Evaluating Training in 5 Steps: The Phillips ROI Model

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Learning & Development (L&D) teams often strive to build trust with department heads and prove the return on investment (ROI) of their training programs. The best way to achieve this is by using a structured methodology that quantifies training outcomes in monetary terms.

This is where the Phillips ROI Model comes into play. This model aims to answer the question:
For every dollar spent on training, what is the exact return for the organization?”

Unlike traditional evaluation methods, the Phillips ROI Model goes beyond numerical (financial) results and also examines intangible benefits, such as employee engagement, job satisfaction, and customer experience.

In this article, we will explore the foundations of the Phillips ROI Model, how it works, and its advantages and limitations.

What is the Phillips ROI Model?

The Phillips ROI Model is a methodology that helps L&D and HR teams correlate training program costs with real business outcomes. It was developed to address gaps in the widely used Kirkpatrick Model.

The Kirkpatrick Model evaluates training at four levels:
✅ Reaction: How did participants perceive the training?
✅ Learning: What knowledge was gained?
✅ Application: Did participants apply what they learned?
✅ Impact: How did this affect business results?

The Phillips ROI Model builds upon this by adding a crucial fifth level:
✅ ROI: The financial value of training outcomes.

This additional level helps determine how training impacts business performance in monetary terms, isolating external influences to measure the true Net Benefit of training.

The Key Questions Answered by the Phillips ROI Model:

• How do participants perceive the training? (Level 1: Reaction)
• How much knowledge did they gain? (Level 2: Learning)
• Are they applying what they learned? (Level 3: Application)
• How did this impact key business metrics? (Level 4: Impact)
• What is the monetary return of this training? (Level 5: ROI)

Why Use the Phillips ROI Model?

The Phillips ROI Model shifts the perception of training from an expense to a strategic investment. By linking training to measurable business impact, L&D teams can justify their budgets with data-driven evidence.

Instead of saying,
“This training was effective,”
managers can now confidently state,
“This program increased productivity by 15% and saved the company $200,000.”

The 5 Levels of the Phillips ROI Model

The model builds upon Kirkpatrick’s framework with an additional ROI level to assess financial returns.

• Level 1 – Reaction

Measures participant satisfaction through surveys or feedback forms. While useful, this step does not indicate actual training effectiveness.

• Level 2 – Learning

Evaluates knowledge acquisition using pre- and post-training tests. Helps determine what participants learned, but not whether they apply it.

• Level 3 – Application & Implementation

Assesses how well employees apply their new knowledge in the workplace.
Phillips ROI Model Advantage: Identifies barriers preventing application (e.g., lack of managerial support).

• Level 4 – Impact

Examines the tangible business outcomes of training, such as:
✅ Increased sales
✅ Cost reduction
✅ Improved efficiency

Instead of focusing only on participant performance, this step analyzes multiple factors influencing results.

• Level 5 – ROI

Calculates the financial return of the training program.
Was the training cost-effective?
Did it generate a positive return?

It also considers intangible benefits (e.g., increased employee engagement, improved teamwork).

How to Calculate ROI Using the Phillips Model

The first four levels generate data, which is then used to calculate the ROI percentage.

Step 1: Pre-Training Data Collection

Measure employees’ existing skills and performance levels before training.
Use surveys and assessments for comparison after training.

Step 2: Post-Training Data Collection

Conduct post-training assessments to measure skill improvements.
Gather supervisor feedback on workplace performance.

Step 3: Isolating Training’s Impact

Training isn’t the only factor affecting performance.
Use control groups or trend analysis to separate training impact from external variables (e.g., seasonal business trends).

Step 4: Converting Results to Monetary Value

Translate performance improvements into financial figures.
Example: If a coding workshop improves productivity and generates an additional $290,000 in revenue, this is considered the monetary gain from training.

Step 5: Calculating ROI (%)

ROI Formula:
ROI (%) = (Net Benefits – Training Costs) / Training Costs ✖ 100

Example Calculation:
Net Benefits: $290,000 revenue gain – $234,900 total cost = $55,100
ROI (%) = (55,100 / 234,900) ✖ 100 = 23.46%

Step 6: Evaluating Intangible Benefits

Beyond financial ROI, consider:
✅ Employee morale
✅ Collaboration & teamwork
✅ Customer satisfaction

Pros & Cons of the Phillips ROI Model

✅ Advantages:
✔ Identifies cause-effect relationships between training & performance.
✔ Measures both financial & non-financial benefits.
✔ Provides evidence-based data for L&D budgeting.

❌ Limitations:
⏳ Time-Intensive: ROI results are available only after full data collection.
Not Always Necessary: Not all programs need full ROI analysis.

Best Practice:
Phillips recommends using ROI analysis for only 5-10% of training programs, particularly high-cost or large-scale initiatives.

Conclusion: Why Use the Phillips ROI Model?

The Phillips ROI Model goes beyond simple feedback and provides measurable financial evidence of training impact.

It helps L&D teams:
Demonstrate the strategic value of training
Identify performance gaps & improvement areas
Justify budgets with tangible business impact

By applying this methodology, organizations can transform training from a cost center to a revenue-driving function.

Want to Learn More?

If you're interested in implementing the Phillips ROI Model or need a customized training evaluation strategy, feel free to contact us. Our expert team is ready to help optimize your learning initiatives.

Get in touch today!

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