Deck 12: The Costs and Benefits of Training Programs

Question 1

If a training program costs $2,000 per employee and the benefit of the program is $5,000 per employee,then the ROI is 1.50 or 150 percent.

Answer 1

True

Question 2

In order to calculate the net benefit of a training program,a training administrator would subtract the training cost from the financial benefit of the program.

Answer 2

True

Question 3

In order to increase the credibility of benefits associated with a training program,human resource departments should use soft data when possible.

Answer 3

False

Question 4

If employees are performing at relatively similar levels,the effectiveness of a training program tends to be less in dollar terms.

Question 5

Calculations of ROI and utility could be described as one part science and one part art.

Question 6

A return on investment ratio of 1:.50 means that for every 50 cents invested in a training program,$1.00 will be returned to the company.

Question 7

There is a negative relationship between the number of employees trained and the utility of a training program.

Question 8

When making estimates of training benefits,it is recommended that human resource departments use both internal and external experts.

Question 9

Break-even analysis can be calculated for any variable in the utility formula.However,the most valuable break-even calculations should be based on the effect size and/or standard deviation.

Question 10

A break-even analysis allows you to find the value at which benefits equal costs and so utility is greater than zero but less than one.

Question 11

The effect size measures the difference in performance between trained and untrained employees.

Question 12

If a training program is expected to reduce the amount of scrap in the production of a product,then a cost-effectiveness evaluation would indicate how much the training program cost and the impact on the bottom line caused by the reduction in scrap.

Question 13

Overhead costs are usually allocated to each training initiative.

Question 14

Direct costs include the trainer's salary,food and refreshments,cost of travel,and administrative salaries.

Question 15

Many organizations in Canada tend to view training as an investment.

Question 16

Cost-effectiveness evaluations and the data collection process include some element of assumptions and expert opinions.

Question 17

Organizations have become increasingly concerned about the effect of training programs on the bottom line.

Question 18

The utility of a training program equals: (T)(N)(td)((SDy - (N)(C))

Question 19

A training program cost $10,000 to deliver.An evaluation of the program determines a decrease in employee turnover from 20 percent to 10 percent.This would be classified as a cost-effectiveness evaluation.

Question 20

Return on expectations is a comparison of the cost of a training program relative to its benefits that involves dividing the net benefit by the cost of the training program.

Question 21

What was the most salient outcome derived from Accenture's ROI study?

A) assessed the relationship between training costs and effectiveness
B) introduced a level of rigour associated with training evaluations
C) helped link the role training and development play in supporting corporate goals
D) allowed the company to realize that for every $3.53 invested in training, they received a return of $1.00

Question 22

In a survey conducted by the Conference Board of Canada,what percentage of companies in Canada conduct training evaluations to determine the bottom-line impact of training initiatives?

A) 21 percent
B) 36 percent
C) 66 percent
D) 76 percent

Question 23

According to the textbook,what percentage of CEOs would like to see training and development linked to return on investment data?

A) 47 percent
B) 68 percent
C) 74 percent
D) 96 percent

Question 24

What could be the rationale behind the low percentage of companies that undertake Level 5 calculations for their training programs?

A) given that training initiatives are geared toward people, Level 5 calculations are simply not appropriate
B) results associated with Level 4 evaluations are much more relevant
C) C-level executives simply are not concerned with Level 5 results
D) Level 5 calculations tend to be complex

Question 25

In the Wood Panel Plant example,how did the authors calculate the total training cost per participant?

A) total training costs divided by the number of participants
B) total trainee compensation divided by the number of participants
C) direct and indirect costs divided by the number of participants
D) overhead costs, indirect costs, and direct costs divided by the number of participants

Question 26

Which of the following statements best describes the concept of cost-effectiveness?

A) compares costs of training in dollars to benefits in dollars
B) compares non-dollar cost of training to non-dollar benefits
C) provides a ratio of net benefits to training costs, divided by the number of participants.
D) compares net monetary cost of training to net benefits

Question 27

What is the net benefit of a training program if the benefits are $500,000 and the costs are $700,000?

A) ($200,000)
B) $200,000
C) ($1,200,000)
D) $1,200,000

Question 28

What formula should be used to calculate benefits to cost ratio?

A) BCR = (Benefits of the Program)/(Cost of the Program)
B) BCR = (Cost of the Program - Benefits)/(Benefits of the Program)
C) BCR = (Benefits - Cost of the Program)/(Cost of the Program)
D) BCR = (Cost of the Program - Benefits)/(Cost of the Program)

Question 29

If ROI is 2.0,what does this mean for a training program?

A) that $2 was spent on the program for every $1 received as a benefit
B) that there is a return of $1 for every $2 spent on training
C) that $1 was spent on the program for every $2 received as a benefit
D) that there is a return of $2 for every $1 spent on training

Question 30

In the Wood Panel Plant example,what would be an appropriate explanation for classifying clerical and administrative salaries as an indirect cost?

A) those costs are directly associated with this particular training program
B) those costs would have been incurred even if the program was cancelled by management
C) authors' choice
D) clerical and administrative staff support all trainees

Question 31

What was one critical aspect of Accenture's reinvention that affected its learning and training programs?

