Show me the money. Monetize this. Turn it into dollars.
Executives often use these expressions when presented with data where the value is unclear. Converting data to money is one way executives can understand problems and opportunities more clearly. If it’s a problem, such as excessive customer complaints, the annual cost of complaints will get their attention. If it’s an opportunity, such as an investment in job engagement, team building or improved communications, the monetary value will help make the investment decision.
This is not a new concept. The phrase “show me the money” was popularized in the 1996 movie “Jerry Maguire” — and represents the title of a book we published 10 years ago — but the concept has been evolving for many years. The issue becomes important when budgets are under scrutiny or when funds are scarce.
According to “The Promising State of Human Capital Analytics,” a 2016 report from the Institute for Corporate Productivity, ROI Institute and the Center for Talent Reporting, converting data to monetary value is also one of the five types of human capital analytics projects. [Editor’s note: The authors founded the ROI Institute.] Let’s look at some examples.
Show the value of employee engagement is a common request. To understand the value, engagement could link to other measures or impacts that can be converted to money easily. The key is to link the “hard to value” measure, like engagement, to a measure that is easy to value, like retention.
Typically, job engagement has been linked to gross productivity, or revenue per employee, sales, quality, safety, retention and customer satisfaction. The challenge is to find the mathematical relationship that represents both a significant correlation and causation. When this is accomplished and operationalized, it shows the value of investing in improvements in this measure. This is often beyond the scope of L&D, but usually involves the human capital analytics team.
Executives sometimes ask how to convert leadership development, coaching or team building into money. To do this, examine the impact of those processes. We’re not monetizing leadership development; we’re monetizing the impact of using leadership competencies. The impact could be any type of measure such as productivity, sales, errors, accidents or turnover that can be converted to money.
If it’s an important measure, such as customer satisfaction, absenteeism or retention, it probably already has been converted to money. Then, it’s a matter of finding the individuals who developed the value; start by locating where the measure is captured. If the measure is customer complaints, the customer care department will have the value. If it’s absenteeism, it’s probably in the payroll department. The point is, there is a group or an individual who captures the data, and they may have already addressed the issue.
If employee turnover is a problem or opportunity, executives will need a credible value for it. Calculating the cost is not difficult; tabulate the costs associated with having an employee leave and be replaced. Unfortunately, it takes resources to develop a credible value, often causing us to look for other ways to obtain the monetary value. Employee turnover is a classic research topic, and it’s easy to find turnover costs in literature. For instance, one might use a database such as eric.ed.gov.
About 80 percent of measures that matter have been converted to money. And of the roughly 20 percent of measures remaining, approximately 10 percent have probably been converted by other organizations with a credible value. Another 5 percent of measures can be converted to money if the organization is willing to allocate the resources to do it. The remaining 5 percent are concepts that probably cannot be converted to money credibly with a reasonable amount of resources. These are the intangibles.
Leadership development, management development, team building or other soft skills, can be pushed to the impact level and converted to money for an ROI calculation. If this conversion is beyond the scope of what you want to do, you have a choice. You can leave it as an intangible or suggest that resources be allocated to convert it to money.