June 22, 2015 at 20:14Return on investment in a corporate social network (part 2)
Two examples of calculating the financial benefits of introducing a corporate social network
In the last article, we started the topic of assessing the benefits of introducing a corporate social network and presented various opinions of social software developers. It turned out that some of them propose to evaluate not only quantitative parameters of the results of this implementation, but also qualitative ones, for example, the quality of decisions made, the implementation of new opportunities, indicators of the effectiveness of the control system, etc. We will talk about these parameters another time, and today we will focus on financial analysis of the effect of introducing a corporate social network.
For example, take the industrial holding XXX, which employs about 30,000 people. Based on their industry average indicators, we assume that 30% of the staff, that is, 9,000 people, are provided with computers. The average salary of employees of the holding with taxes is 40,000 rubles. The staff turnover indicator in the holding is 10%.
The internal customer of the corporate social network is the Human Resources Directorate, which is trying to achieve the target indicator with its help - an increase in the level of staff involvement, and in addition to expanding the contour of the search and talent management system to ordinary employees. The HR Director also seeks to support the holding ’s strategic initiatives.: constant search and implementation of more advanced technological solutions, increasing business transparency through improved feedback from employees to management, employee participation in the holding’s charity fund.
The calculation is made on the basis of the assumption that the corporate social network helps to significantly increase staff involvement, which leads to increased labor productivity (which is repeatedly confirmed by cases of different companies).
Personnel engagement is assessed by the HR department based on the results of the annual survey of holding employees. Suppose that the directorate is faced with the task of increasing the current figure by 5%.
According to Gallup reports, the companies involved, that is, companies with a 100% engagement level, have 18% more staff productivity than companies with a 0% engagement level. Due to the increased labor productivity, it is spent on 100% -100% / (100% + 18%) = 15% less working time to achieve the same result of the work of an industrial holding XXX.
The payroll fund for office workers, to which the performance indicator is primarily applicable, is 40,000 rubles / month * 12 months * 9,000 people = 4.32 billion rubles / year.
The time savings from increased employee involvement, expressed through the wage fund, will be 4 billion 320 million rubles / year * 5% increase in involvement * 15% time savings = 32.4 million rubles / year.
We believe that only half of the time saved will be devoted to work. Total we get a benefit of 32.4 million rubles / year * 50% = 16.2 million rubles / year.
Thus, the introduction of a corporate social network saves 16.2 million rubles a year. But this is true, provided that a 5% increase in engagement is entirely due to her. In fact, this is a set of activities of the HR Directorate, which leads to an aggregate result. In this case, the resulting figure must be reduced in accordance with the share of influence of the corporate social network in the overall package of measures.
To exclude subjective analysis, consultants from Forrester Research proposed a method that relies on indicators of user activity on a corporate social network. They considered that highly-involved employees use the system at least once a day, and average-involved employees use the system at least once a week. According to a conservative estimate by Forrester, a highly involved employee saves 30 hours a year thanks to a system, while a medium-involved employee saves 15 hours a year. Thus, by measuring the activity of users on the network, you can make an assessment of the increase in productivity. Here, for example, we took an adequate estimate in our opinion of 10% of highly-involved and 20% of medium-involved users after a year of using a corporate social network.
Thus, the savings amount to 6.57 million rubles per year.
Additionally, in a financial analysis, you can include a quantitative assessment of the decrease in staff turnover and, accordingly, savings on the search and adaptation of new employees, taking into account the calculation of the reduction in the adaptation time of new employees. Or evaluate the decrease in the number of duplicate projects. Estimates of these parameters, which I did for myself, increase the above benefits slightly, not exceeding 30%.
Of course, these approaches have some assumptions: a 50% increase in the productivity level of the employees involved, low costs for staff reductions (if fewer employees can perform the same work front thanks to the social network), or other reasons (inability to fire low-productive employees).
In general, our task was to give an example of financial calculation of the benefits of introducing a corporate social network, the specific conditions for its implementation depend on each company. Whether or not to use this approach is up to you.
To be continued ...
Vladimir Ivanitsa
viva@supereon.ru
In the last article, we started the topic of assessing the benefits of introducing a corporate social network and presented various opinions of social software developers. It turned out that some of them propose to evaluate not only quantitative parameters of the results of this implementation, but also qualitative ones, for example, the quality of decisions made, the implementation of new opportunities, indicators of the effectiveness of the control system, etc. We will talk about these parameters another time, and today we will focus on financial analysis of the effect of introducing a corporate social network.
