Originally published in the September 2004 Issue of Link & Learn. 

Link&Learn: You recently received the 2003 ASTD ROI Practitioner of the Year Award. What does that mean to you at this stage in your career?

Merrill Anderson: I felt honored by my peers as they recognized my achievements as an ROI and change practitioner. Of course, a lot of recognition has to go to my clients who have provided me with so many exciting and challenging project opportunities. As I reflect upon these experiences, one of my key learnings is how ROI cannot be a "bolt-on accessory," but rather viewed as an important consideration in the design of the initiative or program. It's never too early to think about ROI.

Link&Learn: Many people in learning and organization development are still not sure what to think about ROI. How do you see ROI and the value it adds?

Merrill Anderson: I look at ROI as a versatile tool with three major applications: ROI estimation, ROI forecast and post-program ROI. ROI estimation has proven to be an effective way to build a business case for a learning or change initiative. Forecasting ROI is typically done during the pilot stage and provides an early indication of how accurate the ROI estimate was. It also provides insights into how to make full deployment as successful as possible. Of course, post-program ROI evaluations are done months after the program has been deployed and is the ultimate determiner of program value. ROI adds value as a decision-making tool, like whether or not to invest in a program, how best to deploy a program, and how to maximize the value of future programs.

Link&Learn: How can learning and organization development leaders know what kind of ROI is best and when to do it?

Merrill Anderson: I coach learning and OD leaders to estimate ROI for every major program. The data can be very useful for building a business case. Equally valuable, however, is how estimating ROI helps leaders think differently about their program: what are the cost drivers and how can these drivers be managed; what sources of value can we expect from this program; and how can we maximize the value through the design and deployment of the program? Answering these questions improves how we envision change and make change happen.

Link&Learn: OK, what about guidelines for forecasting ROI and conducting post-program studies.

Merrill Anderson: I recommend that forecasting be done for pilots of large-scale programs. Pilots are intended to shape the scope and direction of the full deployment of the program. Having ROI information can be extremely valuable to make decisions about full deployment. With post-program studies, I say to only conduct one or two a year on those programs that have the biggest price tag, highest expectations, or are the most strategic.

Link&Learn: Where is a good place for learning and organization development leaders who are interested in the value of ROI to start?

Merrill Anderson: There are many excellent books and workshops available to gain knowledge and skills in conducting ROI analyses. (Click here to read about Bottom-Line OD: A Structured Process for Improving Return on Investment offered by Linkage in partnership with Dr. Merrill Anderson) I have also developed a tool that mostly automates ROI estimation. People plug in some program information and values and the tool does the rest. The tool enables leaders to focus on making strategic decisions rather than making calculations. I think that the more we automate the ROI analysis, the greater the acceptance and utilization of ROI will be with learning and OD leaders.

Link&Learn: Why should ROI be important to an organization?

Merrill Anderson: ROI is important to every organization: for-profit, not-for-profit, educational institutions, government agencies, and more. There are variations in how they define value, however, all organizations want value for the investments they make. What makes ROI important is it provides leaders with an important way of deciding in which programs to invest and which programs to delay or reject. What's relatively new, I believe, is that learning and OD projects are being held to the same standards as other business initiatives. It's becoming "Show me the money or I'll show you the door."

Link&Learn: What are the biggest challenges in measuring ROI?

Merrill Anderson: I must admit I've had some surprises as I have conducted ROI evaluations. The first is how few high price-tag programs have specific and measurable objectives. It's a challenge to evaluate the success of a program when objectives or outcomes are not articulated. Another challenge is determining the fully loaded cost of the program. The costs for large, distributed initiatives are often strewn throughout the corporation's chart of accounts which makes it very challenging to gather fully loaded cost data. The third major challenge I encounter is with determining monetary benefits. Many business leaders do not have important information handy, such as margins on products or the fully loaded hourly cost of a manager, which are required to determine monetary benefits.

Link&Learn: What interesting ROI projects are you working on right now?

Merrill Anderson: I am especially excited about conducting a post-program ROI study on executive coaching. I have been doing ROI studies on coaching for three years now and have a growing base of knowledge about the value that coaching adds to the business as well as to the individual being coached. My next book, Coaching That Counts, co-authored with my wife Dianna, presents what I have learned about coaching over these three years. The more data we have the more insights we can draw about what makes coaching so powerful.

Link&Learn: Where do you see the practice of measuring ROI heading in the next couple of years?

Merrill Anderson: I see ROI being institutionalized for learning and OD in much the same way it is for other business units and functions. Learning and OD leaders will adopt standard, and perhaps automated, tools and processes to determine ROI. This will place added emphasis on learning from ROI evaluations and using the data to continuously improve how we design and deliver learning and OD programs. As a result ROI will be integrated into our change processes, and more importantly, become an integral part of how we think about change.

Link&Learn: Finally, let me ask you, what drove your decision to partner with Linkage on your Bottom-Line OD: A Structured Process for Improving Return on Investment Certification Program?

Merrill Anderson: I have worked with the people at Linkage for ten years speaking at conferences, being a learning coach at conferences and having numerous conversations with Linkage leaders about industry trends and needs. Over this time I have been very impressed with how Linkage has grown and developed, even through challenging business climates. When I was thinking about delivering these workshops, Linkage was a natural fit, given its expertise and reputation in the industry.

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Merill C. Anderson, Ph.D., CEO of MetrixGlobal LLC, Linkage Faculty Member. Dr. Anderson is a business consulting executive, author, and educator with 20 years experience improving the performance of people and organizations. Dr. Anderson is the chief executive officer of MetrixGlobal LLC, a professional services firm that partners with business leaders to maximize the value of people and change initiatives. Dr. Anderson's recent book, Bottom-Line Organization development, breaks new ground in applying powerful evaluation methodology to increase bottom-line value from strategic change initiatives. He was recently recognized as the 2003 ASTD ROI Practitioner of the Year. Dr. Anderson can be reached at: merrilland@metrixglobal.net or on the web at: http://www.metrixglobal.net/.