Assessing the Return on Investments in Human Resource Development: Theory and Practice

Abstract

Current studies attest that companies are increasingly investing in the in-company further education of their staff. A substantial reason for this trend is the positive economic effect regarding the company’s success which these investments in further education are intended to accomplish. Education controlling is the specific part of HRM which deals with the checking of training measures as well as its success, utility and effectiveness via the sub-function that is the evaluation. Against this background the article concerns itself with outcome evaluation, which assesses the success of further education measures from an economic perspective. Until now there have been very few theoretical approaches, concepts and models with which one can determine the cost effectiveness of training investments. Business controlling uses economic key performance indicators (KPI) to verify the utility of investments made by the business. One of the most significant KPIs is return on investment (ROI). As the discussion of utility verification of in-company further education measures, especially in regard to the calculation of the ROI on educational investments and the need to establish what deficits exist in the theoretical and empirical foundations of education controlling, in the relevant subject literature has been controversial, this article will address the question how the economic effects of in-company training measures can be determined from a theoretical perspective. To this end, an overview of the current state of research regarding education controlling and especially the return on investment of in-company training measures will be given.