LEADERSHIP DEVELOPMENT:The ROI of Leadership Development

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Despite some claims to the contrary, return-on-investment research that directly links leadership development implementations to financial return is rare. This is because it is very difficult to document accurately.

ROI is generally based on two measurement components: quantitative and qualitative. Quantitative ROI is normally expressed as a quantity that is clearly measurable in dollars, time saved, headcount, improved margins, or other metrics that would stand up to scrutiny by a CFO. Qualitative ROI, on the other hand, relates more to benefits based on less measurable factors such as customer perception, effective leadership, and employee engagement or recruiting and retention success.

How do you convince the CFO that the ROI is truly generated by leadership development? The real difficulty, and hence the scarcity of research data, stems from the fact that organizations are not static but are extremely dynamic. For instance, if a newly trained manager takes over the production department, how can you prove that improved output of the employees in the department resulted from a leadership development program, new process or equipment, improved supplier quality or the new manager’s leadership? You probably can’t. So, this is where common sense takes over. Can you reasonably expect that people who understand what their goals are, how they link to the big picture, how their performance will be measured, and the connection between leadership, performance and rewards will produce more? Obviously, the answer is “Of course.”

Financial measures are not effective measures you can put on a leadership course. What you can do is measure changes in behavior and attitude in the company over a period of time. The effectiveness of leadership training can be measured through a rolling employee survey. Ask employees how their managers are behaving. Are employees being thanked? Are they being given effective direction? Through this process the impact of leadership development can be measured. Leadership training should not be given in isolation.

The employees of the organization should know who is going through leadership development training or coaching and told how it should impact them. People tend to go away to a seminar and then come back and implement new ideas, which leave staff wondering what they are doing or worse yet provide “no” new leadership techniques or change in attitude or behavior.

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Coach and author Roger Ingbretsen is a certified executive coach and organizational developer, providing organizational and career guidance to professionals, managers, supervisors and all individuals looking for "real world" career development and business information. His entrepreneurial approach will help you learn how to plan, lead and succeed in your career. Roger is the creator of the “Leadership Development Coaching Experience©” and author of the personal development reference eBooks, “Plan Your Career Now: The Survival Guide for the American Workplace” and “Master Your Career: Proven Strategies for Career Success©.” To know more and claim dozens of Rogers free articles go to www.ingbretsen.com or call 509 999 7008.

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