What are the most effective ways to measure the ROI of your resource management strategies?

1 Define your objectives and metrics

Before you can measure the ROI of your resource management strategies, you need to define your objectives and metrics. What are you trying to achieve with your resource management? What are the key indicators of success and failure? How will you track and quantify them? For example, you may want to increase productivity, reduce costs, improve quality, or enhance customer satisfaction. Depending on your objectives, you may use metrics such as hours worked, revenue generated, expenses incurred, errors made, or feedback received.

2 Calculate your costs and benefits

Once you have defined your objectives and metrics, you need to calculate your costs and benefits. How much are you spending on your resources and how much are you earning from them? You can use various methods to estimate your costs and benefits, such as historical data, benchmarks, projections, or surveys. For example, you may calculate your costs based on the salaries, training, equipment, and overheads of your resources. You may calculate your benefits based on the value added, sales, profits, or savings of your resources.

3 Compare your results and expectations

After you have calculated your costs and benefits, you need to compare your results and expectations. How well are your resource management strategies performing compared to your objectives and metrics? How much are you gaining or losing from your resource management? You can use various formulas to measure your ROI, such as the simple ROI formula (benefit-cost)/cost or the net present value (NPV) formula that discounts future cash flows. For example, you may compare your ROI with your target ROI or with the industry average ROI.

4 Analyze your strengths and weaknesses

Once you have compared your results and expectations, you need to analyze your strengths and weaknesses. What are the factors that contribute to or hinder your resource management ROI? What are the best practices and the common pitfalls of your resource management? You can use various tools to analyze your strengths and weaknesses, such as the SWOT analysis that identifies your internal and external factors or the gap analysis that identifies the discrepancies between your current and desired state. For example, you may analyze your strengths and weaknesses based on the quality, quantity, availability, or utilization of your resources.

5 Implement your improvements and adjustments

After you have analyzed your strengths and weaknesses, you need to implement your improvements and adjustments. How can you enhance your resource management ROI by leveraging your strengths and addressing your weaknesses? What are the actions and changes that you need to take to improve your resource management? You can use various methods to implement your improvements and adjustments, such as the SMART goals that specify your measurable, achievable, relevant, and time-bound objectives or the PDCA cycle that involves planning, doing, checking, and acting on your resource management. For example, you may implement your improvements and adjustments by hiring, training, reallocating, or optimizing your resources.

6 Monitor and evaluate your progress and outcomes

Once you have implemented your improvements and adjustments, you need to monitor and evaluate your progress and outcomes. How are your resource management strategies affecting your ROI over time? What are the impacts and outcomes of your resource management? You can use various techniques to monitor and evaluate your progress and outcomes, such as the dashboard that displays your key performance indicators (KPIs) or the feedback that collects your stakeholder opinions. For example, you may monitor and evaluate your progress and outcomes by measuring your productivity, efficiency, quality, or satisfaction levels.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?