You can't understand human performance unless you can measure it directly and precisely.

• One cannot adequately engage in evaluation at the end of a project unless a thorough analysis has been completed at the beginning.
• It is impossible to evaluate training impact unless one first determines what behaviors should be added, changed, or deleted.
• Likewise, one cannot evaluate return-on-investment unless one has identified during analysis in what the organization is investing.  

How to measure the worth of performance is the area in need of great attention. It is important to incorporate planning, evaluation of results and return-on-investment (ROI) in the beginning of every performance improvement project so you can influence the business case. 

An old adage says, "what gets measured get managed". What gets measured stands a better chance of becoming successful within the context of an applied strategic business plan.

The evaluation process must accommodate our ever-changing world. It is important to become familiar with the most significant impacts on long-term business growth and development. These aspects include organizational development and organizational effectiveness. The metrics must measure the ROI in human capital to the organization.

Plan and design in a way that you can measure results and ensure measurement is done well. A key feature of sustained performance improvement is that it provides the means for self correction. This can only be accomplished through continuing feedback and evaluation.

Develop a solid case that can show why decision makers should choose a given solution to improve utilization of financial resources. Connect measuring success with planning for success. Part of this involves evaluating both short-term and long-term outcomes:

• Can your employees perform tasks correctly at the end of training?
• Are they performing those tasks three months later on the job?

Keep in mind that "Worth = Value - Cost" and how to determine value and costs. Learn about the Potential for Improving Performance (PIP), the ratio of exemplary performance to typical performance.

• Do you have potential for improved performance in your organization?
• How much do you have and what is it worth? 
• Would improved performance help you better accomplish your business goals?

To create profits, organizations make strategic investments that generate positive cash flows over the life of the investments. The best figure of merit to use in calculating ROI is Net Present Value (NPV) because it uses all cash flows for the project discounted to the present time.

NVP measures the excess or shortfall of cash flows, in present value (PV) terms, once financing charges are met. NVP is the most comprehensive and accurate decision making-tool available for business executives. 

Because most Chief Financial Officers (CFOs) have a strong finance background, using NVP means you are speaking their language. Investments need to be evaluated in today's dollars. Cash flow analysis determines the flows and the NVP technique values them in today's dollars. In that way different projects can be compared regardless of timing. The basic idea it remember is: a dollar today is worth more than a dollar received in the future. 

The further into the future a dollar is received, the greater the uncertainty that it will be received (risk) and the greater the loss of opportunity to use those funds (opportunity costs). Accordingly, cash flows received in the future will be discounted more steeply depending on the riskiness of the project. The evaluation of any project depends on the magnitude of the cash flows, the timing, and the discount rate.

Tip: Always work with the client's budget specialist to calculate NVP when calculating potential ROI of a project. 

Want help in acquiring these skills? See the workshops section.