Introduction: Why ROI Still (and Always) Sparks Debate
Our previous article in this series indicated how Kirkpatrick’s Four Levels remain one of the most practical ways to measure learning impact, from learner engagement to real business results. In this article, we continue on our measurement journey to examine the impact of the Phillips ROI framework.
Learning leaders often encounter the same question from executives and stakeholders: “What return are we getting from this learning investment?” ROI remains a contentious topic because, unlike sales or operational metrics, the value of learning is less direct, sometimes delayed, and often influenced by multiple factors outside the classroom or platform. Yet, measuring ROI effectively can transform the perception of learning from a cost center to a strategic enabler.
Here’s why ROI continues to spark debate: the challenge is not just in measuring outcomes but in linking those outcomes convincingly to business impact. This is where the Phillips ROI Model comes in. It provides a structured way to quantify the financial benefits of learning initiatives, translating performance improvements into a language executives understand.
The goal of this article is to dive deep into the Phillips ROI Model, exploring when and how to apply it, strategic reasons for its use, and practical considerations for adapting it in different contexts, including African and South African organisational settings. By the end, you will understand not just the model itself, but why it matters for aligning learning with performance and organisational results.
ROI is not inherently complicated, but meaningful measurement requires a framework that connects learning to measurable business impact.
What the Phillips ROI Model Is
The Phillips ROI Model was developed by Jack Phillips in the 1980s, building on Donald Kirkpatrick’s Four Levels framework. While Kirkpatrick stops at Results (Level 4), Phillips introduced a fifth level: Return on Investment. This addition bridges the gap between organisational performance improvements and financial impact, making learning outcomes more tangible and defensible in business terms.
The model provides a systematic process to isolate the effect of training and calculate a benefit-cost ratio. It does not replace Kirkpatrick; rather, it extends it to answer the question, “Was the investment worth it?” For organisations looking to justify learning spend or prioritise programmes strategically, Phillips ROI provides a quantifiable, repeatable method.
Phillips ROI involves a sequence of steps: gathering data across Levels 1–4 (reaction, learning, behaviour, results), isolating the impact of the program from other factors, converting the results into financial terms, and calculating the ROI percentage. It encourages careful planning, baseline measurements, and alignment with organisational objectives.
The Phillips ROI Model turns abstract learning outcomes into tangible, financial evidence that informs decisions and prioritisation.
The Five Levels of the Phillips ROI Model (Comprehensive Overview)
Here’s a detailed look at each level in the Phillips model, showing how they build upon Kirkpatrick’s original framework and prepare for ROI calculation:
The Phillips ROI Model builds on Kirkpatrick’s four levels but adds a fifth layer that directly measures financial return. Understanding each level is essential for designing evaluation strategies that go beyond satisfaction surveys or basic knowledge checks. Let’s take a closer look.
Level 1 – Reaction and Planned Action: At this stage, the focus is on participants’ initial response to the learning experience. Did they find it engaging, relevant, and practical? But Phillips adds an extra layer: planned action. Learners are asked not just how they felt, but what they intend to do with their new knowledge or skills. This shifts measurement from passive feedback to forward-looking commitment. Collecting this information early helps identify potential barriers to application and shapes subsequent follow-up.
Level 2 – Learning Level 2 assesses the knowledge, skills, or attitudes gained through the learning intervention: This is where traditional assessments, quizzes, simulations, or practical exercises come into play. The key is to design measurement in a way that clearly links learning to desired outcomes. In a business context, it’s not enough that learners remember content — the question is whether they can use it effectively to improve performance.
Level 3 – Application (Behaviour): Here, the evaluation examines whether learners are transferring what they’ve learned into real-world behaviour. Observations, 360-degree feedback, manager assessments, and on-the-job metrics can all provide evidence. This level highlights gaps between intent (Level 1) and actual application. Phillips emphasises isolating the effect of learning from other influences — a critical step for later calculating ROI.
Level 4 – Business Impact Level 4 moves from individual behaviour to organisational outcomes: Did the learning lead to measurable improvements in business performance, such as increased productivity, higher sales, fewer errors, or improved customer satisfaction? Establishing clear metrics and using control groups or baseline comparisons strengthens the link between training and business outcomes.
Level 5 – Return on Investment (ROI): Finally, Level 5 translates the business impact into monetary terms. Costs of the program are compared with financial benefits to generate a benefit-cost ratio or ROI percentage. This level requires disciplined data collection, careful isolation of learning’s effect, and transparent assumptions. Even partial application can provide executives with actionable insight and justify future investment.
Each level builds on the previous one, creating a logical flow from engagement to financial validation. Implemented effectively, this structure allows L&D teams to provide a complete picture: from participant reaction to measurable business value.
By systematically progressing through these five levels, the Phillips ROI Model provides a clear, evidence-based path to link learning to organisational performance and financial results.
