It measures benefits generated by a program or initiative related to their costs.

Clarity is a must and it should concentrate on:

• the costs included
• other potential costs that could appear and the arguments for not including them
• the benefit calculation

Calculation steps:

1. Calculate the value of the benefits
2. Calculate the costs of the program/measure
3. Divide the benefit value to costs



Example: Let’s say you want to implement a Leadership program for the management team.

The need emerged from engagement surveys and exit surveys where employees appreciated that the leadership team should improve their management skills. One of the objectives of the program is to reduce employee turnover with 10%.

We have a cost of the program charged by the supplier at: 100.000

One of the benefits can be the reduced cost with search firms.

Let’s say that a 10% turnover reduction will generate a saving with recruitment companies of: 200.000

Cost benefit ratio is: 200.000 / 100.000 => 2:1

Definitely a good investment.

Depending on your analytics capability you can calculate multiple benefits or costs of the program.

For example, in this example we did not take in consideration costs like: time investment from the participant managers, nor other assimilated costs of the program like course locations, etc. When it comes to benefits we did not include benefits from other objectives of the program like increase performance.