Lesson 12: The Costs and Benefits of Training Flashcards
What is the main concern for organizations regarding their training and development programs?
Organizations are increasingly concerned about the costs, benefits, and value added to the bottom line by their training and development programs.
Which level of Kirkpatrick’s model of training evaluation is the calculation of return on investment (ROI) considered?
Some experts consider ROI to be Level 5 in Kirkpatrick’s model.
What are the components used to evaluate the effectiveness of a training program?
Costs, benefits, net benefit, benefit-cost ratio, return on investment (ROI), and utility of training and development programs.
What is the purpose of training evaluation?
To measure trainees’ reactions, learning, and behavior, and organization results in order to show improvement in employees’ knowledge, on-the-job behavior, and organizational outcomes.
Why is costing important in training and development programs?
Costing helps demonstrate the financial value of training programs to management and the organization, justifying the training function’s share of the budget and improving its status and influence within the organization.
What percentage of CEOs want to see learning and development connected to business impact data?
96 percent of CEOs want to see learning and development connected to business impact data.
What is business impact-driven learning?
Business impact-driven learning is a bottom-line approach that starts with identifying the end goal of training—how well employees are applying their knowledge to the job and achieving target job outcomes as a result.
What are the four steps of business impact-driven learning?
Identify job performance outcomes or results expected from employees.
Define how employees will achieve those results and key behaviors they must exhibit.
Design a learning program to teach employees the knowledge needed to perform the desired behaviors.
Collect data to track behaviors, measure outcomes, identify deficits, and adjust training in real time to ensure consistent employee performance.
What percentage of Canadian organizations conduct Level 5 (cost-benefit analysis) evaluations for their training programs?
Only 20 percent of organizations conduct Level 5 evaluations, and only 19 percent of courses are evaluated at this level.
What is costing in the context of training programs?
Costing is the process used to identify all the expenditures incurred in training, which is an important procedure in both the design and evaluation of a training program.
What are the two approaches to costing training programs?
Categorizing costs according to the stages of the training process (needs analysis, training design, delivery, and evaluation).
Categorizing costs according to the nature or kind of cost (direct costs, indirect costs, development costs, overhead costs, and trainee compensation costs).
What are direct costs in training programs?
Direct costs are costs that are linked directly to a particular training program, such as trainers’ salaries, equipment rental, course materials, instructional aids, food, and travel expenses
What are indirect costs in training programs?
Indirect costs are costs that are not part of a particular training program per se but are expenses required to support training activities, such as clerical and administrative support, trainer preparation, and marketing training programs.
What are developmental costs in training programs?
Developmental costs are incurred in the development of a training program, including the costs of needs analysis, developing instructional media, designing training materials, and evaluating the training program.
What are overhead costs in training programs?
Overhead costs are incurred by the training department but not associated with any particular training program. They are required for the general operation of the training function, such as maintaining training facilities and equipment, and paying salaries of clerical and administrative support staff.
What are trainee compensation costs in training programs?
Trainee compensation costs refer to the salaries and benefits paid to trainees while they are attending a training program, as well as the cost of replacing employees while they are in training
What are the two purposes of calculating the costs of a training program?
- To prepare a budget for a training program and to compare and contrast the costs of different programs, which is important when making decisions about whether to adopt a particular training program.
- To be used along with benefit information to calculate a training program’s net benefit, benefit-cost ratio (BCR), and ROI.
What are the two types of benefits of training programs?
Monetary benefits - cost-effectiveness evaluations that compare the monetary cost of training to the benefit of training in monetary terms.
Non-monetary benefits - cost-benefit evaluations that compare the cost of training in monetary terms to the benefits of training in non-monetary terms.
How is the net benefit of a training program calculated?
The net benefit of a training program is calculated by subtracting the cost of the training program from its financial benefit (benefits - cost of the program).
How is the benefit-cost ratio (BCR) calculated?
The benefit-cost ratio (BCR) is calculated by dividing the benefit by the cost (benefits/cost of the program).
How is return on investment (ROI) calculated?
Return on investment (ROI) is calculated by dividing the net benefit (benefits - cost of the program) by the cost of the training program:
Return on Investment = (Benefits - Cost of the program) / (Cost of the program)
What is the Investing in People Project?
The Investing in People Project is a program launched several years ago to provide Canadian organizations with methods and tools to assess the impact of their training investments and help them learn how to calculate the ROI of their training programs.
What was the main objective of the Investing in People Project?
The main objective of the Investing in People Project was to provide evidence that training results in a positive ROI and is crucial to business success and economic growth. It also aimed to encourage Canadian organizations to invest more in training and to identify best training practices based on the most successful training programs.
What is the Learning Value Chain methodology used for?
The Learning Value Chain methodology is used for evaluating a training program at each of four “links” (capability, transfer, business results, and ROI). At each link, data are gathered to assess the extent to which the training has achieved key outcomes, added value, and enabled the next critical event in the chain to occur.
