A fundamental objective of training is the elimination or improvement of performance problems. However, not all performance problems call for training. Performance deficits can have several causes, many of which are beyond the worker’s control and would, therefore, not be affected by training.4 For example, the effects of unclear or conflicting requests, morale problems, and poor-quality materials cannot be improved through training.

To be successful, a training program must have clearly stated and realistic goals. These goals will guide the program’s content and determine the criteria by which its effectiveness will be judged. For example, management cannot realistically expect that one training session will make everyone a computer expert. Such an expectation guarantees failure because the goal is unattainable.

Unless the goals are clearly articulated before training programs are set up, the organization is likely to find itself training employees for the wrong reasons and toward the wrong ends. For example, if the goal is to improve specific skills, the training needs to be targeted to those skill areas. In contrast, the company’s training goal may be to provide employees with a broader understanding of the organization.

The economic climate has been challenging and organizational budgets can be strained. Nonetheless, many organizations fervently believe in the importance of training. Although training can be expensive, it can also pay off in more capable and loyal workers. An international survey of more than 5,000 organizations in 26 countries examined the relationship between firms’ investments in training and their profitability.5 A key finding of the survey was that the greater the investment in employee training, the more profitable the firm. Interestingly, the study statistically controlled for past profitability. Thus, the relationship between training and profitability does not appear to be due to firms with more profitable histories having more dollars to put into training. Rather, the findings indicate that training is a good investment that can have a bottom-line payoff. We can’t conclude from the survey findings that training caused the higher profitability, but an emphasis on training certainly differentiates more profitable firms from less profitable ones. Training also appears to be positively related to the stock price of an organization.6 Organizations that expend more on training their employees have been found subsequently to have a higher stock value. A direct interpretation of this finding is that training results in better performance that is recognized by the market. It is also possible that organizations that put more resources into training employees take a longer-term view of building value, and this approach is valued in the stock market. Whatever the causal paths, it appears that investments in training can pay off in bottom-line results.

It isn’t really the cost, per se, that should be the important issue as much as the effectiveness of the investment. In some cases, training may be appropriate but not cost-effective. Before beginning a training program, managers must weigh the cost of the current problem against the cost of training needed to eliminate it.

Not conducting training can be a costly choice. A federal appeals court upheld a judgment against an employer because it failed to train its managers in the basic requirements of discrimination law. Phillips Chevrolet Inc. was found guilty of age discrimination. A general manager who had ultimate hiring authority admitted that he often considered the age of applicants when making hiring decisions and that he wasn’t aware that it was an illegal practice. The courts stated that the failure of the organization to train its managers in the basics of discrimination law was an “extraordinary mistake” and justified the conclusion that the company was recklessly indifferent to antidiscrimination law.7 The court awarded $50,000 in punitive damages. The cost of training these managers in discrimination law was little relative to the cost levied against the company for not providing that training. Sometimes a company may be legally obligated by the state to invest in training. For example, a California law requires all supervisors in companies with more than 50 employees to receive two hours of interactive preventive sexual harassment training every two years.8

Determining whether training is a good investment requires measuring the training’s potential benefits in dollars. Training that focuses on “hard” areas (such as the running and adjustment of machines) that have a fairly direct impact on outcomes (such as productivity) can often be easily translated into a dollar value. Estimating the economic benefits of training in “softer” areas—such as teamwork and diversity training—is much more challenging. However, demonstrating the value of a training investment is important, particularly when budgets are tight. It is estimated that only approximately 7 percent of organizations calculate the dollar return on the costs of their training programs.9 Although it cannot provide a financial estimate, assessing whether trainees apply the new skills and knowledge covered in training when back on the job can be an important indicator of the effectiveness of that training. However, it is estimated that only 9 percent of organizations assess the extent to which training impacts job performance.10 Although evaluation may be lacking, the best companies try to maximize return on their training investment by aligning their training with their mission, strategy, and goals.11 However, only an analysis of costs and benefits will indicate whether a training investment, no matter how well planned and positioned, was worth it or is worth continuing.

Designing effective training remains as much an art as a science, because no single type of training has proved most effective overall. For example, an organizational culture that supports change, learning, and improvement can be as much a determinant of a training program’s effectiveness as any aspect of the program itself. Participants who view training solely as a day away from work, as in the chapter-opening example, are unlikely to benefit much from the experience. In addition to the role of participants in determining the effectiveness of training, managers of trainees need to endorse the content and purpose of training in order for the training program to have a positive influence on work processes.

Finally, training will not work unless it is related to organizational goals. A well-designed training program flows from the company’s strategic goals; a poorly designed one has no relationship to—or even worse, is at cross-purposes with—those goals. It is the manager’s responsibility to ensure that training is linked with organizational goals.