Economic Return on Training Investment at the Organization Level

Abstract

This study examined labor-productivity returns from investments in training in a manufacturing industry. The study was conducted using data from auto parts manufacturing firms in Taiwan. Data included two labor-productivity dependent variables (sales per worker and value added per worker), and two training-investment independent variables (total training costs, and direct costs of training). The relationship between each independent and dependent variable was analyzed using multiple regressions that controlled for 14 other independent variables that might affect the relationship between investment in training and labor productivity. Results showed a significant relationship between investments in training and labor productivity as measured by value added per worker, but not total sales per worker. Value added per worker was defined as the dollar value of products sold, minus the cost of materials in those products, divided by the number of workers. This study provides evidence that investments in training do yield significant and practical increases in labor productivity at the organizational level.