Deck 11: Training Costs and Benefits

Question 1

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."

Answer 1

True

Question 2

Break-even analysis can be very useful because it helps eliminate the uncertainty associated with the estimates of the various parameters used to calculate utility.

Answer 2

True

Question 3

A survey of CEOs found that 100 percent of them want to see learning and development connected to business impact data.

Answer 3

False

Question 4

A training program costs $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 5

Because cost-effectiveness evaluations are NOT dependent on assumptions and opinions, the results should be considered 100 percent accurate.

Question 6

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

Question 7

Often, the benefit-cost ratio of a training program will be the same as the return on investment ratio.

Question 8

The training program described in the MW CanadaChapter-opening vignette had two main objectives: decrease equipment downtime and improve product quality.

Question 9

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

Question 10

The utility of a training program equals (T)(N)(td) × [(SDy - (N)(C)].

Question 11

A training program costs $10,000 to deliver and produces a "utility value" of zero. By definition, this program will break even.

Question 12

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 13

To calculate the impact training has on the bottom line, trainers or program designers must be able to calculate the costs and benefits of training programs.

Question 14

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

Question 15

Direct costs include the trainer's salary, food and refreshments, cost of travel, and the basic costs associated with doing a needs analysis.

Question 16

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 costs and the impact on the bottom line caused by the reduction in scrap as a result of training.

Question 17

A training program is expected to cost $1,000 and the "gross benefit" of the program is $2,000. Given that the return on investment in this scenario is positive, management should NOT invest in this program.

Question 18

Given that trainees are already being paid by the company, their salary should NOT be included in a training program cost structure.

Question 19

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.

Question 20

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

Question 21

What costing concept refers to costs that are not part of any one particular program but 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 22

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 23

What may be concluded from theChapter-opening vignette about MW Canada's Technical Skills Certificate Program as it relates to training cost effectiveness?

A) it was a poor financial investment with negative utility
B) it was a good investment given a conservative 17 percent return on investment
C) no conclusion may be made as the return on investment was zero
D) given that a return on investment calculation was not made, it is impossible to determine the program's cost-effectiveness

Question 24

As explained in theChapter-opening vignette, MW Canada introduced the Technical Skills Certificate Program (TSCP) to its workforce in an effort to accomplish which of the following?

A) adapt to increasingly competitive markets
B) reduce top line results
C) reduce overall training costs
D) align its training programs to Canadian national standards

Question 25

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 26

Information from a utility analysis can be used to determine the return on investment (ROI).

Question 27

Experts consider the calculation of return on investment (ROI) to be Level 6 in Kirkpatrick's model of training evaluation.

Question 28

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

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

Question 29

Which of the following is a strong rationale for putting together a process to identify costs of a training program?

A) demonstrates that a positive return on investment is likely to happen
B) demonstrates that the training "effect size" will be positive
C) they can be used to prepare a budget for a training program
D) they can be used to calculate return on equity

Question 30

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

A) production results
B) Web-based surveys
C) observations
D) interviews

Question 31

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 in non-monetary terms

Question 32

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 33

You have decided to use a costing scheme that separates costs according to the nature or kind of cost. In which category would you include the cost of doing a needs analysis and the cost of evaluating a training program?

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

Question 34

How would you describe MW Canada's Technical Skills Certificate Program in terms of program design?

A) apprenticeship
B) on-the-job
C) blended
D) off-the-job

Question 35

Direct costs are costs that are linked directly to a particular department.

Question 36

Most companies in Canada have begun to calculate the return on investment (ROI) of their training programs.

Question 37

Non-monetary benefits are similar to behaviour or Level 3 evaluation criteria.

Question 38

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

A) those costs are directly associated with this particular training program
B) those costs would have been incurred even if the program were cancelled by management
C) this classification decision was the authors' choice
D) clerical and administrative staff support many different departments, not just HR

Question 39

Which of the following statements is NOT supported by content in the textbook relating to "training and the bottom line"?

A) calculating the return on investment of a training program tends to increase the program's effectiveness
B) companies increasingly want to know the return on their training investments
C) the training function faces increased pressure to justify the costs of training programs
D) 74 percent of CEOs want to see ROI data supporting training initiatives

Question 40

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

A) based on the number of participants
B) using two separate categories, indirect and fixed 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

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 42

What does it mean when the utility factor for a training program is zero?

