Brancher's ROI: Understanding the ROI of Mentoring

When implemented correctly, a mentoring program can yield clear benefits for mentees, mentors and the organisation. Before you can start implementing a mentoring program, you need to seek executive approval. Often this involves creating a business case and determining the return on investment (ROI) your organisation will receive from mentoring. 

In this article, we help you to calculate the ROI of your mentoring program, depending on whether you are (1) implementing a new mentoring program or (2) switching from manual to software.

Implementing a New Mentoring Program

If you are implementing a new mentoring program, you will need to demonstrate the key benefits - both intangible and tangible. 

Tangible benefits can be touched, seen, or quantified. They are concrete and measurable. 

Tangible Benefits of Mentoring Software

• Increased employee engagement
• Increased employee retention
• Increased productivity
• Enhanced skills and leadership
• Savings due to reduced administration

In contrast, intangible benefits do not have a physical presence and cannot be touched or seen directly. They are abstract and often harder to measure.

Intangible Benefits of Mentoring Software

• Increased motivation and morale
• Increased trust and loyalty
• Improved organisational collaboration and culture
• Increased diversity and inclusion outcomes

As mentioned above, there are many tangible and intangible benefits of mentoring, however, the most compelling benefit for executives is often helping organisations to reduce their employee turnover costs. 

The actual cost of employee turnover varies per position and salary bracket. Gallup reports that the cost of replacing an employee can be between 0.5x to 2x the annual salary of the employee. 

It also takes up to two years for a new hire to match the productivity of an existing employee.

To calculate the impact of mentoring on reducing employee turnover and increasing retention in your organisation, use Brancher’s ROI calculator. You will need four numbers:

1. Number of participants in your mentoring program. If you’re unsure, 120 people or 60 pairs is the average for most Brancher customers.
2. Average annual employee salary cost ($). If you’re unsure, $90,000 is the Australian average.
3. Average employee turnover rate. If you’re unsure, 20% is the average.
4. Average cost of employee salary turnover. If you’re unsure, 75% is a conservative estimate.

The sources for the above averages and statistics can be found on Brancher’s ROI calculator page.

So why do employees quit? 

A study reveals that 46% of HR Managers believe employee burnout is a significant factor that affects the workplace. The best way to combat employee burnout is to increase support within the organisation. 

Research shows that employees are 70% less likely to experience burnout if they have adequate support. This is where mentoring programs play a crucial role. Mentors can provide additional support to mentees.

Employee Engagement

An employee’s engagement level is a key metric of their emotional commitment to the organisation. A study by Gallup revealed that over 70% of employees are actively disengaged or not engaged in their workplace. The average cost of disengaged employees is 34% of their salary.

To calculate the benefit of mentoring on employee engagement, use Brancher’s ROI calculator. You need to enter two data points for this metric:

1. Number of participants in your mentoring program. If you’re unsure, 120 people or 60 pairs is the average for most Brancher customers.
2. Average annual employee salary cost ($). If you’re unsure, $90,000 is the Australian average.

Brancher’s ROI calculator will then provide you with the employee engagement cost benefit, with links to relevant sources.

For a program of 120 people (60 pairs) and an annual employee salary cost of $90,000 per annum, the engagement savings are estimated to be $315,792 (a 10X benefit).

Improving employee engagement can help to:

• Lower absenteeism by 78%
• Increase employee wellbeing by 68%
• Decrease employee turnover rate by 51%
• Increase sales profits by 23%

Switching From Manual to Software

Suppose you are switching from running a mentoring program manually to bringing in mentoring software. In that case, the business case will be around (1) administration savings and (2) your ability to scale existing benefits to more employees.

First, use Brancher’s time and dollar-saving calculator to calculate the administration savings. 

To calculate the impact of administration time and dollar savings in your organisation, use Brancher’s Time and Dollar Saving Calculator. You will need these three figures:

• The number of participants in your mentoring program: If you’re unsure, 120 people or 60 pairs is the average for most Brancher customers.
• The length of the program in months: If you’re unsure, the average length of most programs is 10 months. 
• The annual salary of the program administrator and mentee-mentor average: If you do not know these figures, your next best figure is to use the average salary cost within your organisation. If you don’t know this, you can use the national average of $90,000.

Secondly, to calculate the benefits of scaling the program to more employees, you have two options:

If you have existing data on the quantitative impact of your mentoring program. 

The impact of scaling the program can be explained by analysing the data on the previous program’s success and projecting future benefits based on the number of increased participants. You may have data on the impact of mentoring on participants’ engagement, skills, knowledge, promotion, and retention. 

For example: If 50% of previous mentees received a promotion while participating in the mentoring program compared to 10% of staff not participating in mentoring, you can expect the benefit to be around 40%. 

In this example, participating in the mentoring program is associated with a 40% increase in promotions.

If you do not have this data:

Use Brancher’s ROI calculator explained above to determine the new employee engagement and retention savings of running a bigger mentoring program for a larger population. 

For example, a mentoring program with 120 people is expected to result in an annual saving of over $477,792 due to employee retention and engagement.

Finally, once you have determined the benefits, the final step to calculate ROI is to divide the benefits by the cost. 

To determine your mentoring program’s ROI, you can use this formula: 

Mentoring benefits (employee retention, engagement, admin savings and scale impact, if relevant) divided by Mentoring Investment (cost of mentoring software)  = Mentoring Program ROI

How Brancher’s ROI Calculators Help You Out

To build a strong business case for mentoring software, you’ll need two key resources: Brancher’s ROI calculator and Brancher’s time and dollar-saving calculator. These tools measure different aspects:

• Brancher ROI Calculator: Measures employee engagement and retention
• Brancher Time and Dollar Saving Calculator: Measures the admin’s time savings and financial savings using the software

Use these tools to support your business mentoring case. For further questions, feel free to contact us, and we’ll be happy to help explain the process.

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