I have been researching, interviewing, and discussing measuring the impact of Leadership Development on Business Outcomes. Leading the way to success and 4x growth of the business via continuous and consistent Leadership Development is still a ‘hazy’ topic for many practitioners and recipients of Leadership Development.
When I dive in, the summary of what I am hearing and learning is as follows:
Calculating an ROI of Leadership Development cannot be too simplistic and must account for the complexity of measuring the impact of these activities.
Leadership Development is just one of many complex pieces that influence business outcomes; any model must account for the impact of all these factors.
An individual learning style unique to leaders and cohorts can and does impact the effectiveness of Leadership Development programs.
Finally, the big one is measuring leadership development's long–term impact on business outcomes.
These are valid and real concerns and need to be tackled head-on. Leadership Development is a complex topic. In fact, anything that deals with humans is, let alone related to, the development of the Human Leader. There is something else that Leaders touch that is equally, if not more, complex. That is the business and the organizations these leaders serve. So the question is, "how does one evaluate an ROI of Leadership Development?" For starters, we would assess the program's financial costs and subsequent returns to determine whether "the squeeze is worth the juice," as one of my Rejuvi colleagues would say. Further, estimating the financial benefits over the long term is necessary; so:
Determine costs (course fees, time spent away from work by participants, etc.)
Determine the benefits via improved performance on business KPIs (reduced turnover, improved efficiency ratios, category share gain, etc.)
Calculate the ROI, and if the ROI is > 1, the program has generated more financial benefits than costs.
Isolating the Leadership Development program's impact from other factors influencing business outcomes has traditionally been challenging. When you think of solving this via an 'old-school' approach, this is an almost impossible task and, when done, takes years of research and significant resource investments. The 'measurement' was a disincentive to moving forward with any intent to evaluate ROIs. The benefits of training programs, such as increased engagement, decreased turnover, increased innovation, and adaption of transformation initiatives, are entirely possible to quantify financially if one takes a Modern Leadership approach to the issue.
If Leadership Development were modeled as a 'subscription service' that was enveloped within an insight and intelligence platform; with the ability to collect data that is lightening fast (i.e.., less than 10 minutes per reviewer per leader); done consistently and continuously across Senior Executives, Sales Leaders, Service, Team and Technical Expert Leaders - then ROI's of Leadership Development initiatives would not only be within reach but would be the right of any organization.
The Rejuvi platform is doing exactly this. Reach out if you want to learn more!