Utility Analysis

The results of an evaluation study often express the effect of an HRD program in terms of a change in some aspect of the trainee’s perfor- mance or behavior. For example, if untrained employees average 22.5 units pro- duced (per day, or per hour) and trained employees average 26 units produced, the gain due to training is 3.5 units per employee. Utility analysis provides a way to translate these results into dollar terms. For example, Thornton and Potemra recently estimated that the utility of an assessment center procedure to promote police officers to the rank of sergeant was over $400,000.121 One pop- ular approach to utility analysis is the Brogden-Cronbach-Gleser model.This model computes the gain to an organization in dollar terms �U, or “change in utility,” using the following variables:

N ¼ Number of trainees

T ¼ Length of time the benefits are expected to last

dt ¼ An effect size, which expresses the true difference of job perfor- mance between the trained and untrained groups (expressed in standard deviation units)

SDy ¼ Dollar value of job performance of untrained employees (expressed in standard deviation units)

C ¼ Costs of conducting the training

Wayne Cascio combined these elements into a formula to compute the dollar value of improved performance due to training.The left side of the equation estimates the benefits of training, while the right side presents the cost. The for- mula is:

DU ¼ ðNÞðTÞðdtÞðSDyÞ − C

Some terms in the equation can be directly measured, such as N, C, and dt, but others, such as T and SDy, typically must be estimated. More complicated versions of this formula have been developed to account for other factors that may affect the real monetary value of the benefits accrued, such as attrition and decay in the strength of training effects over time.