monash_62848.pdf (1.14 MB)
Does training improve organizational effectiveness? A review of the evidence
journal contributionposted on 2017-06-05, 06:13 authored by Tharenou, Phyllis
There has often been skepticism about whether training pays off for organizations. The aim of this paper is to review the evidence examining whether training improves organizational effectiveness and, if so, under what conditions. Explanations are proposed at individual and organizational levels, consistent with the empirical studies of training's effects being conducted at these two levels. At the individual level, the empirical evidence shows that training improves human resource outcomes (job performance), organizational outcomes (productivity), and financial outcomes (return on investment). At the organizational level, overall, training improves organizational outcomes (quantity and quality of productivity). At the organizational level, there are inconsistent links between training and financial outcomes (e.g., return on investment), and too few links with capital market outcomes (e.g, market value) from which to draw definitive conclusions. Training appears most likely to improve outcomes directly rather than to do so contingent on other conditions. The evidence is conflicting as to whether training is most effective as part of high performance work systems or when used independently, but there is little support hitherto for a horizontal integration view. Although training was related more to organizational effectiveness when it fitted with business strategy than not, there are too few studies to draw conclusions: Overall, training appears to improve human resource and organizational outcomes under most conditions.