindsets,andskillsthatareacquiredduringthe
workshopwillreturntheirinvestmentlongaftertheprogramisfinished.

PurposeofmeasuringROI
Measuringreturnoninvestmenthasvaluefortheindividualswhoareinvolvedin
theprogram.Itcanhelpindividualsmakethedecisiontoparticipatebasedonthe

perceivedtangibleandintangiblebenefitstheycouldreceive.Itisalsoameansof
determininghowtoproducethegreatestamountofvalueforindividualsthatchoose
participate.MeasuringROIhasbenefitsbeyondsimpleproofofaprograms
effectivenessifitisdesignedasafeedbackloopsimilartotheprocessforvaluations.
ThisrequiresthatROImeasurementsmovebeyondasimpleyesornoansweras
towhethertheprogramwaseffective.Thereasonthatstudentsparticipateinthe
workshopinthefirstplaceisbecausetheybelieveitscontent(orwhattheylearnthrough
theexperience)willhelpthemsolveaproblemorbecomeastartingpointfor
improvement.SomequestionsthatwillhelpturntheROImeasurementintoafeedback
loopinclude:Whatworked?Why?Howdowechangetheprogramsothatitcanmeet
theobjectives?Whatobjectivesdoesitmeetifnottheintendedones?
TheprogrammayreturnapositiveROItostudents,butnotinthewayexpected.
TheonedifferencebetweenROIandevaluationisthatthevalueofaccomplished
objectivesaremeasuredinfinancialtermsandcomparedtoothersonthesamebasis.ROI
couldbeusedasacomparativemeasure.Howdoesoneprogramreturnthemoney
investedrelativetoanotherprogram?Ontheotherhand,theROIprocesscouldbe
flippedsothatthevariousoutcomesdeterminewhichaspectsoftheprogramaremost
valuable.Thiscouldhelpprogrammanagersdeterminewheretoplacegreateremphasis
ondevelopment.
Dependingontheirattitudes,programdirectorsmaychoosetofocusonthose
thingsthatproducethegreatestROI.However,therearetwodrawbackstothis.First,itis
possiblethattheinstrumentsdesignedtomeasureROIareineffectiveatpinpointingthe

realbenefitsoftheprogram.Aswithmostconversionofsocialactivitytofinancial
measurement,ROIisbasedonassumptionsthatcanjustaseasilybeprovedasdisproved.
Second,itispossiblethattheROIfromthemostbeneficialaspectsoftheprogramis
measuredinadifferentway.Similarly,thesamecontentandexperiencemayproducea
differentROIdependingontheindividualsthatareinvolved.
Despitethedifficultiesofmeasurement,ROIstillhasvalueintermsofproviding
somesortofconcretebasisonwhichtodetermineapricetochargestudentsandan
overallunderstandingofthevalueoftheservice.Inthiscase,IhopetouseROIto
determinethepricethatcanbechargedbytheprogram.Workbackwardsfromthe
estimatedvalueoftheprogramtodetermineitscost.Sometimesinbusiness,anincrease
incostincreasesthetotalvalueproducedbytheprogrambecauseofpsychologicalvalue
byparticipants.

ROISchema
Sofarthegreatestinterestinthisworkshophascomefromindividualswhodont
necessarilywanttocommittoacollegedegreeandwhodonotsimplywantaccessto
informationthroughafreemassiveonlinelearningplatform.Forthem,thevalueofthe
workshopcanbemeasuredintermsoftimeandimprovementsintheirworkandstudy
effectiveness.Theywanttolearnandperform,butwithoutpayingthenecessarycostsof
timeandmoneyrequiredbyadegreebasedprogram.Thisworkshopgivesthemthetools
todesigntheirownlearningexperienceandmaximizelearningthroughlife.
TwoorthreeprimarybenefitscanbemeasuredforROIfortheseindividuals.

