HRD4801 Assignment 11 Semester 2 2023 (SOLUTIONs)

ASSIGNMENT 11 Lesson 11 DUE DATE Unique number 10 January LEARNING OUTCOMES After completing this assignment, you should be able to • calculate the return on investment (ROI) of a human resource development (HRD) intervention in an organisation by applying the ROI formula • evaluate the percentage calculated • discuss and apply the steps of the ROI implementation process • apply the ROI implementation process to measure the financial impact of an HRD intervention • reflect on your learning experience once you have completed your assignment • indicate the ten (10) pitfalls of calculating the ROI and suggest strategies to avoid them • discuss the measurement of ROI strategies for HRD 2 QUESTION 1 Read the case study and then answer the questions that follow: African Bank Corporation: Measuring the return on investment (ROI) in selection and onboarding African Bank Corporation (ABC) is a large commercial and consumer banking organisation with a strong presence in Africa. Functionally, ABC operates through different divisions, including retail banking, electronic banking, international banking, consumer loans, commercial loans, home mortgages, wealth management, corporate services and investments. ABC has experienced significant growth and is planning for future growth; however, the management team is concerned that the management talent is inadequate in the organisation. Each year, African Bank Corporation recruits from major business schools, hiring more than 100 Master of Business Administration (MBA) graduates. Executives had two concerns about the programme: there were not enough new MBA’s and the turnover among newly hired MBA’s seemed too high. The records show that up to 30% of new MBA hires left in the first two years after ABC invested a significant amount of money in their development. ABC had experimented with rotational training programmes in the past, but that did not seem to work out well, and the turnover rate was even higher. Management was convinced that the turnover had more to do with the way new hires transitioned into the bank. They concluded that three issues were contributing to the problem: • the importance of having a clearly defined career path • there is a lack of meaningful assignments in rotational areas • placements’ not occurring as quickly as they should be. These three challenges led the global talent management team to develop a new onboarding programme for MBA candidates. Needs analysis The talent management team conducted analyses to understand high turnover rates and the failure of the previous programme. They aimed to improve the current programme and eventually implement a new one to retain key appointees. HR reviewed exit interview data and called previous MBA hires to discuss improvements. Furthermore, HR invited current MBA graduates to participate in focus group interviews to gain insight into the reasons why some colleagues left. The analysis revealed that age, gender, marital status and grades had little impact on tenure and career progression. Three business schools had significantly higher tenure and success, based on the MBA curriculum. The selection process was reviewed to ensure the right candidate was selected. Recruitment/Selection The recruiting team focused on three business schools with higher success rates, aiming to produce graduates who quickly take on leadership roles. A customised assessment tool was used to assess the graduates’ eagerness to lead a team and willingness to assume responsibility, as well as their values about the ABC culture. After analysing data, low scores indicated potentially low level of loyalty. Interviews were focused on organisational culture, responsibility and team success. 3 Rotational assignments The rotational programme had undergone five changes. The first involved the length of the programme, with each assignment negotiated between participants, a career advisor and relevant departments. Participants were expected to fill a current job within a department and improve within two months as part of the second change. The third change required participants to recommend improvements in their assigned department, including aspects such as technology, procedures, leadership and human resources. The fourth change was the rotational schedule, with participants completing at least six rotations, ideally seven or eight, to ensure that they could transition into full-time positions. The final change was requiring new candidates to assume a leadership role within a year. Formal training An important part of this programme is a comprehensive two-week workshop that provides the training necessary to succeed at African Bank Corporation. External faculty and internal experts facilitate the workshop, covering the following 15 modules: 1. Introduction to the MBA Programme 8. Leadership Development 2. Company Mission, Vision, 9. Home Mortgages Values and Strategic Objectives 10. Wealth Management 3. Retail Banking 11. Investment Services 4. Electronic Banking 12. Negotiation Skills 5. International Banking 13. Process Improvement 6. Corporate Services 14. Managing Change 7. Consumer/Commercial Lending 15. Performance Management Because only a few participants have banking experience, this training programme aligns the new MBA recruits with the company and the banking business environment while covering key soft-skills topics that are necessary to succeed in the bank. Rationale for ROI The senior management team wants to assess the programme's impact and financial