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Return on Investment of Employee
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Return on Investment of Employee
Return on Investment of Employee
Return on Investment of Employee
Return on Investment of Employee
Return on Investment of Employee
Return on Investment of Employee
Return on Investment of Employee
Return on Investment of Employee
Return on Investment of Employee
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Return on Investment of Employee


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Some Related Topic Tags
employees (general), return on investment (roi)
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  Post Number #1  
Old 19th June 2013, 03:00 AM
hsd222

 
 
Total Posts: 2
Please Help! Return on Investment of Employee

Dear All,

I am trying to calculate ROI of employees, especially shop floor operators and supervisors.
I know how to calculate ROI for some new purchases or something of that kind.
But this is getting harder as I am digging in.
The main part where I am stuck is the tangible and intangible benefits from an employee.
If we consider Production per unit time as a tangible benefit and Effeciency/Effectiveness as intangible benefits, I wonder how I can quantify intangibles.
Also, am I going right on this???
Also my company's management wants that ROI, what exact data should they capture herewith???

Please help.

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  Post Number #2  
Old 19th June 2013, 08:14 AM
Randy's Avatar
Randy

 
 
Total Posts: 8,561
Re: Return on Investment of Employee

1st tell your management to do an ROI of themselves to help understand the process
Thank You to Randy for your informative Post and/or Attachment!
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  Post Number #3  
Old 19th June 2013, 08:16 AM
Ninja's Avatar
Ninja

 
 
Total Posts: 790
Re: Return on Investment of Employee

LOLROF Awesome response!
  Post Number #4  
Old 19th June 2013, 08:41 AM
RoxaneB's Avatar
RoxaneB

 
 
Total Posts: 2,980
Re: Return on Investment of Employee

Quote:
In Reply to Parent Post by hsd222 View Post

Dear All,

I am trying to calculate ROI of employees, especially shop floor operators and supervisors.
I know how to calculate ROI for some new purchases or something of that kind.
But this is getting harder as I am digging in.
The main part where I am stuck is the tangible and intangible benefits from an employee.
If we consider Production per unit time as a tangible benefit and Effeciency/Effectiveness as intangible benefits, I wonder how I can quantify intangibles.
Also, am I going right on this???
Also my company's management wants that ROI, what exact data should they capture herewith???

Please help.
I love Randy's response! But saying that might not be a smart move for your own employment.

Calculating ROI for an employee implies that there has been some "I" in the first place. What kind of investments are being taken with these employess and what are the costs associated with these investments?

For things like Six Sigma training, I've heard that companies want the project portion of that training to be equal to or more than the cost of the training. There's your "R".

If you're talking about leadership/teamwork training for your supervisors, consider the costs to train new employees and avoiding the need to do that because your supervisors are just so gosh-darn awesome.

Happy, job-satisfied employees tend to stick around, avoid sick days, be more productive, etc. Take a look at turnover, sick day numbers, productivity numbers.

I doubt you'll find a hard-and-fast way to calculate ROI for employees unless their training has a direct connection to a project or activity.
Thank You to RoxaneB for your informative Post and/or Attachment!
  Post Number #5  
Old 19th June 2013, 12:00 PM
BethP

 
 
Total Posts: 48
Re: Return on Investment of Employee

This sounds like an exercise to determine which employees are most valuable. Is a layoff being planned?

Some other factors to consider:
1. Time to proficiency (how long does it take new employee or existing employee rotating to new area to reach target productivity numbers)
2. Number of skill sets (how flexible is the employee to rotate between different areas based on need?)
3. Tribal Knowledge / SME (who are the go to people for providing OJT or to work on special projects or to answer questions on how / why things are as they are?)
4. Work accuracy

Upper management sometimes make the mistake of looking at averages and saying this person is equal to that person. However, people are not always interchangeable.
Thank You to BethP for your informative Post and/or Attachment!
  Post Number #6  
Old 19th June 2013, 07:11 PM
kgott

 
 
Total Posts: 1,027
Re: Return on Investment of Employee

Quote:
In Reply to Parent Post by hsd222 View Post

Dear All,

I am trying to calculate ROI of employees, especially shop floor operators and supervisors.
I know how to calculate ROI for some new purchases or something of that kind.
But this is getting harder as I am digging in.
The main part where I am stuck is the tangible and intangible benefits from an employee.
If we consider Production per unit time as a tangible benefit and Effeciency/Effectiveness as intangible benefits, I wonder how I can quantify intangibles.
Also, am I going right on this???
Also my company's management wants that ROI, what exact data should they capture herewith???

Please help.
I find this an interesting question. How would or could ROI be calculated for a support person such as a quality manager/coordinator or HSEQ person etc??
Thanks to kgott for your informative Post and/or Attachment!
  Post Number #7  
Old 20th June 2013, 04:56 AM
hsd222

 
 
Total Posts: 2
Re: Return on Investment of Employee

Now let me tell you the way I am approaching.

STEP 1 : Calculating the Total Cost i.e. CTC as fixed plus variable costs, which comes out to be Total Costs incurred on an employee.
STEP 2: Calculating Productivity Gain .
- Suppose in a shift on 8 hrs an operator produces 100 pieces. So,100/8=12.5 units per hr are produced.
- Consider total hourly cost as 100 bucks and value added cost at the operator's work station be 40 bucks. So, operator returns 40*12.5=500 bucks per hr.
- gain = (output/input)*100= (500/100)*100= 500% returns.
Now, this is Performance Evaluation technique.

Calculating ROI on quality managers is indeed a tough job.
But that can be done once one knows how he can quantify managers KPIs.
  Post Number #8  
Old 20th June 2013, 07:03 PM
kgott

 
 
Total Posts: 1,027
Re: Return on Investment of Employee

Quote:
In Reply to Parent Post by hsd222 View Post

Now let me tell you the way I am approaching.

Calculating ROI on quality managers is indeed a tough job.
But that can be done once one knows how he can quantify managers KPIs.
I'd like to how because then I can put it in my resume.
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