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HRM Training Costs, Accounting and Benefits Capture

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Allocation of costs
-Distributed across organizational budgets
-Assigned to managers who have no control over the funds
- Unrelated to actual costs
Benefits of cost allocation method
- Simple to administer
- Managers don't control funds
(CFLL model)
Disadvantages of cost allocation method
-No incentive to training group to improve training delivery
-Unrelated to actual costs
Selling the service
Selling training courses or programmes to department; need pricing to be competetitve, course relevance to business needs (Generic Training model)
Policy costs
Training included in policy costs and accounts, deducted from budgets (cost centre approach, e.g. CRMB ODOE)
Utility analysis
Forecasting net financial benefits that result from HR programmes such as L & D
Overhead costs
Costs of such items as leasing or renting premises, administrative and clerical support, mailing costs, lighting, heating, etc.
Trainee compensation costs
The cost of paying trainees' salaries, wages and benefits while they attend training; also applies to replacement staff when trainees attend training
Developmental costs
The cost of developing training materials, videos, handout materials, pre-reading, etc.
Direct costs
Costs such as the trainer's costs or vendor cost for training delivery; cost of training materials provided during training; food; travel; equipment
Indirect costs
Costs of training marketing, administrative staff salaries and benefits to prepare materials, pre-sent materials, etc.
ROI (Return on Investment)
The cost of the training programme relative to its benefits
ROI = Net prog benefits/cost
Net benefit
Est value of the performance improvement over the cost of improving performance
Net ben = value of perf impr/cost of improving perf
Cost-benefit evaluation
Comparison of cost of training to benefits in non-monetary terms
Cost-effectiveness evaluation
Comparison of monetary costs of training to benefits in monetary terms

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