Assume you work in the HRD function for a large manufacturing facility. Employees have been placed into work teams, and top management is now considering providing additional formal cross-training to team members, so that people will be able to do a variety of different tasks within their teams. However, the lowest possible cost available for a high-quality training program is determined to be $2,000 per employee. In light of this cost, management has asked you to estimate the potential value (utility) of this training program. Initial training will be provided to thirty team members, and their performance will be compared to thirty other employees who have not been trained. To be conservative, youve decided to assume that the effects of training last for one year (though you obviously hope the impact lasts much longer).

Two critical items that you need to calculate a utility estimate are dt and SDy. After training, you find that the trained employees can now produce an average of 26 units per day, while the untrained employees produce 22.5. To calculate dt, you need to take the difference between these two numbers and divide the result by the standard deviation in units produced for the untrained group. In this case, the standard deviation in units produced turns out to be 5 units per day. The other critical item to determine is SDy. In a manufacturing setting such as this, you can look at actual productivity levels for all employees in this job category and calculate the difference between an employee at the mean or average productivity level, and an employee one standard deviation above the mean. From company records, you determine that this number is $10,000.

You now have all the information you need to calculate a utility estimate for this situation.

Questions:

Using the formula from Cascio :

What was the cost?

What is the estimated change in utility of this training?