Determining the Benefit of Training Investment: The Net Present Value Approach

Gabriel Dwomoh, Kofi Kwarteng and William Appienti Ansah

International Journal of Management Sciences, 2014, vol. 3, issue 8, 601-611

Abstract: Evaluating a training programme is one of the stages in the training process. Whilst organizations do it at the end of the training, the study emphasis that if appraisal on the investment is not done after training needs assessment is conducted, shareholders value can be diluted. This is based on the fact that if the benefits derived from the training programme when converted into present value terms are not sufficient to cover the present cost of the training; it will do more harm to shareholders. The study therefore looked at appraising a training investment before the organization goes into it. The main sources of data used for the study is secondary. The main cost areas by which training investment can occur was determined and various variables were assigned to them. Hypothetical case using Airtel Ghana Limited was used and the benefits of their training investment determined. The benefits were converted into present value terms and compared with the cost incurred to make the cost and benefit analysis of the organization training programme easier. The study recommends that zero NPV of training investment should be pursued by the company since although it neither dilutes nor adds to shareholders wealth but pursuing the training programme will serve as an intrinsic motivation to employees.

Keywords: NPV; shareholders wealth; training; investment and Airtel Ghana Limited (search for similar items in EconPapers)
Date: 2014
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