How To Find Positive Return On Leadership Development

return on leadership development

Last year, Deloitte released some startling statistics about leadership development in their 2015 Human Capital Trends Report. According to their global survey, 50 percent of respondents rated their leadership shortfalls as “very important.” Yet only 6 percent of organizations believe their leadership pipeline is “very ready”—pointing to a staggering capability gap.

This capability gap will only widen if organizations don’t make leadership development a priority. So, how can organizations get back on track in 2016?

Leadership development is a fairly common phrase in business. Most professionals understand and appreciate leadership development for its intangible benefits: growing our cadre of business leaders, improving our workforce, developing core skills such as communication and management. It’s all those things, AND it’s more.

Understanding how leadership development provides a positive return on investment is critical in establishing and sustaining an effective program.

How Leadership Development Affects Your Bottom Line

return on leadership developmentThere are three core areas through which leadership development can affect your bottom line:

1. Setting/executing corporate goals. Providing skill development for leaders in the area of both setting and executing corporate goals is a foundational component of their development.

Emerging leaders in an organization are counted on to become champions and contributors to organizational planning. They will be the guiding forces within business units or departments to see those plans are executed. Over time, these emerging leaders will direct the planning at the highest levels. Because of this evolving set of expectations, providing these individuals with a proper tool set is paramount.

The investment up front for personnel to develop their skills in strategic planning, business planning and related actions will provide a return on investment in both the short and long terms. In the short term, they help direct the goal execution in a more efficient (read: cost minimizing) way. In the long term, they will take their knowledge and expertise to make the key decisions that directly affect the bottom line.

2. Getting the best from individuals and teams. The second impact to the bottom line relates to these developing leaders getting the very best results from the individuals and teams they lead. Through skill development in the areas of communication, management, coaching, emotional intelligence, presence, and others – leaders will be able to more effectively redirect their personnel’s ineffective approaches.

A leader can better motivate an individual by being actively present on-site, in a very supportive and approachable manner. A leader can make significant contributions to individual performance because of a refined set of skills as a coach. Knowing and working with team members who have different levels of emotional intelligence could provide difference-making insights.

All these outcomes provide stimulus for greater efficiency, time savings, cost savings and profitability.

3. Driving accountability. Finally, leadership development supports more effective levels of accountability. First, the leader is held accountable in having an active stake in the business, as one of the key contributors to organizational goals. Additionally, these leaders provide an improved approach to driving accountability for the individuals and teams they manage. And improved levels of accountability leads to improved results in terms of financial outcomes.

While the intangible benefits of leadership development have grown increasingly visible to organizations, the return on investment has not received as much attention. Understanding the ways in which your financial investment intentionally leads to improved performance helps reinforce the importance of the leadership development. It also makes a direct impact on the dollar signs that your stakeholders find important.