iedex online Pty Ltd ABN 65 081 927 513 PERFORMANCE & DEVELOPMENT PLANNING (PDP) RETURN ON INVESTMENT (ROI) ASSESSMENT iedex Pty Ltd 2/17 Raglan Street South Melbourne VIC 3205 www.iedex.com.au Phone : (03) 9696 1222 Fax: (03) 9696 1333
THE IEDEX PERFORMANCE & DEVELOPMENT PLANNING TOOL Research suggests that businesses that perform well on all elements of managing performance and development can outperform their competitors by 20% on Return On Equity (ROE), revenue growth and Net Profit Before Tax (NPBT) (1). In addition to direct financial benefits, the right performance and development solution will also drive improvement in 4 of 5 key HR business capability areas (2): HR capability / attribute Impact on business performance Scope for improvement iedex PDP can help Strategy 43% 27% Personal credibility 23% 17% HR delivery 18% 26% Business knowledge 11% 31% HR technology 5% 40% The iedex performance and development solution (PDP) will provide you with financial benefits and improve your businesses HR capability by allowing you to: Align individual goal performance to strategic outcomes Improve your organisation s performance potential by focussing on key capabilities and defined behaviours 1 Source: Workforce Intelligence Institute / Success Factors white paper 2 Source: Ulrich and Brockbank The HR Value proposition p222-242 iedex Pty Ltd Page 2 of 9
Manage your Learning & Development spend more effectively by identifying capability gaps Retain your key talent by providing career development and readiness for transfer / promotion indicators Govern the performance development process and link salary / bonus payments more accurately through access to real time staff performance and potential information Obtain both staff and management commitment to individual performance and development. While the benefits of implementing our PDP solution has both qualitative and quantitative rewards, in this report we will focus on the quantitative or financial benefits you might receive at <business name> by implementing our effective, simple, on-line PDP tool. We will look at three (3) areas in particular: Administrative cost savings from using an automated, online system Reduced recruitment costs Increased business output. Finally, we will provide you with a summary of our findings against the estimated cost to implement our solution at <business name>. iedex Pty Ltd Page 3 of 9
ADMINISTRATIVE COST SAVINGS By replacing a manual process with the automated PDP software solution you can expect cost savings in the following areas of your business: Tracking learning & development recorded in performance plans Applying career development priorities across the business Gathering information to assist recruitment Succession planning Communicating and managing progression incentives. Communicating and aligning values & behaviours to those desired by the business If each of these selected areas is manually administered for each employee every year, by using the iedex PDP solution, the vast majority of this administration is automated for you. Plans are available automatically to staff and managers, email reminders are sent regularly, plans pass between staff and managers automatically through process workflow, standard templates are available, data can be pre-filled to streamline your process and learning and development options are available for selection without needing additional paperwork. If we estimate that your HR resources spend 15 minutes per annum, per selected area, per employee to cover the administration steps incorporated in the iedex PDP tool, there will be substantial administrative cost savings: iedex Pty Ltd Page 4 of 9
While these quantitative, cost savings are brought about by automating the administration of your performance and development process, there are additional, qualitative benefits from using the iedex PDP solution: Visibility of the performance and development process, real-time Governance of the performance and development, succession planning and incentive processes Enabling managers and staff to see real time plan / review status and to edit plans and reviews through each iteration Understanding your organisational learning and development requirements to plan, budget and negotiate whole of business training deals with external vendors Auditing adherence to HR policies and procedures for OHS, compliance and business improvement purposes.. REDUCED RECRUITMENT COSTS Unwanted turnover of key staff is creates major direct and indirect costs for your business. The cost to replace staff is generally estimated to be 1.0 to 2.5 of their annual salary. This figure is comprised of: Recruitment costs (estimated to be 50% - 100% of annual salary) Induction costs (estimated to be 20% - 40% of annual salary) Getting up to speed time (estimated to be 40% - 100% of annual salary). In our ROI calculation we take a more conservative approach to this figure by using a factor of 0.75. With our PDP, you will be retaining your key people, keeping them engaged in your organisation and acknowledging their career preferences, succession aspirations, learning and development opportunities. iedex Pty Ltd Page 5 of 9
Some further qualitative benefits from using the iedex PDP solution are: Retaining key staff allows their experience to work in favour of your business through better decision making, more streamlined work processing and improved mentoring for new staff when you do need to recruit externally Capacity to improve the Employer of Choice rating of your business and increasing Employee Engagement levels Directing the learning and development budget and effort to meet defined needs rather than perceived needs, which will drive productivity upward and turnover down. INCREASED BUSINESS OUTPUT It is generally regarded that effective performance and development planning can increase your business output or productivity by up to 45%. This is due to a number of factors such as: 1. Alignment Alignment of individual effort to business goals Skill and behavioural alignment to business needs, goals and values 2. Productivity Effective management of Learning & Development spend Making the best use of key talent by ensuring they are challenged in their roles and fully engaged Effective succession planning Shedding persistent poor performers Progression validation 3. Motivation Upward feedback to improve leadership Accurate alignment of incentives with performance and effort Staff being encouraged for roles matching their career aspirations. iedex Pty Ltd Page 6 of 9
Figure 1 below shows how this productivity growth is achieved, by using your staff more effectively in these three areas (Alignment, Productivity and Motivation). Figure 1 Increased business output through effective performance & development planning Our ROI calculator will assess the benefits to your organisation resulting from improved alignment, productivity and motivation. By implementing the iedex PDP solution, we conservatively estimate a one (1)% increase in business output or productivity from each of these areas. If we then apply this output or productivity increase to something simple, for example your annual payroll expense, you can see significant business output improvement / productivity. iedex Pty Ltd Page 7 of 9
FINDINGS SUMMARY In summary, our ROI Claculator will provide you with a clear, reliable estimate of the value of your investment in our PDP tool: Year One implementation of a fully customised solution Set Up $ <set up fee> Annual Licence $ <annual licence> Training (optional) $ <training> Year One total initial cost $ <total initial fee> Ongoing annual costs (from Year Two onward) Annual Licence $ <annual licence> Annual Maintenance & Support $ <10% fee> Ongoing annual costs (from Year Two onward) $ <total annual > iedex Pty Ltd Page 8 of 9
The annual benefits calculated for you will be shown as: Administrative cost savings $ <administrative cost saving> Recruitment cost savings $ <recruitment cost savings> Increased business output $ <business output> Total business benefits $ <total benefits > By comparing these benefits with the investment you will be making, we will provide you with a payback period and an ongoing ROI from your investment in the iedex PDP solution. By including further qualitative benefits achieved through the alignment of goal achievement to strategic outcomes, improved organisational capability through a focus on key capabilities and behaviours, effective management of learning and development spend and gap identification, retention of key staff and governance over the performance and development process, it is impossible to ignore the benefits an online performance and development tool from iedex would bring to your business. Why not contact us now at iedex and organise an obligation free ROI calculation and a demonstration of our Performance & Development Planning (PDP) solution. Please note this report is based on information provided to iedex and is provided in good faith. Cost Savings quoted are estimates only based on acknowledged management calculations. Prices quoted for the PDP tool are subject to change and maybe negotiated upward or downward with iedex depending on amount of customisation, timeline for delivery or contract period. iedex Pty Ltd Page 9 of 9