Leadership Development: How can you show leadership development programmes provide a return on investment?

Take Away Line

Turbulent times call for even greater sophistication in leadership.  Linked to culture change, effective leadership development programmes should have direct benefits for all-staff engagement levels, which in turn predict future organisational success.  Measure and re-measure engagement levels and you predict the ROI from your leadership intervention.  But choosing the right programme is important too.

The Almost Impossible Challenge of Leadership

When it comes to work organisations, the times are changing. Fast and profoundly.  Indeed, trends like the following have become almost clichés:

  • Realignment of corporates following the recession is leading to significant people and cultural challenges – the ‘war’ for talent has entered a new and more critical phase
  • Trenchant cuts in public service budgets and the ability of people to give to worthy causes is  compromising public service delivery and voluntary social action alike, forcing cutbacks or radical rethinks
  • The globalisation of markets and ever smarter IT systems, social media and on-line resources mean that change trends go global faster than ever before

Two brief examples illustrate the point.

  1. Working with a team of leaders within a global bank recently, the critical issue that they brought to the room was forging a sense of being a meaningful team, based on clear mandates and robust relationships, while the bank went through its own post-crisis realignment that simultaneously sought to deliver the seemingly contradictory goals of fostering stability alongside radical internal change.
  2. In a leadership development programme for the leaders of local NGOs in the UK, we have found the issue many of the participants are now facing more than ever is how to cope with sudden and deep cuts in funding from rather panicked funders.  Their reaction leads to thoughts about future sustainability via ‘bankable’ priorities that still deliver the mission.  In some cases, the mission too is up for grabs.

So, the challenge for leadership in work organisations is profound, requiring abilities to redefine goals and realign people and cultures to new conditions quicker, often within a tighter resource framework and in what may appear to be a somewhat quixotic environment. Who’s prepared for that?

Developing Leaders for Tough Conditions

Clearly, only the brightest of the MBAs with the most charismatic of personalities are the people we need.  Right?

Not necessarily.  A good business education and a well-rounded and ambitious personality may be a great foundation, but recent management thinking points to the idea that leadership isn’t so much about education or innate qualities, but more about choice and practice.  In other words, leadership is akin to a craft which can be learnt and should be honed with time and attention.

If the development of the leaders we need to see us through the profound challenges before us is as much about choice and commitment to learning as anything else, that places the future of our work organisations firmly in the arms of leadership development professionals.  In-house or open, leadership development programmes offer great potential for the future of our work organisations in all sectors.  Yet, in a time of tight budgets such programmes can often be the first ‘soft’ expenditure to be lost.

Rational response?  Only leadership programmes that pay for themselves should be considered. If you get more back than you put in, at least over time, you can perhaps justify the investment now.  But demonstrating a material and direct benefit for leadership development interventions is notoriously tricky.  New research by Fierce (a leadership develoment consultancy), points the way.

It’s pretty well established that higher levels of employee engagement and alignment with shared organisational goals predict improved organisational outcomes and bottom line gains.  And so much of employee engagement and alignment is dependent on effective leadership. So, the thinking goes, effective leadership is predicts higher engagement which in turn predicts higher organisational success.  When you think about it, it’s obvious: if we believe what our leaders are leading us towards and we feel strongly part of the team that delivering those things, we’re more likely to deliver more.

So, if a leadership development intervention results in higher levels of engagement across the organisation, can we prove that it will pay for itself in the bottom lines of the organisation?

Proving the ROI – and beyond

In principle, measuring employee engagement before and after a leadership development programme should help show the change in engagement and pinpoint the cause of the change.  Assessing bottom-line changes (be they monetary or client outcome) before and after should add to the picture.  And there is some science around this too.

But there’s more that can be done to predict success.  A successful leadership development intervention will more likely deliver if you:

  • Are very clear about the outcomes of the leadership development programme itself
  • Insist on leadership development working with culture change in one programme – in other words leadership is seen as occupying the collective space, not so much the ego space.
  • Choose a leadership development tool (and facilitator) that will deliver your required outcomes
  • Obtain real commitment (and appropriate participation) by the board and top management of the organisation to the process
  • Pilot the approach to iron out any glitches
  • Go for at least 10% of the organisation and watch the culture change that emerges from that

For further reflection

  1. What are the new leadership challenges in your organisation at present?
  2. Do you find your investment in leadership development is aligned to these challenges?
  3. What’s your experience of trying to assess ROI of leadership development?
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About transformingtales

What you do is what you do, isn't it? Nothing special there. What I do is work mainly with civil society organisations, but also some public and corporate sector outfits, to help them change. For the better. For good. If you provide a list of the things you do, the services you offer, like strategic planning, leadership development, corporate governance, culture change and performance management, they are just words. And tricky sounding words too that put you off and imply more questions than they answer. So, this blog is about the stories, the joys and the woes of making tranformative change happen (on a good day) and when and why it doesn't (on a bad day). And it's dedicated to my daughter who asked the question a few years ago: 'What do you do again, Dad?'
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One Response to Leadership Development: How can you show leadership development programmes provide a return on investment?

  1. As an addendum to my own piece, I see that in December, the Leadership 20:20 Commission in the UK has called on funders and commissioners to include management and leadership development components in funding agreements. Good news that the value of leadership development is recognised in this way and that funder are being urged to support it more readily. For more on this see: http://www.ncvo-vol.org.uk/leadership2020

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