One of the more important issues to examine is the impact an HRD program has on an organization’s effectiveness. This assessment can be done using a variety of performance indexes, such as productivity, timeliness, and cost savings. One goal of translating the effects of HRD programs into monetary terms is making clear that the programs are investments and will lead to payoffs for the organization in the future.

Evaluation of training costs compares the costs incurred in conducting an HRD program to the benefits received by the organization, and can involve two categories of activities: cost-benefit evaluation and cost-effectiveness evaluation. Cost-benefit analysis involves comparing the monetary costs of training to the benefits received in nonmonetary terms, such as improvements in attitudes, safety, and health. Cost-effectiveness analysis focuses on the financial benefits accrued from training, such as increases in quality and profits, and reduction in waste and processing time.

The general strategy for evaluating training costs is to measure cost and benefit indicators in dollar terms and then compare them. For example, a program’s return on investment (ROI) can be calculated by dividing total results by total costs. The greater the ratio of results to costs, the greater the benefit the organization receives by conducting the training program. The results of an evaluation study often express the effect of an HRD program in terms of a change in some aspect of the trainee’s performance or behavior.