Darleen DeRosa’s article, “Measuring the ROI of Leadership Development,” should be required reading for every senior leader. Here’s how she opens the article.
“Most companies understand the benefits of leadership training and development programs. In fact, in a recent survey of more than 500 executives, 27 percent of those who said their company was “currently winning in the market” attributed that success to great leadership, while another 25 percent credited powerful and distinct capabilities. Unfortunately, the knowledge that leadership development is crucial to success doesn’t prevent these programs from being axed when budgets are tight.”
Darleen demonstrates how a company can use the Kirkpatrick/Phillips Model to develop a “hard” assessment of the ROI of your training and development programs. You should do that, but there’s another problem that has nothing to do with those hard numbers.
Leadership development programs and executive self-interest
The problem is that many key executives don’t evaluate leadership programs based solely on ROI and long-term value. Self-interest plays a role, too. When times are good, it’s easy to support them based on those numbers, but when executives are under pressure to increase share price this quarter, programs with a big payoff in the future usually get cut.
That’s the bad news. The good news is that it doesn’t happen everywhere.
Leadership development done well
In companies that do it well, leadership development is part of the culture. Managers spend time evaluating and coaching their team members because that’s their job. The meeting cadence of the company includes important training and development activities right along with meetings about financial performance.
If you want leadership development to survive short-term pressure you must do two things. Do the analysis to demonstrate why the programs are worth keeping. And do the hard work to make leadership development part of the warp and woof of corporate life.