ROI – Return on Investment.

In business, the term “return on investment” (ROI) is used to measure the “rate of return” on money invested in a commercial venture that will decide whether or not to continue down that particular road. It quantifies risk. Experienced businesspeople find that taking the time to calculate an ROI is good business. First-time entrepreneurs often act on impulse believing that just because something sounds like a good idea to help their business grow it must be, often resulting in money spent foolishly and needlessly.

With all the talk and controversy surrounding teacher observations, let’s apply **ROI – Return on Investment principles** to see if teacher evaluations are worth the time, money and aggravation. Here’s the math:

To demonstrate how easy it is to calculate an ROI for any situation, we’ll use your own LinkedIn account to calculate the ROI for increasing you’re the number of people who viewed you profile in the past (since I assume no one is looking to *decrease* the number of viewings.)

Here is the standard ROI formula we will be using:

**ROI ****= ****Net Profit**** (Gain from Investment – Cost of Investment) / Cost of ****Investment**** x ****100**

Open a new tab at the top of your screen and go to your LinkedIn “Home” page. Look at the following:

- Click on the number of people who have viewed your profile in the past 90 days

We have to assign a value (the same unit) to both profit and cost. We must apply an arbitrary unit, but you can think of this number in terms of “value” or dollars. Using an arbitrary value for this LinkedIn *exercise* is fine, since ROI’s are used to determine worth, dollars or value, it is for our understanding only. Here are the terms we will use:

**Cost of investment** (The value of the time you worked on increasing your profile)

**Gain from Investment** (The *total* money, goodwill, clients, value, etc… you gained from the time invested)

**Net Profit** (Gain from Investment – Cost of investment)

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**Example #1:**

**Gain from Investment**– 300 people viewed your profile in the past 90 days. You rate this a 500,*since*y*our ranking has never gone over 20. This is great!***Cost of Investment**– You spent a mere 3 hours working on the LinkedIn site in addition to your regular job schedule of 40 hours/week.*The value is low because the investment was so little.**You spent almost no time on LinkedIn. In turn, you got to spend lots of time with your family, your wife is loves you for always being home (and cooked you a big juicy steak to prove it), and your kids took you to see the new Jurassic Park movie. They even took your neighbor Mr. Smith since he is your best friend! All this for a mere 3 hours of investment.*So you rate this a 50.

**Let’s calculate your ROI:**

**ROI ****= ****Net Profit**** (Gain from Investment – Cost of Investment) / Cost of ****Investment**** x ****100**

**ROI = Net Profit (500 – 50) / 50 x 100****ROI = 900% (that’s a***positive*900%! This is a great investment!)

When you first saw your profile views over 300, you thought, “This is great! I did nothing and got a great return and got a couple of new leads!” But you didn’t know exactly *how great* until you ran the numbers. *Now you have a baseline* to compare to in the future. So for a little effort, you got a good return on your investment.

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**Example #2:**

**Gain from Investment**– 1,113 people viewed your profile in the past 3 days. WOW! You rate this a 500,*since*y*our ranking has never gone over 700. This is great!***Cost of Investment**– 35 hours spent working on the LinkedIn site in addition to your regular job schedule of 60 hours/week.*You spent a LOT of time on LinkedIn, very little time with your family, your wife is mad at you, and your kids went to the ball game with your neighbor, Mr. Smith. In fact they think Mr. Smith is their father since they see him more than the see you.*Not good, so you rate this a 2000. (The cost was very high.)

**Let’s calculate your ROI:**

**ROI ****= ****Net Profit**** (Gain from Investment – Cost of Investment) / Cost of ****Investment**** x ****100**

**ROI = Net Profit (500 – 2000) / 2000 x 100****ROI = -75% That’s a***negative*75% (If you lose money or worth – or if there is a loss – the formula will yield a negative number.)

When you first saw your profile views climb over 1000, you thought, “This is great! All that extra work was worth the effort!” That was until you were sleeping on the couch, your kids didn’t recognize you and you received no leads for all your hard work”. After doing the math, you can see this was not a good investment? Definitely not L

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Now let’s calculate the ROI for your Teacher Evaluations: Here is our 1^{st} example: (actual values may differ for evaluators. Understand this is a *hypothetical* situation, but I am sure some points will hit home.)

**Teacher Observation Example #1:**

**Gain from Investment**

– You performed 100 formal Teacher Observations this year, in addition to multiple weekly informal (graded) walk-throughs.

– Teachers are usually a little nervous, in fact many of them appeared almost *apprehensive* of the process.

