In organization benefit evaluations, one attempts to determine whether there is a measurable improvement in an organizational performance indicator, such as higher output, reduced error rate, increased profitability, increase in school district standardized test score, increased college admissions of high school graduates,and so forth. This type of study can be based on perceptual data such as interviews, measures of increased performance, or cost-benefit ratios based on financial data. In the latter case, one has to estimate the total cost of designing, developing, and implementing the educational program and then measure the financial benefit resulting from its implementation. For example, if there is a measurable reduction in defective products, then a financial estimate of savings or cost avoidance can be determined. By dividing the costs into the benefits, one can determine whether there was a positive result.
Regardless of the type of evaluation, there are two types of decisions, called formative and summative, that one can make based on the result and one’s purpose for doing the evaluation. Formative decisions are those in which the results of the evaluation provide guidance on how to improve instructional materials or the procedures by which they are designed and developed. Summative evaluation leads to decisions about the worth and value of a product or activity. Formative evaluation occurs most frequently during materials and process evaluation. While summative evaluation is more common during outcomes evaluation. However, either type of decision can made with respect to any of the types of evaluation. For example, measures of learners’ reactions can identity areas where the implementation of a course can be improved, or they can be used to determine whether an instructor should be retained, promoted, or released. This is certainly true in private-sector training, but is also happening with greater frequency in higher education.