Enterprise return on a training investment

Abstract

This paper reports on a study intended to develop a training evaluation process to assist organisations in identifying the financial returns from training investment decisions. There are three main objectives of the study. The first objective is to present detailed examples or case studies of actual training programs undertaken by Australian organisations and to illustrate how training programs can be evaluated, what data are necessary for evaluation and what techniques can be applied as part of the evaluation process. The second objective is to quantify the net gains derived from training programs, including identifying the costs and benefits associated with training and determining the net financial impact of the training. The third objective is to develop a simple and practical process for training evaluation which should be general enough for use by most, if not all organisations whether they are profit, non-profit or government-owned. The two main forms of data used are time series and matched pairs, pre- and post-training. In addition, both subjective and objective data are used in a number of the case studies, illustrating the diversity of data sources available to organisations and the use to which such data sources can be put. A four step training evaluation process was developed, forming the basis of the methodology adopted in the study. The four steps are: (i) data collecting; (ii) comparison of pre-and post-training performance/behaviour; (iii) multivariate analysis; (iv) comparison of the costs of the training to the benefits derived from the training, usually expressed as a cost-benefit ratio and return on investment. It is suggested that these steps be followed sequentially. The study has shown that a well designed and delivered training program can be expected to generate significant financial returns that compare quite favourably with other forms of investment.

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