– You were quite and sat in the back. To be honest, you didn’t even see entire observations as you spent most of your time typing and checking off boxes on your IPad. The new program seemed like a good idea, but you find it does distract from observing as you weren’t even watching entire lessons. In fact you think, “Do I really need to be checking so many boxes? This should be easier.”

– Post-obs were routine. You showed teachers where they were coming up short – even the experienced teachers – and said how you are confident they will improve. Pluses were pointed out, but no matter how many times you observe them, they routinely demonstrate deficits in their teaching. Will they never get it right?

– No one said anything to you “pro or con” days or weeks after their observations. A lot of time goes into these observations with the intention of developing teachers, yet you failed to hear one comment about how the observation assist in their development or growth. This surprised you. Wouldn’t you think teachers would be thankful for the guidance you provided?

– The end of the year came and went without much of a bang. Gone were the years filled with pre-summer tears and hugs like you were sending your first-born off to college. It seemed as if they couldn’t get out that door quick enough!

– Student scores did not increase appreciably, in fact some departments even showed a drop in the number of students reaching proficiency. You found this unusual because these were the departments that were most frequently observed and where maximum effort was put forth to have them correct deficiencies in teacher skills and competence.

– You rate this a 500, *since you failed to witness much change in the performance of your staff.** *

**Cost of Investment**

– You spent 50% of your day (and thus 50% of your year) observing staff and teachers. This took away from the time you would have rather interacted and supported them in more personal ways, but there just wasn’t enough time in the day.

– Your paperwork load was typically heavy. Even though the AP’s were able to pick up a good deal of the slack, you wanted to observe as many teachers as you could since their growth fall on your shoulders.

– So you rate this a 2000. *The value is high because the investment was so great.* *Lots of time invested – do the teachers even r**ealize how much? This took up so much time, yet with little to show for it. You left the building every day like a giant weight was being lifted from your shoulders – and very tired. Family life? If there is time, maybe…*

**Let’s calculate your ROI:**

**ROI ****= ****Net Profit**** (Gain from Investment – Cost of Investment) / Cost of ****Investment**** x ****100**

**ROI = Net Profit (500 – 2000) / 2000 x 100****ROI = -75% (that’s a***negative*75%! This is not the wisest investment.)

Your ROI is low, but having taught math, you know that if the variables change, then the outcome can change as well. Time to try something different…

**Teacher Observation Example #2:**

**Gain from Investment**

– You performed 50 formal Teacher Observations this year, in addition to dozens of weekly “zero-stakes” walk-throughs.

– Teachers and students were always happy to see you coming in. They all greeted you with a big, “Good Morning Mrs. A!”

– You complimented both teachers and students (teachers are nervous when a principal enters the room so these new informal walk-throughs help them to feel at ease) and you could see their appreciation immediately 🙂

– You began a formal program of inter-visitations for teachers this year. If successful, you hope to eliminate formal observations all together – part of how you are seeking to have teachers become more self-actualized instead of having to “be told” what to do for each successive evaluation. They loved the idea and were able to see “modeling” at its best through colleagues’ work. One half of these evaluations were “self-generated”, the other half were “peer-generated.

– Your teachers thank you at the end of the year for making it such a great experience for their growth and the students’ successes. They shower you with accolades.

– You rate this a 1000, *since you know how hard it can be for a principal to build trust in their staff and it paid off BIG based on how they showed their appreciation. You did this by allowing them to learn **by inter-visiting with colleagues and to see for themselves **the same mistakes you saw, but allowed the teachers to correct on their own.*

**Cost of Investment**

– You spent only about 20% of your day observing and being visible to staff and teachers. This is down from about 50% last year.

– Your paperwork load was reduced as the informal walk-throughs required substantially less time to document and discuss later on.

– So you rate this a 500. *The value is low because the investment was so little.* *You spent much less time than last year accomplishing the same tasks with improved results. You left work feeling a little lighter and so you enjoyed your family more when you were home.*

**Let’s calculate your ROI:**

**ROI ****= ****Net Profit**** (Gain from Investment – Cost of Investment) / Cost of ****Investment**** x ****100**

**ROI = Net Profit (1000 – 500) / 500 x 100****ROI = 100% (that’s a***positive*100%! This is a great investment!)

When you decided to change your approach to observing teachers you were unsure how it would go over, but WOW, what a surprise! The atmosphere in the school was brighter, students seemed more engaged since you were spending more time with them in their environments. You didn’t the idea of using a random factor for the value, but at least now you have a baseline from which to gauge the program for next year. Less effort, increased ROI Success!

Try it. Do the math for this past year and see what your numbers tell you. Use any value for “worth” that you like. If you have questions, please ask.

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