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May 04 2018
Noboby Wants to Be the Denominator!

In 1978, Thomas F. Gilbert rocked the world of training and performance improvement by pointing out the obvious in his book, Human Competence:  In the “world of work,” as he called it, the WORTH of any effort to improve organizational performance is equal to the VALUE of the accomplishments (or work outputs) produced or improved by that effort divided by the COST of the behavior. He pointed out very clearly that accomplishments are valuable, while behavior is costly.  We need to pay, support, provide resources for, and otherwise invest in the  behavior of people. What we hope to get from that behavior are valuable accomplishments or work outputs that are valuable because they contribute to organization-level business results, or perhaps to societal results.

It is common these days to use a formula for ROI (return on investment) that is quite similar. ROI is equal to the value of the accomplishments divided by the cost for producing them through the behavior of people.

When calculating ROI, accomplishments are the numerator while behavior is the denominator.

Often programs designed to improve communication, develop software skills, build strategic thinking, and so forth, focus on developing the behavior of people who complete those programs. Similarly, we typically instruct coaches to focus on the behavior of the people whom they coach. But those things are all costs. What are the valuable accomplishments that the people will produce as a result of the coaching or training?

That's where we get a positive ROI.

We can encourage people to behave in different ways, but until we specify the valuable work outputs or accomplishments that they will produce, neither they nor the organization can identify the value of their performance, or determine the ROI for our efforts to help.

Training, management, and development programs that focus on behavior without specifying valuable accomplishments are part of the denominator in the ROI equation. We cannot determine whether they deliver value unless we know the work outputs.

In whatever role we play, we want to be or be associated with the valuable accomplishments, not merely costly behavior.

In short, nobody wants to be the denominator!

We want to optimize value delivered.  And that is why we begin our analysis using the Performance Chain by identifying, and anchoring the rest of the analysis, in work outputs or accomplishments of people that contribute to business results.

- Carl Binder, CEO


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