When and Why to Use the Phillips ROI Model
Understanding when to apply the Phillips ROI Model is critical to getting meaningful results without overcomplicating measurement. Not every learning initiative requires a full ROI calculation, but there are clear situations where it adds strategic value. Here’s why and when it makes sense.
When to Use the Phillips ROI Model
High-stakes learning investments: When programs represent a significant cost or strategic priority, executives want to see a tangible return. ROI provides a concrete measure of whether the investment generated proportional benefits.
Executive decision-making: Organizations often face pressure to justify learning budgets. A well-executed ROI analysis translates training impact into financial terms, speaking directly to C-suite expectations.
Complex or multi-layered initiatives: For programs that involve blended learning, cross-functional teams, or long-term behavioural change, ROI ensures that evaluation captures the full spectrum from knowledge acquisition to business impact.
Continuous improvement goals: When L&D teams want to refine or scale programs, ROI provides objective evidence of what drives measurable results, informing prioritization and resource allocation.
Why Use It
The Phillips ROI Model helps teams move beyond anecdotal success stories or completion rates. It emphasizes a disciplined, evidence-driven approach, which:
- Links learning investments directly to business outcomes
- Encourages planning for measurement from the design stage
- Creates accountability and transparency across stakeholders
- Enables better decisions about program continuation, adaptation, or expansion
By framing evaluation in terms of financial return, it builds credibility for L&D within the broader business. It also helps identify high-value learning interventions, making the case for strategic investment rather than treating training as a cost centre.
The Phillips ROI Model is most effective when learning programs are costly, complex, or strategically important, providing clear, evidence-based insight into how training drives measurable business results.
When Not to Use the Phillips ROI Model
Small-scale or low-cost initiatives: For brief courses, microlearning modules, or pilot programs with minimal investment, a full ROI analysis can be disproportionate to the scale of the program. The time and effort required may outweigh the insights gained.
Rapid or exploratory learning experiments: When testing new content, delivery methods, or technologies, the focus is better placed on engagement, learning outcomes, and early behavior signals. ROI calculations at this stage may be premature and misleading.
Programs with hard-to-measure outcomes: Some learning initiatives influence qualitative aspects such as culture, leadership mindset, or employee engagement. While these are critical to performance, they are difficult to translate reliably into financial terms. Attempting ROI in these cases can give a false sense of precision.
Lack of baseline data or measurement infrastructure: ROI calculations require accurate cost and performance metrics. Without a robust tracking system, pre- and post-program data, or clearly defined business metrics, the results can be misleading.
Why It Matters
Applying ROI in the wrong context risks wasted effort, frustrated stakeholders, and potentially skewed decision-making. Teams may spend weeks producing a complex report that offers little actionable insight. Recognizing when simpler, qualitative, or intermediate evaluation methods are sufficient preserves time and resources while still delivering meaningful evidence.
Use the Phillips ROI Model selectively. Reserve it for significant, high-impact programs where accurate measurement is feasible, and other evaluation methods cannot fully capture the value of learning
Strategic Reasons Organisations Use Phillips ROI
For many organisations, the Phillips ROI Model is more than a measurement tool. It’s a strategic lever linking learning to business outcomes. It signals discipline and accountability while shifting learning from cost to performance driver. Understanding why organisations adopt it shows how L&D can move up the strategic curve.
Why Organisations Value the Phillips ROI Model
Demonstrates financial accountability: Translating learning into monetary terms helps L&D speak the language of executives and finance teams. This supports budget approval and investment in programs that deliver real results.
Aligns learning with business strategy: ROI calculations require clear objectives, relevant business metrics, and measured impact. This keeps learning tightly connected to organisational priorities.
Supports continuous improvement: Measuring ROI identifies what works and what doesn’t. These insights inform program redesign, content updates, and more targeted delivery, improving both learner outcomes and organisational performance.
Elevates credibility of L&D: Consistently reporting measurable ROI positions learning as a strategic partner, not just a training provider. The conversation shifts from attendance to behaviour change and business value.
Encourages stakeholder engagement: Calculating ROI requires input from leaders, managers, and learners. This builds shared ownership and reinforces alignment between learning and performance.
Organisations use the Phillips ROI Model to make learning accountable, impactful, and strategically aligned. It creates clarity, drives improvement, and positions L&D as a credible performance enabler.
Case Examples
Seeing theory in action often makes the abstract a lot easier to grasp. For L&D and HR leaders, real examples can turn measurement concepts from “interesting on paper” to “practical in practice.” Below are two anonymised case examples showing how the Phillips ROI Model works in organisational contexts. These are compiled from a mix of industry reports, public case studies, and practitioner interviews to protect confidentiality while still showing practical application.
Case Example 1: Reducing Onboarding Ramp-Up Time:
A mid-sized South African financial services company struggled with new hire productivity. Onboarding programs were inconsistent, and managers weren’t sure how effective the training really was. Applying the Phillips ROI Model, the L&D team identified specific business metrics: time-to-competency and first-quarter sales performance. They tracked Levels 1–4, converting improvements in onboarding completion and early sales into a tangible financial impact. Even small tweaks to onboarding materials produced measurable ROI, giving the team confidence to invest further in digital learning tools.
