Sometimes the ROI for Instruction is Better Seen as RONA

From a post back in 2007… which was an overview and the “back-story” about a published article of mine from ASTD’s Technical & Skills Training journal/magazine back in the May/June 1991 issue

An argument had broken out during a Project Steering Team (PST) Gate Review Meeting (GRM) at the end of the Implementation Planning phase (4) of a Curriculum Architecture Design (CAD) project about a CAD for CAD.

The Critical Business Issue?
The upper management had determined that their CAD-CAM operators’ proficiencies were the cause of THEM not getting the promise of this expensive system. Their Informal Learning approach after the vendor’s quick and insufficient “training” was not sustainable.

The controversy? The price tag for taking all of those U-OJT modules, as they currently existed, and upping them ALL to Formal Learning of classroom/lab – we had to have both the computer tool and a facilitator/coach – someone who could provide the learner/Performers with guidance and feedback and help in the many application exercises we had spread out through the dozens and dozens of Modules of the CAD. The price tag was $2M for initial development and pilot-testing. Then deployment cost estimates were another number.

It was a flexible CAD. One could take the first dozen Modules and hold a T&D Event for deployment…or dole them out in smaller or larger chunks to address the current situation. This Enterprise had big ups and downs with Government contracts. Lay-offs were a reality. And large up-sizing happened occasionally too.

The CoC and CoNC This group understood many quality principles and tools/techniques. So in the “debate becoming an argument” in this meeting I wrestled control back from my client at the front of the room by dragging a flip chart up to the front of the room and barking out a question…

  • How many operators do we have right now…approximately? Over 100.
  • I wrote down 100. How much do they make…fully loaded…approximately? Over $60k.
  • How proficient are they they right now? 100%? 75%? 50%? 25%? 5%? Under 50%.

So…I said…the cost-of-non-conformance RIGHT NOW based on just salary dollars is…100 x $60,000 x 50%. Or $3 million dollars.

You are paying $6 million for their total performance in compensation BUT only getting $3 million back because they are less than 50% proficient on this new tool.

That’s what you’re leaving on the Performance Table every year…so to speak. And that doesn’t even address the downstream scrap and rework caused by their lack of proficiency. Right? Which makes these salary dollar wastes look silly. Right? Darn silly! RIGHT?

Heads nodded around the room.

So what is it worth to resolve THIS and get everyone on average up to…say…75%? From 50%?

Isn’t it worth about $1.5 million the first year alone to do that? And more if we bothered to think more about scrap and rework…and contract penalties for missed deadlines….

Then everyone wanted to start talking about “we could get them to 90%” and other topics that told me we had moved off of our sticker shock..of the Cost-of-Conformance.

Because the Cost-of-Non-Conformance was so big that the focus shifted from cost to quality of response. Now we were ready to look at this Design of Formal Learning with less skepticism about the need. Or more correctly…the “value” of the need.

I guess that many in the room, like me, were wondering how BIG a number the real CoNC was.

But it was time to move on to our next step.

Summary

In this case the manufacturing organization well understood the concept of RONA – Return on Net Assets – and this approach articulated here was a proxy for RONA and not ROI. But close enough for everyone concerned to see the data as real – and the value for making the investment in formal instruction.

Read that older post – here.

Read that ASTD article from 1991 – here.

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2 comments on “Sometimes the ROI for Instruction is Better Seen as RONA

  1. Pingback: ROI Case Study: Implementing CAD for CAD | EPPIC - Pursuing Performance

  2. Pingback: The Tool Should Fit the Job | EPPIC – Pursuing Performance

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