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The Human Capital Return On Investment

A paper from Global Learning Alliance and Knowledge Advisors

Part 3 - Learning Measurement Level 5 (Phillips)

Level Five is not a Kirkpatrick step. Kirkpatrick alluded to ROI when he created level Four linking training results to business results. However, over time the need to measure the dollar value impact of training became so important to corporations that a fifth level was added by Dr. Phillips. Dr. Phillips outlines his approach to Level Five in his book Return on Investment in Training and Performance Improvement Programs, Butterworth Heinemann Publishers, Inc, Woburn, MA 1997. Dr. Phillips has written extensively on the subject, publishing or editing dozens of books on the topic of ROI.

The Guidelines for Level Five are as follows:

• Use a control group, if practical
• Allow time for results to be achieved
• Determine the direct costs of the training
• Measure a productivity or performance before the training
• Measure productivity or performance after the training
• Measure the productivity or performance increase
• Translate the increase into a dollar value benefit
• Subtract the dollar value benefit from the cost of training
• Calculate the ROI

ROI calculations are being done by a few world-class training organizations. They help these organizations:

• Quantify the performance improvements
• Quantify the dollar value benefits
• Compute investment returns
• Make informed decisions based on quantified benefits, returns, and percent return comparisons between learning programs

Dr. Phillips has created an ROI Methodology that he conducts certifications and workshops on and has helped training organizations use the right tools to measure the ROI on organizational learning.

Click here to view an illustrated summary of his methodology.

The methodology is a comprehensive approach to training measurement. It begins with planning the project (referred to by Dr. Phillips as an Impact Study). It moves into the tools and techniques to collect data, analyze the data and finally report the data. The end result is not only a Level 5 ROI but also measurements on the Kirkpatrick 4 Levels as well. This yields a balanced scorecard approach to the measurement exercise.

Part 2 < Back to Top > Part 4   

© 2004 Global Learning Alliance and Knowledge Advisors. Reproduced with permission. Any opinions or views contained in this article are solely those of the author and do not necessarily represent those of Training Reference.

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