First,thecostandtimerequiredbyalternativedegreebasedcourses.Timecanbe
calculatedbasedonthenumberofhoursastudentwouldberequiredtoinvestina
programthatwasnotcustomizedtotheirinterests.Anaverageof810hoursweeklyover
12weeksgivesatotalof96120hoursthatastudentwouldbeexpectedtospendinan
informationcentricprogramwhichtheymayormaynotbeabletotakefulladvantageof.
Financialbenefitsoftheprogramintermsofcostssavedfromotheracademic
programsmayaveragebetween$300$3000,timespentinlessrelevanttraining(2hours
at$25=$50),andremedialexpensestomakeupfornotparticipatingcanalsobebuilt
intotheROIcalculation.
AthirdfactoroftheROIcalculationlooksattheincreaseinstudentefficiencyof
workingorlearning.Timecanbeaddedinfromworkorotherstudiesthestudent
currentlyparticipatesinthatwillbeenhancedbyparticipationintheprogram.If
effectivenessinasingleaspectofworkorstudy(forexample,meetings)increasesby10
25%foraparticipantthathasanaverageof2meetingsperday,thisleadstoanextra1
2.5hoursoftimesavingsevery5dayweek.12weeksthissingleaspectofefficiency
couldaccumulatestoupto1230hoursofadditionaltimefortheparticipant.Ongoing
efficienciesinlearningthatdevelopovercourseofparticipationwillcontinuetogivethe
benefitoftimetothestudent,butatadecreasingrate.Toaveragetheamountoftime
savedoverayear,multiplythe12weekcalculationby3or4.Totaltimesavingsshould
bemultipliedbyafactoroftheparticipantshourlywage(average$25[TableB3,
2014])todetermineoverallROI.
Costsoftheprogramincludethe25hoursofrecommendedtime(timesthewage

multiplier)andthepricetagofparticipation.Forthepurposesofprogramdesign,priceis
theunknownvariablethatwillbecalculatedbasedonROImeasurements.

ROIMeasurementandCalculation
Allofthepreviouscalculationsareestimates,buttheycanbeverifiedthroughthe
followingmethods.Thecourseopenswithagroupactivityinwhichallparticipantsform
teamstosolveaproblem.Thisactivityformsthebasisoflearningthroughouttheweek
andiscomparedtoafinalgroupactivityofasimilarnature.Studentsareaskedto
comparethetwoactivitiesonasurveyandthisbecomesthebasisofestimatingefficiency
beforetheprogramandefficiencyaftertheprogram.Thisdifferenceisthenmultipliedby
theaveragewagefactor(oranexactwagefactor)ifstudentschoosetoanonymously
contributesuchdata.
Thefollowingchartshowsdatafor6sampletrialsrunwithvariousreported
levelsoftimeusedandconfidenceinthesolutiondeveloped.Inthisexample,trial6and
5werecompletedbythesamegroup.5tookplacebeforethetrainingand6tookplace
after.Whilethegroupusedthesameamountoftimetocomeupwithasolutiontothe
problem,theirconfidenceincreasedby20%leadingtoanoverallcalculationthattheir
efficiencyasagrouphadincreasedby(2700/2100=1.28)28%asaresultofthe
program.Ifthesituationwerereversedandtrial5tookplaceafterthetraining,the
efficiencyofthegroupwouldhavedecreasedby(2100/2700=.77)23%.Thiswouldlead
toanegativeROIcalculationfortheprogramandareconsiderationofitsbenefits.
Tri

Time

Time

Differe

Efficiency

al

Allowed
1
2
3
4
5
6

Used
60
60
60
60
60
60

nce
60
55
50
40
30
30

0
5
10
20
30
30

Confidenc
e
Factor
80
0
80
400
90
900
80
1600
70
2100
90
2700

Itisassumedthatmoststudentswillseeanaverageof10to20percent
improvementintheirefficiencythroughoutthecourseoftheprogram.Thischange
shouldbeeffectiveimmediately,butproducemuchofitsbenefitbeyondtheweekor
monthinwhichthecoursetakesplace.Inthefollowingformula,anaverageof12.5%
efficiencyisestimatedtobeconservativeinROIestimates.Asstudentsactuallycomplete
theprogram,ROIestimateswillbereadjustedtoreflectactualresults.

