The ROI methodology was developed by Dr. Jack Phillips in the 1970s and has been continually refined since then. The founders and owners of the ROI Institute, Dr. Jack J. Phillips and Dr. Patti P. Phillips, are experts in evaluating the effectiveness of various projects. The largest organizations on the Forbes list utilize the ROI methodology. Evaluation of effectiveness according to the Phillips approach is based on five levels.

And a few questions that may arise when looking at this model:

1. Do we evaluate every project at all levels?

• Definitely not, only important projects from the organization’s perspective, usually large projects.

2. Can we assess the fourth level immediately?

• One of the ROI Institute’s standards states that to assess at a higher level, data must be collected from lower levels. It’s crucial to have insights into what skills were lacking at the implementation stage if there are no changes in KPIs (fourth level), to draw conclusions for future projects.

3. What happens if the return on investment is negative?

• It can happen. In such cases, it’s essential to understand the reasons behind it and implement necessary changes in future projects. Piloting, especially for large projects, can be helpful to ensure everything works as planned.

4. Who should be involved in evaluating effectiveness?

• HR, training departments, and definitely the managerial staff – direct supervisors and higher-level managers.

5. Is effectiveness evaluation at all five levels always reliable?

• Unfortunately, no. Some evaluations may struggle to provide reliable results. This isn’t necessarily tied to the type of projects, whether they’re related to development, coaching, leadership, or more tangible areas. The issue often lies in the timing of the decision to evaluate effectiveness at all five levels. The later this decision is made, the harder it will be to obtain credible information. It’s best to plan effectiveness evaluation at the start of the development process.