Leadership development ROI

November 29, 2017 by Wally Bock

Leadership development is more like planting a seed than calculating miles per gallon. That’s why every time I encounter an article with a title such as “Leadership Training—Calculating ROI and Measuring Effectiveness” I get just a little crazy.

Calculating the Return on Investment (ROI) of leadership development sounds like a good idea. But at best it’s a guess and at worst it’s a sham. The problem is with the word “calculating.”

Calculating is a mathematical activity. To get it right you need to have accurate values for your inputs and a proven method for determining your output. You may be able to count the dollars being spent on development activities but there’s simply no way to count or calculate the result of them. Here’s how sociologist William Bruce Cameron described the situation in a 1958 issue of the NEA (National Education Association) Journal:

“Counting sounds easy until we actually attempt it, and then we quickly discover that often we cannot recognize what we ought to count. Numbers are no substitute for clear definitions, and not everything that can be counted counts.”

The best analogy we have for developing leaders is raising children. In both cases you can confidently calculate some of the costs, but you can’t calculate ROI.

Leadership development costs

You can decide which of your expenses can be allocated to your development program and tote them up. You can assign reasonable values to the time contributed by executives.

Leadership development investment decisions

You can judge whether your company is spending money on the best practices and technology available. You can review the work of your instructors and coaches. You can determine if your program is meeting assessable short-term objectives. After that it’s all hope.

Leadership development and parenting

Developing leaders and raising children are ultimately about doing the best you can with the resources available. Calculate the costs you know. Do the best you can to send your leaders into the world to do the things you expect. Twenty years from now, someone else will be able to determine if you did a good job.

Wally Bock is a coach, a writer and President of Three Star Leadership.

Posted in Leadership Development

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