What Is "Interpersonal Risk Management" and How do you measure it?

We coined the term "interpersonal risk management" when we discovered the common thread underlying turnover, employment-related lawsuits, low productivity and ineffective management -- interpersonal relationship failures. We believe that 80 percent of all employment-related claims, 50 percent of all voluntary terminations, and the vast majority of production problems are due to interpersonal mismanagement. That's why we developed our interpersonal risk audit as a first step in helping companies develop a specific analysis of their company's interpersonal risks and providing them with a concrete -- and measurable -- action plan.

MEASURING THE BENEFITS OF APPROPRIATE WORKPLACE BEHAVIOR TRAINING

When it comes to training aimed at preventing problems, the benefits are sometimes difficult to measure. You can evaluate the course by measuring the feelings and opinions of trainees immediately after a course. However, it is this immediacy and subjectiveness that makes it a weak form of evaluation. You can also measure the effectiveness of training by assessing the knowledge, skills, and attitudes of the learner. This can be done through pre and post-assessment tests. The more people who pass an objective standard, the more effective the delivery of learning. Still, the problem in assessed learning at the end of a course gives no indication of either the amount of learning that is subsequently retained or the application of that learning in the workplace.

So how do you measure the success of an interpersonal risk management program? The best way to measure success is through quantifiable numbers. By looking at the number of employee problems (through measures such as turnover, inappropriate behavior claims, employee satisfaction surveys) that occurred during a certain period before the training, and monitoring employee problems afterward, you can begin to develop a measure of a training program's success. We feel there are seven area of financial loss when companies fail to manage their interpersonal risks.

Wasted time: Studies have shown that up to 42 percent of a managers' time is spent dealing with interpersonal conflicts. If just 3 employees wasted 80 hours in a year due to conflicts, and each had a salary of $100,000, their squabbling would cost their company over $10,000.00 a year. In addition, interpersonal conflicts lead to ineffective decision making

Lawsuits: Reduced decision quality: Conflicts, which can cause stress in the workplace, lead to ineffective decision making. Conflicts within the workplace can cause people to withhold information leading to uninformed decisions. Another important issue involves conflict between team members working together to make a decision for the company. The costs can be enormous if infighting between the members leads to making an improper decision. This is especially true for teams that come together mainly to perform routine repetitive tasks.

Turnover: People don't leave a company, they leave a manager. The costs for an employee who resigns due to interpersonal relationship problems are extensive; some studies indicate that the costs are up to 3 times the departing employee's annual salary. In addition, there are other costs involved such as hiring and training for the replacement position.

Restructuring: There are times when an office has to be restructured or rearranged so that the employees who have had conflict problems do not have to work together. This can lead to redesigning the workplace in an inefficient manner.

Workplace sabotage/theft/violence: Disgruntled employees who have had problems with their coworkers or managers may sabotage other employees' work, waste materials, and/or steal company property. In addition, mishandling performance reviews and/or involuntary terminations can greatly exacerbate the potential for workplace violence.

Lowered job motivation: Disgruntled workers can affect the productivity of fellow employees by causing stress and tension in the work environment, which can lead to decreased job motivation. This decline in productivity can and will show up through lost sales, turnover, and/or increased absenteeism. Increased absenteeism can be especially troubling because some employees would rather miss work than deal with a difficult coworker.

Health Costs: Conflicts which cause either harm or illnesses can take a toll on a company's expenses through higher health insurance premiums. Not only are health insurance premiums affected, but there is also a loss in productivity due to the employee's absence from work.

ROI

Return on Investment (ROI) compares the investment in a training deliverable with the eventual cost benefits over a specified period of time. There are two major components in ROI: BENEFITS and COSTS.

COSTS BEFORE APPROPRIATE WORKPLACE BEHAVIOR TRAINING

One of the key components of our interpersonal risk management program is our signature appropriate workplace behavior training, a comprehensive harassment/discrimination prevention program that combines legal and psychological expertise to promote effective workplace behavior while eliminating behavior that is inappropriate and/or illegal. In order to determine the benefits of this training, we must look at the costs that could be incurred if training does not take place. We then look at the reduction training will cause in these costs to determine the benefits of training.

COST OF TRAINING

The cost of training your employees can vary greatly depending on the type of training you receive and how the training is delivered. We looked at a company of 1,000 employees and estimated they would have average costs of $200,000 to run the program and pay for the employees time while training.

EXAMPLE

In our example, we realistically assumed that approximately 20% of all employment-related claims go to trial. So let's assume that The Relationship Dud Co. had 60 claims two years ago and then reduced claims to 35 last year (after implementing our interpersonal risk management program). So they would have 15 claims go to trial before training and 7 claims after training.

The Numbers
Before Training

Attorney's Fees $250,000 X Claims 15= $3,750,000
Settlement Costs (Avg.) 1,880,000 X Claims 15= $28,200,000

Total Cost=$31,950,000

After Training

Attorney's Fees $250,000 X Claims 7= $1,750,000
Settlement Costs (Avg.) 1,880,000 X Claims 7= $13,160,000

Total Cost=$14,910,000

Savings

By reduced claims $15,040,000
Cost of Yearly Training $200,000

ROI

Benefits/Costs *100
$15,040,000/$200,000*100=7500

Giving an ROI of 7500 percent.

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