[Assessment 1532] FW: [Odnet] OD and ROI
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Mon Dec 15 12:40:16 EST 2008
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Folks, I thought this message on the relationship between organizational development and return on investment, from the Organizational Development Network Listserv has some interesting parallels with our discussion on the relationship between professional developments and direct student outcomes. Go here for information on the OD Network http://www.odnetwork.org/resources/discussions/index.php Best, George Demetrion> From: > To: odnet at lists.odnetwork.org> Date: Fri, 12 Dec 2008 16:13:43 -0800> Subject: Re: [Odnet] OD and ROI> > > It's unfortunate the terminology "ROI" ever got started with regards to OD.> ROI means Return on Investment. Return is the revenue received from an> investment. An ROI analysis is used to determine the revenues expected> from an investment in a product. > > An organization must invest in many other things other than the products> (or services) it sells. For lack of another term, I'll use the term> infrastructure. Infrastructure investments include, for example,> buildings, computers, light bulbs, salaries, training, legal fees, postage,> and a whole host of expenses that have these characteristics:> 1. The are expended to stay in business or to enhance the business> 2. There is no direct line-of-sight connection with revenues or profits. > There's no "proof" that spending more will increase revenues or profits. If> there's an obvious connection, it's only one of many factors contributing> to the revenues or profits. > > Investing in OD work never produces revenues directly. Sometimes there can> be a connection drawn with revenues or profits but even then the connection> is not very tight. Thus OD never (I would say) produces a return on> investment. Let's stop using that term!> > What actually happens is this: A manager believes that a certain activity> (whether it's a socio-techical analysis or a leadership coaching initiative> or painting the walls a different color or upgrading the computer system)> will have a beneficial impact and is willing to invest in that activity. > As someone else mentioned, the true measure of value, then, is whether the> activity had the effect that was expected. > > And it's the role of the manager (not the role of the OD consultant) to> articulate the expectation at the outset of the engagement. > > Where we really get ourselves in a pickle is when we accept the role of> trying to "prove" that the OD engagement had a "return" on investment after> the fact?> >
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