A) training could no longer be viewed as a cost centre
B) training could no longer be provided without a cost-benefit evaluation
C) training could no longer be rationalized for contingent employees
D) training could no longer be expected when the global market was down

Question 32

What conclusion may be made in the Accenture study between training and productivity?

A) surprisingly, the ROI study found that billings, a metric of productivity, actually decreased
B) a positive relationship between training levels and productivity metrics
C) results were neutral-in other words, ROI was 1:1
D) results were negative

Question 33

If training costs are $2,500 per employee and the financial benefit of training is $2,000 per employee,what is the ROI of the training program?

A) (20 percent)
B) (25 percent)
C) 20 percent
D) 25 percent

Question 34

What approach did Accenture use to demonstrate the value of their training initiatives?

A) cost-benefit evaluation
B) return on investment
C) benefit-cost ratio
D) return on expectations

Question 35

What is another way to express a ROI of 1.0?

A) 10 percent
B) 100 percent
C) 1.0 percent
D) 1,000 percent

Question 36

How does Cisco collect the data that it uses for its calculation of ROI for its e-learning programs?

A) questionnaire
B) Web-based survey
C) observation
D) interviews

Question 37

Why did Human Resources and Social Development Canada award $1.3 million to the Canadian Society of Training and Development?

A) to develop Canadian training evaluation techniques
B) to study ROI case studies in numerous organizations
C) to conduct cost-effectiveness evaluations
D) to study Canadian trends in training and development

Question 38

Which of the following challenges was NOT addressed in the Wood Panel Plant example?

A) quality of end product
B) number of preventable accidents
C) housekeeping issues associated with the production area
D) interactions between management and employees

Question 39

What concept refers to costs that are NOT part of any one particular program but that are needed to support training activities and cannot be recovered even if the program is cancelled?

A) developmental costs
B) overhead costs
C) indirect costs
D) standard costs

Question 40

Which of the following would be an appropriate method of categorizing the cost of a training program?

A) based on the number of participants
B) using two separate categories, indirect and direct costs
C) based on hard costs, soft costs, and variable costs of the training program
D) according to the specific stage of the training process

Question 41

How is the utility of a training program defined?

A) Utility = ((C)(N)(dt)(SDy) - (N)(T))
B) Utility = (T)(N)(dt)(SDy) - (N)(C)
C) Utility = ((T)(N)(td)(SDy) - (N)(C))
D) Utility = ((T)(N)(td)(C) - (N)(SDy))

Question 42

If a break-even analysis produces neutral results,what impact is expected on the utility?

A) utility is positive
B) utility is zero
C) utility is negative
D) utility cannot be calculated

Question 43

The textbook offers a few strategies to strengthen credibility of data.Which of the following strategies were NOT discussed in the textbook?

A) use reliable sources for data
B) use hard data if available
C) do not adjust the data if the estimates appear too optimistic
D) disclose assumptions

Question 44

Briefly describe at least three reasons why many managers avoid the costing process when it comes to training.

Question 45

If break even occurs with an effect size of 2,what conclusion can you make about utility if the effect size changes to 2.5 (assume all other utility variables remain constant)?

A) utility will increase
B) utility will decrease
C) utility will be zero
D) utility will not be impacted

Question 46

Define the term return on investment and explain how ROI on training is calculated.

Question 47

What is the estimate for utility given the following information? Training has a continued effect on performance for 3 years; the number of people trained is 100; the true difference in job performance between the average trained and untrained employee in standard deviation units is 1.5; the standard deviation of job performance is $50; and the cost of training each employee is $100.

A) $10,000
B) $12,500
C) $22,500
D) $52,500

Question 48

What relationship does Jack Phillips' ROI calculation illustrate?

A) relationship between financial costs and net financial benefits of training initiatives
B) relationship between training costs and benefits of training initiatives
C) relationship between the number of trainees and utility of training initiatives
D) relationship between training utility and standard deviation of performance in financial terms

Question 49

Identity and briefly outline the advantages and disadvantages of the three ways to administer training accounts.

Question 50

What is the concept that fundamentally attempts to attach a dollar value to the effectiveness of a training initiative?

A) cost-benefit analysis
B) break-even analysis
C) utility analysis
D) benefit-cost analysis

Question 51

When calculating utility,what is the concept that measures the true difference in performance between average trained and untrained employees in standard deviation units?

A) the standard deviation of untrained employees in dollars
B) the benefits-cost ratio
C) the effect size
D) return on investment

Question 52

Briefly describe 5 things that can be done to increase the credibility of estimating the benefits of a training program.

Question 53

Explain the differences between cost-effectiveness evaluation and cost-benefit evaluation.

Question 54

Break even effect size was found to be 2.The actual effect size used to calculate utility was 100.How confident would management be with the expected utility of a particular training program being positive?

A) very confident
B) would seek a second opinion given the small margin
C) not confident at all
D) somewhat confident

Question 55

Jack Phillips offers a step by step method for converting training benefits into monetary values.What does he suggest be done in the last step?

A) determine a value for each unit
B) calculate the change in performance
C) focus on a single unit
D) determine the annual value