Abstract
Return on investment (ROI) has become one of the most challenging and intriguing issues facing the human resources development (HRD) and performance improvement fields. With ROI, decision makers evaluate investments by comparing the magnitude and timing of expected gains to the magnitude and timing of investment costs. A good ROI means that investment returns compare favourably to investment costs.
This study is aimed at testing the feasibility of a Return on Investment (ROI) model in the context of a training programme in the Indian Oil Corporation (IOC), a government organization, to see whether the success of a training programme can be measured more accurately in monetary terms. It is meant to enable the management to understand the direct impact on the business bottom-line as a causal effect of the training imparted and to decide whether to continue or discontinue the programmes. IOC conducted in-house training programmes in 2004 which included a blend of behavioural and functional training. The programmes conducted at this organization were evaluated using the most comprehensive evaluation models and discussed in terms of return on investment. The two programmes chosen for the study were: The Threshold Programme and the Excellence in Project Management, each having 30 participants.
The ROI analysis plan document captures information on several key issues necessary to develop the actual ROI calculation:
Significant data items The method for isolating the effects of the training and education programme The method for converting data into monetary values The cost categories, noting how certain costs should be prorated The anticipated intangible benefits The communication targets to receive the information Other issues or events that might influence programme implementation.
With a proper planning around a proven framework, realistic evaluation targets, and shared responsibilities for major steps, the ROI process can be implemented in a costeffective, systemic manner and can assist the resource-constrained training function to reap financial benefits that leaders understand and have come to expect. It is now strategically imperative that training be conducted with the clear understanding that if people are truly the organization�s greatest asset, then training is beyond doubt, the greatest investment and must hence be utilized wisely.