The Return on Investment Phenomena

The Return on Investment Phenomena

Have you ever stopped to think about what your time is worth? What is the long-term impact of your programs and how do you evaluate if something has a Return on Investment for you?

The basic formula for calculating ROI is as follows:

Direct Vs. Indirect Costs

It can be really hard to calculate some of the soft costs of the hours spent. So, let’s take a look at an injury cost and the return on investment for implementing a proactive assessment. We need to first understand what costs we can track.

  • Total Direct Costs (benefits, wages, health care costs, disability manager costs; WSIB premiums/costs – rebates; STD/WI benefits paid out; Daily wage X sick days; LTD premium; Staff replacement costs /OT; Disability Management Personnel costs; Accommodation Costs; Grievance costs; Arbitration costs/legal costs).          
  • Total Indirect Costs (lost productivity, supervisor time, coworker time, replacement/overtime, training, administration fees/time, lost sales, reporting time, customer relationships, etc.) *Indirect costs = 75% of direct costs – Statistics Canada

Calculating ROI Depending on Your Profit Margins

If your profit margin is 10% and your cost of a claim is $750, you need to sell 750 $10 veggie burgers to generate $7,500 in sales just to break even!

If your profit margin is 10% and a simple lost time claim is $5,000, you need sell 3,333 chicken dinners at $15 each to generate $50,000 in gross sales to create $5,000 in profits just to break even!

If your profit margin is 10% and a more complex claim is $20,000, you need sell 8,000 steak platters at $25 each to generate $200,000 in gross sales to create $20,000 in profits just to break even!

If you profit margin is 10% and you have a serious claim at $200,000, you need sell 57,143 surf & turf dinners at $35 each to generate $2,000,000 in gross sales to create $200,000 in profits just to break even, but you will have $5 left over.

Understanding Return on Investment and Cost Avoidance

In the area of proactive and preventative measures, the costs of injury and illness may not have been spent yet, but we are really trying to avoid costs. So, we would need to estimate what the average cost of a similar claim or similar injury might be. You can get that information from your Workers’ Compensation statistics, Statistics Canada, your benefits carrier, or general industry data from Conference Board of Canada.

You then determine if your approach is the same or different from the one you are comparing to (i.e., are you comparing apples with apples or apples and oranges?) It is best to compare with a similar industry or even a similar department within your organization.

Once you have some comparative data, you can determine what the claim could cost on average. Now, what is the cost of the accommodation, program, or intervention that you are providing? Compare the cost of the program and the cost avoided to determine if there is a ROI.

The ROI of Joining Our Membership

Gowan Consulting has taken the liberty to demonstrate ROI through comparing the cost of our membership to the hours that you would spend gathering and preparing tools for your team. We know that time is one of the most limited resources that you have…so let us show you the time you save with our membership EACH month! This is just the ROI of the employee tools you get with the membership – and you get so much more.

  • Hours of gathering and vetting information (experienced disability researcher): 20 hours
  • Hours of creating information in a meaningful format for employees: 15 hours
  • Hours of beautifying the information: 8 hours
  • Training time for presenter of videos: 19 hours
  • Finalizing videos: 15 hours

TOTAL hours (your cost): 77 hours (10 working days x $350) = $26,950.00

Cost of the Membership (your investment) = $100 – $500

Return on Investment = 53.9 ROI

Isn’t your time worth it? Join the Mastering Health and Productivity Membership before September 30, 2021!

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