Ch 12 - done Flashcards
Calculating the costs and benefits of training programs is necessary because ?
for viewing training as an investment.
In order to calculate the effect of training on the bottom line, you must first calculate… ?
the costs and benefits of training
what is the definition of costing ?
- the process of identifying all the expenditures used in training
- Important procedure in both the design and evaluation of a training program
what are two types of calculations ?
- Categorize the costs of training according to the stages of the training process (cost of needs analysis, training design, delivery, evaluation)
- Categorize the costs according to the nature or kind of cost (direct costs, indirect costs, development costs, overhead costs, trainee compensation cost)
Definition of Direct costs
costs that are directly linked to a particular training program ex. Trainer salary, equipment
Definition of indirect
costs that support training activities and are not directly linked to a particular training program ex. costs that support training activities and are not directly linked to a particular training program
Clerical/administration, materials sent to trainees, marketing are examples of indirect costs ? true/false
true
Definition of development costs
costs that are incurred in the development of a training program ex. Needs analysis
Definition of trainee compensation
the cost of the salaries and benefits paid to trainees while they are attending a training program
Once the costs of a training program have been calculated they can be used for two purposes, what are they ?
- Be used to prepare budget for a training program and compare and contrast the costs of different programs
- Be used along with benefit information to calculate a training program’s net benefit, benefit cost ratio, return on investment
a comparison of monetary cost of training to the benefit of training in monetary terms is the definition of cost benefit evaluation ? t/f
f. cost effectiveness evaluation
Cost benefit evaluation: is the comparison of … ?
a comparison of the cost of training in monetary terms to the benefits of training in non-monetary terms ex. Rate of turnover, absenteeism, customer satisfaction
definition of net benefit ?
the estimated value of the benefit minus the cost of the training program
what is the equation for benefit cost ratio ?
the benefit divided by the cost of the training program
ROI is the comparison of…?
a comparison of the cost of a training program relative to its benefits
ROI equation …?
= Benefits - cost of the program/ cost of the program
When the ROI is above 1 it indicates …?
that the return of a training program is greater than the investment, the higher ratio of results to costs indicates a greater financial benefit to the organization
When the ROI is less than 1 it indicates… ?
that the investment or cost is greater than the return
What does the utility analysis method forecast ?
the financial benefits that result from human resource programs such as training and development. The effectiveness of the programs is translated into dollars. See text book for equation
what are the 4 factors that need to be considered when calculating the utility of a training program
- Effect size - what’s the difference in the performance in trained employees vrs non trained. The larger the effect size the more effective a program will be
- Standard deviation of job performance - how much difference the job performance and untrained employees and the monetary value of this difference
- Number of employees trained - the more trained the higher the utility
- Length of time that the training benefits will last - longer = higher utility
Definition of break even analysis ?
finding the value at which benefits equal costs and utility is equal to zero, helps reduce the uncertainty associated with the estimates of the various parameters used to calculate utility.
is Calculating costs, benefits, ROI, utility is not an exact science? yes/no
no, assumptions and judgements are made when estimating the monetary benefits. Only works if managers and clients except the assumptions
Credibility is a major issue in cost effectiveness evaluation t/f ?
true, data must be accurate and the process believable
what should the trainer do to gain credibility on training programs ?
ensure that their clients and managers agree on the cost factors and the measurement and estimation benefits. They must view the estimates as credible, believable, acceptable
what is another method a trainer can do to gain credibility ?
Use external and internal experts to assist in making benefit estimates, because they are experts and they may be perceived as credible by management
