TABLE OF CONTENTS 
The monetary values for program benefits, developed in Chapter 5, are combined with program cost data, developed in Chapter 6, to calculate the return on investment. This chapter explores several approaches for developing the return on investment, describing the various techniques, processes, and issues involved. Before presenting the formulas for calculating the ROI, a few basic issues are described. An adequate understanding of these issues is necessary to complete this major step in the ROI process. The uses and abuses of ROI are fully explored.
The term return on investment is often misused, sometimes intentionally. In these situations, a broad definition for ROI includes any benefit from the program, a vague concept in which even subjective data linked to a program are included in the concept of the return. In this book, the return on investment is more precise and is meant to represent an actual value developed by comparing program costs to benefits. The two most common measures are the benefits/costs ratio and the ROI formula. Both are presented along with other approaches that calculate the return.
For many years, training and development practitioners and researchers have sought to calculate the actual return on the investment for training. If employee training is considered an investment, not an expense, then it is appropriate to place the training and development investment in the same funding mechanism as other investments, such as the investment in equipment and facilities. Although these other investments are quite different, management often views...
