Companies discovered that one way internal resources can contribute to a company’s business objectives is to use them as an Employee Resource Group (ERG) or convert them to Business Resource Groups.
These groups have a primary focus to assist the organization in meeting its strategic business goals and objectives. There is growing pressure on both Employee Resource Groups and Business Resource Groups to show measurable results for their initiatives, programs, and company-sponsored events. As companies continue to look for ways to cut costs and improve financial returns there is increasing interest in establishing Business Resource Groups and transforming ERGs to BRGs that have the skills to measure the ROI of their initiatives. There is a book and other resources I have used that provide a comprehensive, yet practical approach for aligning, collecting, analyzing and reporting the ROI impact of all ERG and BRG initiatives.
Calculating Costs and Benefits
Taking the time to calculate the costs and benefits of an ERG/BRG initiative is an essential step in developing the Diversity Return on Investment calculation since it represents the denominator in the DROI formula. It is equally critical to pay attention to both the costs and benefits of any ERG/BRG initiative that you put in place. In practice, however, the costs are often more easily captured than benefits.
Today there is more pressure than ever before to report all initiative costs or what is commonly referred to as fully loaded costs. This takes the cost profile beyond the direct cost of ERG/BRG initiatives and includes the time all participants are involved in developing and participating in the initiative, including all costs, benefits, and other overhead. Taking the conservative approach to calculate diversity return on investment, you should plan to report fully loaded costs. With this approach, all costs that can be identified and linked to a particular ERG/BRG initiative are included. The philosophy is simple: When in doubt in the denominator, put it in (i.e., if it is questionable whether a cost should be included, the rule suggests that it should be included, even if the organizational costs guidelines don’t require it). When Diversity ROI (DROI®) is reported to your target audiences, it should withstand even the closest scrutiny in terms of its accuracy and credibility. The only way to meet this test is to ensure that all costs are included. Here is a link to the book I mentioned and other ERG and BRG ROI resources:
A Seven-Stage Model of ROI Analysis
It provides a 7-stage model to generate ERG and BRG value to the bottom-line. This Diversity ROI approach can help ERGs and BRGs save time, resources and efforts when developing methods to measure and demonstrate the financial ROI impact their initiatives are having on the organizations bottom-line. It is a “must read” for any group that wants to highlight their success in performance improvement terms and impact!
Dr. Ed Hubbard is the President & CEO of Hubbard & Hubbard, Inc., and recognized as the Founder of the Diversity Measurement and Diversity ROI Analytics fields. For more information about the Hubbard Diversity ROI Institute, log onto http://www.hubbardnhubbardinc.com/certification-workshps.html