ROI, focusing on retention, success in permanent jobs, performance levels and system improvements. The ROI methodology process, which captures reaction, learning, application, impact and ROI, is chosen for comprehensive evaluation. The objectives The programme aims to provide a comprehensive learning experience for MBA graduates. It follows five levels of evaluation, with objectives developed with input from executives and stakeholders. Level 1 (reaction) focuses on ensuring that the programme is relevant to participants' individual needs and important for their career success. Level 2 (learning) involves a two-week classroom programme to teach basic banking and organisation skills. The goal is to have 90% of participants complete the programme. Participants must complete a quiz about their department's work and self-assess their learning needs. Level 3 (application) focuses on job assignments and individual projects to achieve average performance within two months. Level 4 (business Impact) focuses on achieving 80% permanent assignments within one year, 90% retention, and 50% implementation of participant projects in rotational departments. Level 5 (ROI) sets a 20% ROI objective, aiming for a reduction in turnover, increased participant performance and departmental improvements. The programme costs include administrative expenses, training and subsidised salaries in the participating departments. 4 For Year One Turnover data Improvement: 22% - 4% =18% Cost of turnover = 1.5 x annual salary Annual MBA salary = R80 000.00 Cost avoided: R80 000.00 x 1.5 x 10 = R1 200 000.00 Process improvement projects: R 111 298.00 Total monetary benefits (1st year): R1 311 298.00 For Year Two Turnover data R1 200 000.00 Process improvement projects R 111 298.00 Total monetary benefits (2nd year) R1 311 298.00 Total monetary benefits in two years R2 622 596.00 The process improvement projects involved individuals demonstrating the monetary value of the improvements, often including multiple years of revenue. The first year's value was R111 298.00, while the balance for total monetary benefits in two years was R2 622 596.00. Early job assignments contributed value to the bank, but inconsistency prevented their pursuit. Programme cost For Year One Needs assessment R 10 000.00 Programme development R 5 000.00 Workshop development R 20 000.00 Coordination R 93 000.00 Facilitation of workshop (3 groups) R 150 000.00 Facilities, food & refreshments R 45 000.00 Administrative expense R 16 000.00 Workshop materials R 16 000.00 Participants (salaries): Two-week workshop R 232 615.00 Rotational assignments (20%) 12 months R 1 209 600.00 Executive time (salaries) R 55 000.00 Evaluation R 50 000.00 Total R 1 902 215.00 For Year Two Coordination R 16 000.00 Administration expenses R 5 000.00 MBA participants’ salaries 20%, 1.2 months R 120 960.00 Executive time (salaries) R 5 500.00 Total R 147 460.00 Two-year total R 2 049 675.00 5 The figures outline the costs of a programme, including needs assessments, programme development, workshop development, materials, facilitation and facilities. The programme also includes coordination and administration, which involve two full-time people. Using a 40% benefit factor, we calculated the total salaries for participants to be R232,615.00. The talent development department assumed 20% of their pay for the rotational assignment, while the visiting department absorbed the remaining 80%. Executives at different levels spent a total of R55 000.00 in time, while the evaluation cost amounted to R50 000.00. The two-year total cost of the programme, fully loaded and ultraconservative, is R2 049 675.00. The executive time (salaries) is now down to R5 500.00, leaving a total of R147 460.00 for the second year. MBA students who have not yet been assigned will not have Year Two costs repeated. Source: Adapted from Phillips, PP (2018) 1.1 Calculate the return on investment (ROI) by using the ROI formula. Show all your calculations as well as the answer. (7) 1.2 Evaluate your final ROI figure in question 1.1. (3) 1.3 Describe and apply steps 1, 3, 6, 8 and 11 (2 marks per step) in the implementation process of the ROI to the case study. Give examples from the case study for each step you describe. (10) 1.4 If you were a human resource development (HRD) manager, how would you report the results of the case study to top management? (You will be awarded a maximum of 5 marks.) (5) 1.5 What are the lessons learnt from this case study? (You will be awarded a maximum of 5 marks.) (5) [30] QUESTION 2 As a business consultant working with organisations in South Africa, you are tasked with explaining the concept of ROI to a group of executives. Discuss what ROI is (1 mark) and its relevance to human resource development (HRD), drawing on Drucker’s (2017) observation, “If you can’t measure it, you can’t manage it.” (5 marks). How can South African businesses effectively apply the concept of ROI to improve decisionmaking and performance (4 marks)? (10) [10] QUESTION 3 You are the HRD manager for Bontle Corporation, which is keen on enhancing its employee training programmes to improve overall performance and productivity. The organisation has decided to implement a system to measure the ROI of these training initiatives. Your role is crucial in ensuring a successful implementation. However, there are potential pitfalls that you must navigate. Discuss the ten (10) pitfalls that are likely to be encountered when implementing ROI. (Each correct pitfall will earn you one mark.) (10) [10] Total: 50 marks