Economic utility of training programs

In economic terms, training projects represent a major outlay for many corp orations. In spite of the growing need to evaluate the cost-effectiveness o f training programs in organizations, such cost-benefit analyses are rarely conducted. Moreover, the extant conceptual approaches and mathematical for mulas typically used for this purpose produce inaccurate estimates of the e conomic utility of training programs for organizations. An amended approach to this procedure is elaborated and its benefits demons trated. The proposed model regards any potential plan as an investment proj ect that should be evaluated in a similar way to the assessment of other in vestment options. Thus, it is recommended that a training project be consid ered only if its potential real, post-tax rate of return exceeds the real, post-tax cost of capital to the firm, subject to the unique features of inv estment in human capital. This process could improve the potential financia l benefits to the firm, from investment in training.