MANAGEMENT

Pay back of Training and Development from Organizational Perspective

Pay back of Training and Development from Organizational Perspective

CHAPTER 1: INTRODUCTION

Training and development remains an important human resource (HR) practice of interest to researchers, managers, governments, and employees. Training and development research is of substantial interest and reviews show it's enormous and continued growth. Training is of major interest to practitioners and managers in order to update employee skills, improve job performance and productivity, and develop the competencies employees need to meet the strategic objectives of their organizations (Sugrue and Rivera, 2005; 2006). Training is of significance to governments who facilitate its use to provide the capabilities a country needs for economic growth and to address skill shortages in a highly competitive global economy (Aguinis and Kraiger, 2009, pp. 451-74). Lastly, training is important to employees for whom it increases employment duration and continuity, pay, and career advancement (Tharenou, 1997, pp. 251-73).

However, problematic issues continue to arise in regard to the usefulness of and return on training and development (Bunch, 2007, pp.142-63). Managers want to know what the return is on their investment. Yet, the impact of training on performance continues to be rarely evaluated and its ROI rarely calculated (Sugrue and Rivera, 2005; 2006). Scholars lament that practitioners do not use the results of research to incorporate the well-developed scientific knowledge about training into needs analysis, design, delivery, transfer, and evaluation.

Aims and Objectives

The main purpose of the study is to identify the effectiveness of training and development from organizational perspective. Interest has recently arisen in determining whether training and development improve organizational effectiveness. Some scholars believe that training should improve organizational performance (Martocchio and Baldwin, 1997, pp.1-46), whereas others emphasize that training should only have behavioral effects on the individual (Barrie and Pace, 1997, pp.335-42).

CHAPTER 2: LITERATURE REVIEW

Return on investment in corporate training programs

When deciding on the allocation of funds for training and development, many managers realize that this is necessary, but not quite sure that the investment will give it an economic effect. This article is designed to equip managers and HR-specialist data characterizing the size of a possible return on investment in staff development. Researchers say that now the economic effect of investment in staff development is higher than that of investing in the means of production.

Studies conducted in 3200 American companies and S. R. Zemsky Shamakole (University of Pennsylvania), showed that 10% increase in expenditure on staff training provides productivity gains 8.5%, while the same increase investment yields performance only 3.8%. C specialist American Society of Training and Development (ASTD) estimated that a dollar invested in employee development; bring 3 to $ 8 of income. Thus, investment in training of foreign companies can bring to companies not only profit, but more benefits (Morgunov, pp. 46, 2004).

Importance of training and development

Many organizations have started evaluating their training programs for the purpose of achieving competitive advantages through the so-called seniority training high under this concept is to link the results or outcomes of training programs and ...