BenefitsCalculationWorksheet
Blankspacesareforstudentinputs.Theestimatesusedinthispaperhavebeen
includedinparentheses.
Costofparticipatinginalternativeprogram_______(estimatedearlierat$300)
Timesavedfromalternativeprogram_________(averagedearlierat108hours)
Timesavedfromwork/studyefficiencies_________(estimated12.5%efficiency*12
weeks*40hours=60hours)
Ongoingtimesavings___________(Multiplypreviousresultof60by3.33=200hours)
TotalHourssaved_______(108+60+200=368)
Totalof___________(368)hoursofvaluemultipliedby__________$25/hour(average
UShourlywage).
____________($9200)=TotalMeasuredHourlyBenefitstothisStudent
Addinthecostsavingsofanalternativeprogramat_________($300).
TotalBenefitsoftheprogram=_______________$9,500

CostCalculation
25hoursorrequiredtimemultipliedbythewagemultiplier($25)=$625
EstimatedCostoftheProgram=$1500
$2125=TotalMeasuredCoststoStudent
ROICalculation
Returnoninvestmentiscalculatedbydividingnetbenefitsbytotalcosts.Net
benefitsarecalculatedbysubtractingtotalcostsfromtotalbenefits.
$9,500$2,125=$7,375=NetBenefits
NetBenefits/TotalCosts=ROI
$7,375/$2,125=3.470=347%
ReturnonInvestmentforthisprogramwithapriceof$1500is347%.
ResponsetoROI
BasedonthiscalculationforROI,theprogramproducesa347%returnon
investmentatapriceof$1500.Itlookslikeitwillbeagoodideatocontinueofferingthe
program,thoughitwillbedifficultatfirsttoconvincestudentsofits$1500value.Until
itsvalueisproved,itislikelythattheprogramwillneedtoprovideclosertoa1000%
returnoninvestmentbyreasonofamuchlowerpricetag.
Asstudentsfilloutthecalculationworksheet,theywilldiscovertheROI
particulartotheirownsituation(alternativeprograms,changesinefficiency,hourlywage
rates,etc).IfIammarketingtocollegestudentsratherthanyoungprofessionalswho
wanttocontinuetheireducationoutsideacollegecontext,Iwillneedtousealower
wageconversionrate.
BecauseofthecomplexityoftheROIformula,itwouldprobablybeeasiestifthis
wasconvertedintoadigitalformatthatrequiredstudentstoenterthetimeittookto

participateinthemeasuredgroupdiscussions,theirconfidencefactor,andtheirwage
rate.OtherfactorsmaybesuggestedandalteredasstudentsprefertochangetheROI.
Thismakestheprocesssimpleandallowsstudentstofocusontheresultratherthanthe
processofcalculatingROI.
Otherfactorsnotdirectlyincludedinthisformulaarepotentialforpayraisesand
promotionsasstudentscontinuetheireducationandworkmoreeffectivelywithintheir
teams,theincreasedstudentabilitytolearnfromfutureclasses,elfawareness,self
confidence,newlearningmethods,improvedleadership,higherGPA,higherlevelsof
learningandengagement,andperhapsanincreasedabilitytoenjoylife.Thesethingsare
notnecessarilytaughtthroughtheworkshop,butarepotentialintangiblebenefitsthat
mayresultfromlearninghowtomaximizelearningthroughtheexperienceoflife.

Reference
Table B-3. Average hourly and weekly earnings of all employees on private
nonfarm payrolls by industry sector, seasonally adjusted. (2014, January
1). Retrieved December 16, 2014, from
http://www.bls.gov/news.release/empsit.t19.htm