A) the organization should not implement the training program
B) the training program's development costs equal the net benefits of the program
C) the benefits are greater than costs
D) the program breaks even

Question 43

You are given the following five pieces of information about a training program: training will have an impact on performance for two years; 10 employees will be trained; the effect size of the program is 2; the standard deviation of untrained employees in dollars is 100; and it costs $50 to train one employee. What is the dollar value of this training program?

A) $4,000
B) $1,500
C) $3,500
D) unable to determine as some of the direct costs have not been provided

Question 44

What do some experts consider the calculation of return on investment (ROI) to be in terms of Kirkpatrick's model of training evaluation?

A) the combination of all levels of evaluation
B) levels 3 and 4 combined
C) level 5
D) level 4

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

After doing an evaluation of a training program, you determined the effect size of the training program was 50% less than expected. Assuming all other utility variables remain constant, what conclusion can you draw from this decrease in effect size?

A) an increase in utility
B) a decrease in utility
C) no impact on utility
D) program cost increased

Question 47

What is another way to express an ROI of 1.0?

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

Question 48

Which of the following is NOT one of the categories of the costing approach described in the textbook?

A) direct costs
B) fixed costs
C) indirect costs
D) overhead costs

Question 49

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)(SDy)] - (N)(C)
D) Utility = [(T)(N)(C)] - (N)(SDy)

Question 50

If one wanted to estimate the cost of employee grievances, who would be a good expert?

A) manager involved in the grievance
B) manager of training and development
C) manager of human resources
D) manager of labour relations

Question 51

What is the main difference between the calculation of the net benefit and benefit-cost ratio?

A) The net benefit does not consider the cost of the program.
B) The benefit-cost ratio does not consider the cost of the program.
C) The net benefit ratio divides the cost of the program.
D) The benefit-cost ratio divides the cost of the program.

Question 52

If the net benefit of a training program is $3,000 and the cost of the program is $1,000, what is the return on investment (ROI)??

A) 3
B) 2
C) .33
D) 1

Question 53

According to a survey, what percentage of CEOs want to see learning and development connected to business impact data?

A) 90 percent
B) 93 percent
C) 96 percent
D) 100 percent

Question 54

If ROI is 2.0, what does this mean for a training program's utility calculation?

A) that $2 was spent on the program, which should provide a negative $2 in utility
B) that there is a return of $1 for every $2 in utility
C) that $1 was spent on the program for every $2 received as net utility
D) that there is a positive utility result

Question 55

The Wood Panel Plant example depicted in Table 11.2 resulted in a return on investment outcome of 5.78. What can management conclude from that number if the assumptions underpinning the ROI calculations are correct?

A) management should expect a $1.00 return for every $5.78 invested in training
B) management should expect to receive $5.78 for every dollar invested in training
C) management should expect a $1.00 return for every 58 cents invested in training
D) the break-even point on this training program will required a 578% "effect size"

Question 56

The textbook offers a few strategies to strengthen credibility of data. Which of the following strategies was 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 57

You are given the following four pieces of information about a training program: training will have an impact on performance for two years; 10 employees will be trained; the standard deviation of untrained employees in dollars is 100; and it costs $50 to train one employee. What must be the effect size so as to allow the program to break even?

A) 50
B) 25
C) .25
D) 1.25

Question 58

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 59

Which of the following statements is NOT one of the steps needed to convert benefits to monetary values for the purpose of calculating the return on investment?

A) focus on a single unit, such as time savings, increase in output, decrease in errors, etc.
B) determine a value for each unit
C) determine the change in performance post-training
D) obtain an annual amount and multiply that amount by the effect size

Question 60

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 61

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

Question 62

a) Briefly describe the three methods presented in the textbook for calculating the financial benefits of training and development programs (not including utility analyses).?b) For each method, calculate the financial value of the training program if the benefit is $10,000 and the cost of the program is $6,000.

Question 63

An appropriate approach to costing a training program is to group costs according to the nature or kind of cost. Using one of the approaches described in the textbook, identify potential groupings of costs and provide at least two examples of cost that would naturally fit into each of the groups or categories.

Question 64

a) Briefly describe five things that can be done to increase the credibility of estimating the benefits of a training program.?b) Why have cost-effectiveness calculations been described as "part art and part science"?

Question 65

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

Question 66

Why should trainers and HR professionals learn how to calculate and demonstrate the financial results of training and development investments?

Question 67

a) Briefly describe at least three reasons why many managers avoid the costing process when it comes to training.?b) What might senior management do to "encourage" training programs to include costing and some element of quantifiable benefits associated with specific training programs?