Not by the Numbers

In the case of a business-performance-measurement program he attended at California Institute of Technology in 2001, he picked up the idea of using a "dashboard" of critical variables for business success, for instance. Rehnberg and his team now lay out all the company's key variables, giving him a thorough picture of business performance. For example, one key variable at Idaho Asphalt is tons of asphalt shipped. The dashboard shows tons shipped from month-do-date versus year-to-date and offers up comparisons of those figures to company projections, enabling Rehnberg to anticipate problems. If the tons-shipped figure is lower than planned, for instance, he knows that accounts receivable will be lower; hence cash flow will be lower than projected.

Evidence vs. Proof
One reason that ROI is so rarely used is that it's hard to distinguish what happens after an executive takes a course as mere evidence of a return or whether it's absolute proof, as Karen Vander Linde, a PricewaterhouseCoopers' HR principal, puts it. Does a boost in profits absolutely stem from an executive's participation in a course? It's often hard to single out executive education as a definite contributor to financial performance.

Even those who try to quantify educational returns for a living warn against the dogged pursuit of a dollar value as proof. Schon Beechler, the faculty leader of the Columbia Learning Impact Initiative, stresses that any number arrived at is only part of the picture. "To think ROI [alone] can measure long-term value is naïve," she says.

In fact, math is only about a third of what goes on in the Columbia initiative, which analyzes the financial return of the four-week Columbia Senior Executive Program at the companies of the program's alumni. The rest is investigation into intangible factors — which are more important in determining whether exec ed will pay off, Beechler contends

For example, Columbia researchers study participants' personal attitudes and work environments. One finding is that alumni who had supportive bosses showed a significantly higher rate of success in business challenges after taking the program than those whose bosses were unsupportive, uninterested, or otherwise disengaged.

Indeed, the best executive education program won't pay off back at work if the environment there doesn't encourage development. For all that organizations spend on executive education programs, "a lot of companies are leaving money on the table from not addressing the support of participants," says Beechler.

Northrop Grumman's integrated systems unit addresses that problem by considering each executive individually. Unit heads assess executives and send them to educational programs based on their particular needs and potential. Newquist's definition of return on such investments extends far beyond the individual level. "The return is that you have a strong talent pool," he says.

In fact, there's a point beyond which the pursuit of ROI becomes self-defeating; the point of executive education in the first place gets lost. "Measuring ROI is fine and noble" until the forced outcome becomes a number that goes out two decimal places," says Unicru's Yerex.

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