Chapter 14Measuring ROI
A publically owned electrical utility serving several states in the USA was very interested in controlling costs for its twelve power generating locations, ranging from coal fired to nuclear power. Top executives realize that the creative spirit often lies with the employees who know where improvements can be made and can see innovative opportunities to reduce costs. They wanted to tap the creativity of the team and pay them for the ideas.
The approach taken is a classic suggestion system based on cost savings which has been implemented by many organizations, often with good success. Benchmarking data suggest that, if implemented properly, about 10% of the workforce would actually make suggestions. The General Manager had requested an evaluation of the program at the ROI level.
As the Organization Effectiveness (OE) team implemented the system, they were very well aware of what’s necessary to achieve this success. Using the ROI Methodology, they started with the end in mind and that’s direct cost reduction or cost avoidance as the impact. There would also be some other impacts involving efficiency, effectiveness, and some intangibles such as commitment, engagement, satisfaction, and teamwork.
They knew that the reaction would be easy to measure. For learning, it’s important for the employees to know how to make a suggestion, how it’s evaluated, when it’s evaluated, who evaluates it, when they will be notified, and when they receive the money. These knowledge ...
Get The Value of Innovation now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
