Return on Investment (ROI)

Jack Phillips added a fifth level, Return on Investment (ROI) to Kirkpatrick’s Evaluation Model, that proposes a systematic, four level framework for evaluating interventions. Organizations emphasize results, and ROI is a useful tool for measuring human capital success. The essential question is “Did the training investment provide a positive return on the investment?”

Organizations should examine the results of interventions against the costs of implementing the intervention, thereby establishing accountability for interventions. The process focuses on ascribing monetary values to costs and benefits.

A potential drawback of ROI is the difficulty of assigning value to “soft” costs with the emphasis on results. A "soft" cost is an expense that is not a direct production expense, such as sales and marketing, legal fees, taxes, etc.

It is expressed as a ratio:

ROI = (Net Project Benefits/Project Costs) X 100 (Rothwell, 2013)

References:

Rothwell, W.J., Hohne, C.K., King, S.B. (2013). Human Performance Improvement: Building Practitioner Performance. (Second Edition). New York: Routledge.