Case Example 2: Upskilling Customer Service Teams:
A multinational retail organisation aimed to boost customer satisfaction and reduce complaint resolution times. Using the Phillips ROI framework, the L&D team compared pre- and post-training performance, isolating the impact of the learning program on key metrics. Level 4 results: faster resolution times and higher customer satisfaction were then translated into financial value by linking improvements to retention and repeat sales. The ROI calculation showed a clear return on investment, highlighting L&D’s strategic contribution to business outcomes.
What These Examples Show
ROI measurement is possible even in complex operational environments
Aligning learning objectives with business metrics is essential
Anonymised or aggregated data can still deliver compelling insights
Storytelling with ROI reinforces credibility, giving executives tangible evidence of learning’s value
By applying the Phillips ROI Model systematically, organisations can turn learning outcomes into credible business impact, making L&D’s value visible and strengthening its role as a strategic partner.
ROI & Phillips in African Contexts
Using the Phillips ROI Model in African, and specifically South African, organisations requires practical adaptation and cultural awareness. Many organisations operate with limited resources, diverse learner populations, and a mix of formal and informal learning. Measuring impact in this environment is challenging but also presents opportunities to show real business results while respecting local dynamics.
Adapting ROI Measurement
Direct financial metrics don’t always capture the full value of learning. In South African manufacturing or service environments, for instance, gains in compliance, safety, or customer engagement may indirectly reduce costs or increase revenue. Phillips’ methodology encourages teams to identify such metrics carefully, even when direct attribution is tricky. A combination of quantitative data—production efficiency, sales figures, call-handling times and qualitative insights from managers and employees helps create a credible ROI case.
Accounting for Local Contexts
Culture and organisational factors shape both the design and interpretation of ROI studies. South African workplaces often feature multi-generational workforces, varied digital literacy, and differing exposure to formal learning. ROI calculations should account for these variables. Learning transfer may be slower in settings with less prior exposure to structured training. Surveys on confidence, readiness to apply skills, and observational feedback can help refine impact estimates.
Maximising Adoption and Credibility
For ROI measurement to influence decisions, local leaders need to see results that matter in their context. Showing that learning improves safety, productivity, or customer retention builds buy-in. Using anonymised benchmarks from similar organisations or industry data can contextualise findings and make results more compelling.
Practical Guidance for African L&D Teams
Start by selecting measurable outcomes that clearly link learning to performance
Combine quantitative and qualitative data to strengthen attribution
Consider workforce diversity and digital maturity when designing assessments
Communicate results in business terms: cost savings, revenue impact, risk reduction, or operational efficiency
Thoughtfully adapting the Phillips ROI Model for African contexts allows L&D teams to provide credible, actionable insights. It validates learning investments, guides decisions, and reinforces the strategic value of L&D in driving business performance.
Further reading
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Phillips, J.J. — Measuring ROI in Learning and Development
Practical resource from the ROI Institute explaining Phillips’ methodology and books on measuring ROI in L&D.
https://www.roiinstitute.net/measuring-roi-books -
Phillips & Phillips — The Value of Learning: How to Measure ROI and Show the Results of Training
Guidance from the ROI Institute on isolating program effects and converting outcomes into business impact.
https://www.roiinstitute.net/value-of-learning -
Kirkpatrick Partners — The Four Levels of Evaluation
The foundational Kirkpatrick model overview explaining Levels 1–4 which Phillips extends with ROI.
https://www.kirkpatrickpartners.com/Our-Philosophy/The-Kirkpatrick-Model -
ATD (Association for Talent Development) — Research on ROI and Talent Development
Research and insights from ATD on measuring learning effectiveness at enterprise scale.
https://www.td.org/research -
Bersin by Deloitte — High-Impact Learning Measurement Research
Industry research connecting learning programs to business performance and measurement best practices.
https://www2.deloitte.com/us/en/insights/focus/human-capital-trends.html -
South African Department of Higher Education & Training — Skills Supply and Demand Report
Local context on workforce skills and planning useful for framing learning and ROI in South Africa.
https://www.dhet.gov.za/SitePages/Skills-Planning.aspx -
National Skills Fund & SETA Research Reports (example: Services SETA Research)
Sector research and data from SETAs that can help ground ROI claims with sector-specific metrics.
https://www.serviceseta.org.za/?page_id=208 -
World Bank — Human Capital & Skills Development in Africa
Research and reports on skills development and human capital across Africa useful for economic framing of ROI.
https://www.worldbank.org/en/topic/education -
McKinsey & Company — Building Capabilities for Performance Transformation
Insights connecting capability building learning interventions and measurable organisational performance.
https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights -
Harvard Business Review — Learning & Development Performance Articles (example: Why Leadership Training Fails)
Critical perspectives on when leadership and L&D interventions deliver results and when they do not.
https://hbr.org/2016/10/why-leadership-training-fails