PlanetNTF

A simplified or simple approach in measuring Social ROI:

In any business, time is money. If you can show how your social initiative can reduce time and effort for specific tasks that leads to an increase in productivity, you can relate the savings to the cost of an employee’s time.

A simple formula for measuring the cost of an employee is:

• Annual Salary + Salary Burden (typically 15 percent – 20 percent of the Annual Salary) / 2,080 Hours (total hours in a working year).

For example: Jane is an HR Analyst making $60,000 per year. Using the formula above you can extrapolate the following:

• $60,000 per year + $12,000 (20 percent Salary Burden) = $72,000
• $72,000 / 2080 hours = $34.61 per hour cost for Jane

According to a McKinsey & Company study, social collaboration can increase internal communication and collaboration by 25 percent to 35 percent and overall productivity by 20 percent to 25 percent.

If we take the overall productivity number at face value (using the lower percentage) we can calculate the cost savings for Jane the HR Analyst based on the following algorithm:

• 40 hours per week * 20 percent increase in productivity = 8 hours per week
• 8 hours per week * $34.61 = $276.88
• $276.88 * 52 Weeks = $14,397.76 per year.

This is a very simple algorithm that can guide you in showing hourly savings for a specific employee. There are more complex algorithms that can be used to calculate employee cost but I wanted to keep this simple for the purpose of this exercise. You can find free calculators online that will provide you a deeper breakdown and more options to input if this algorithm is too simple.

via Practical Steps to Measuring Social ROI.