It worked well when people could go out to the warehouse and count assets. In the information age, it's an inappropriate yardstick because most of the assets drive home every night. It doesn't recognize that people become more valuable over time. Your gut may tell you that you'll be repaid in the future for investing in people today, but where training is concerned, the only metric taken into consideration is cost. Accounting has no measuring stick to distinguish a good idea from a bad one.
Excellent training hits the books at the same value as bad.
Weigh subjective factors as well as objective ones. Keep two sets of books, one for investors and regulators, the other to track the intangibles. Robert S. Kaplan and David P. Norton, co-authors of The Balanced Scorecard, devised a means of evaluation developed to help make up for the insufficiencies of financial accounting. In addition to finances, the balanced scorecard looks at changes in customers, processes, and employees. According to Kaplan and Norton, managers have traditionally attempted to improve performance by making operating and investment decisions to develop new and better products, to increase sales, and to reduce operating costs.