Value for Money
by Patricia Pulliam Phillips, Jack J. Phillips, Gina Paone, Cyndi Huff Gaudet, Kyle McLeod
Chapter 13Make It Credible: Capture Costs of the Program and Calculate ROI
A publicly owned electrical utility serving several states in the United States was very interested in controlling costs for its 12 power-generating locations, ranging from coal fired to nuclear power. Top executives realized that the creative spirit often lay with the employees who knew where improvements could be made and could 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 percent of the workforce would actually make suggestions. The general manager (GM) had requested an evaluation of the program at the ROI level.
As the Organization Effectiveness (OE) team implemented the suggestion system, they were very well aware of what was necessary to achieve this success. Using the ROI Methodology, they started with the end in mind with direct cost reduction or cost avoidance as the desired impact.
The evaluation team 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 points are necessary for employees to see the value ...