For example, take the industrial holding XXX, which employs about 30,000 people. Based on their industry average indicators, we assume that 30% of the staff, that is, 9,000 people, are provided with computers. The average salary of employees of the holding with taxes is 40,000 rubles. The staff turnover indicator in the holding is 10%.
The internal customer of the corporate social network is the Human Resources Directorate, which is trying to achieve the target indicator with its help - an increase in the level of staff involvement, and in addition to expanding the contour of the search and talent management system to ordinary employees. The HR Director also seeks to support the holding ’s strategic initiatives.: constant search and implementation of more advanced technological solutions, increasing business transparency through improved feedback from employees to management, employee participation in the holding’s charity fund.
The calculation is made on the basis of the assumption that the corporate social network helps to significantly increase staff involvement, which leads to increased labor productivity (which is repeatedly confirmed by cases of different companies).
The involvement of staff. Method number 1.
Personnel engagement is assessed by the HR department based on the results of the annual survey of holding employees. Suppose that the directorate is faced with the task of increasing the current figure by 5%.
According to Gallup reports, the companies involved, that is, companies with a 100% engagement level, have 18% more staff productivity than companies with a 0% engagement level. Due to the increased labor productivity, it is spent on 100% -100% / (100% + 18%) = 15% less working time to achieve the same result of the work of an industrial holding XXX.
The payroll fund for office workers, to which the performance indicator is primarily applicable, is 40,000 rubles / month * 12 months * 9,000 people = 4.32 billion rubles / year.
The time savings from increased employee involvement, expressed through the wage fund, will be 4 billion 320 million rubles / year * 5% increase in involvement * 15% time savings = 32.4 million rubles / year.
We believe that only half of the time saved will be devoted to work. Total we get a benefit of 32.4 million rubles / year * 50% = 16.2 million rubles / year.
| No. | Metrics | Formula | In year |
| IN 1 | Number of active users | 9,000 people | |
| IN 2 | Average salary, including taxes | 40 000 p. | |
| AT 3 | Engagement growth | 5% | |
| AT 4 | Increased productivity (reduced labor time) | 100% -100% / 118% | fifteen% |
| AT 5 | Lost time | fifty% | |
| Productivity increase | B1 * B2 * 12 * B3 * B4 * B5 | 16,200,000 p. |
Thus, the introduction of a corporate social network saves 16.2 million rubles a year. But this is true, provided that a 5% increase in engagement is entirely due to her. In fact, this is a set of activities of the HR Directorate, which leads to an aggregate result. In this case, the resulting figure must be reduced in accordance with the share of influence of the corporate social network in the overall package of measures.
The involvement of staff. Method number 2.
To exclude subjective analysis, consultants from Forrester Research proposed a method that relies on indicators of user activity on a corporate social network. They considered that highly-involved employees use the system at least once a day, and average-involved employees use the system at least once a week. According to a conservative estimate by Forrester, a highly involved employee saves 30 hours a year thanks to a system, while a medium-involved employee saves 15 hours a year. Thus, by measuring the activity of users on the network, you can make an assessment of the increase in productivity. Here, for example, we took an adequate estimate in our opinion of 10% of highly-involved and 20% of medium-involved users after a year of using a corporate social network.
| No. | Metrics | Formula | In year |
| F1 | Number of active users | 9,000 | |
| F2 | Average salary, including taxes | 40 000 p. | |
| F31 | Percentage of Highly Involved Users | 10% | |
| F32 | Share of average users involved | 20% | |
| F41 | Increased Productivity of Highly Involved Employees | 30 of 1970 hours per year | 1.52% |
| F42 | Increased productivity of mid-level employees | 15 of 1970 hours per year | 0.76% |
| F5 | Lost time | fifty% | |
| Productivity increase | F1 * F2 * 12 * F5 * (F31 * F41 + F32 * F42) | 6 566 4 00 p. |
Thus, the savings amount to 6.57 million rubles per year.
Additionally, in a financial analysis, you can include a quantitative assessment of the decrease in staff turnover and, accordingly, savings on the search and adaptation of new employees, taking into account the calculation of the reduction in the adaptation time of new employees. Or evaluate the decrease in the number of duplicate projects. Estimates of these parameters, which I did for myself, increase the above benefits slightly, not exceeding 30%.
Of course, these approaches have some assumptions: a 50% increase in the productivity level of the employees involved, low costs for staff reductions (if fewer employees can perform the same work front thanks to the social network), or other reasons (inability to fire low-productive employees).
In general, our task was to give an example of financial calculation of the benefits of introducing a corporate social network, the specific conditions for its implementation depend on each company. Whether or not to use this approach is up to you.
To be continued ...
Vladimir Ivanitsa
viva@supereon.ru