How do you measure the ROI of your leadership development?

In my experience, leadership development is not just an investment in the growth and success of an organization; it is also an investment in the growth and success of the individuals who contribute to its success. As we define our goals and metrics for leadership development, it is essential to remember that the true measure of success lies not only in business performance and outcomes but also in the transformation and empowerment of our leaders. At its best, leadership development is about developing both individual and organizational leadership capability.

It is always a tricky one as we all know it makes sense to develop leadership. There are some definite numerical measures you can make as well as more subjective comments - I believe they are both equally valid. Retention - have you reduced the churn in your workforce Sick days - dropping? Feedback NPS - Net Promotor Scores are a valuable and accurate insight Subjective Feedback - put some effort and science behind the feedback you seek. What specific questions do you want to ask? You need to uncover peoples' level of commitment, desire to give extra effort and ownership. Compassionate Index - we use a scientifically created Compassionate Index that links directly to performance; if that rises we know that performance will too.

Remember, a successful manager doesn't necessarily make for a great leader. The interests and competencies are not the same. You can save yourself plenty of grief by simply asking individuals if they have an interest in leadership. The answers may surprise you.

The ROI of leadership development can be measured through the use of performance reviews, 360-degree feedback, behavioral observation and employee engagement and retention.

Calculating ROI must be simplified. Employee Turnover, Customer Retention, New Customer Acquisition. If you are struggling in any of these areas, it's a leadership problem.

Be careful with 360° feedback tools. At times feedback may render "false positives" if individuals fear retribution based upon the feedback they provide. Historically males have over-rated their leadership skills while females have under-rated theirs when compared to the rankings provided by the "followers".

When choosing our evaluation methods, let us remember that the power lies not only in the data itself but in the stories it tells. It is about celebrating the growth, progress, and success that emerge from investing in our human capital. Together, as we combine the quantitative and qualitative insights, we gain a holistic understanding of the true ROI of our leadership development efforts. This knowledge empowers us to refine our strategies, celebrate our achievements, and continuously strive for excellence in shaping the future of our organization.

To define the ROI of leadership development, the "R" has to be defined first. What results do you want to get out of your leadership development? Organizations can look at business measures they want to improve (compare: Pyramid Resource Group, which measured a 788% ROI for executive coaching). Individuals can define measurable goals like a promotion, team engagement, or increased buy-in to assess the impact of their personal development. The return will often go far beyond the initial goals. An HBR article showed that stock portfolios of companies invested in development outperformed the S&P 500 by 17-35%.

Operational plans based on the strategic plan with measurable or observable benchmarks is a excellent starting point, but additional helpful tools are 360 assessments and larger environmental surveys depending on the size of the organization and ability to garner broader staff and client feedback.

The most accurate measure will come from the stakeholders they interact with - their team, peers, and senior management. Using the criteria of Trust, Connection, and Relationships - I would craft questions that generate a NPS for each. For example (1) How likely are you to trust this leader direction? (2) How likely are you to connect to their vision and values? (3) How likely are you to recommend them to lead a project?

Developing competencies is an investment in a present and future asset, just like investing in hard assets. Human resources are the organization's most important asset. Investing in upgrades and maintenance has direct and indirect ROI. Leadership PERFORMANCE is measured by results, utilizing skills. What results do leaders need to deliver to accomplish org goals? Retention? Key Performance Indicators (KPIs)? When leaders are unable to deliver results, the most common cause is lack of leadership skills. Therefore, to improve ROI in leadership development is to intentionally and functionally target the skills needed to drive strategy home. We call this a Talent Strategy, the plan and budget that connects strategic plan to desired results.

Don't forget the retention numbers when it comes to calculating costs. People leave bad managers but are attracted to companies with dynamic leaders. The cost of recruiting, hiring, and onboarding can be staggering. Effective leadership can lower the cost of turnover. Leaders cultivate culture.

The benefits of leadership development go far beyond financial gains; they translate into increased capacity, effectiveness, and efficiency. Investing in your leaders empowers them to rise to the challenges with confidence, drive innovation and creativity, and gain a competitive advantage in the ever-evolving market. As we apply the ROI formula, we see that the benefits - represented by increased sales, productivity, and efficiency - far outweigh the costs. When you invest in your leaders, you invest in the heartbeat of your organization. The impact is felt in every aspect of your business. Leadership development is not just a business strategy; it is the lifeline of your organization's growth and future prosperity.

ROI is a quantitative way to measure the return on leadership investment. I would also look at this longitudinally—how many leaders advanced internally in the same organization. Or how many leaders progressed into different operational or support domains in the same organization.

All great points, but are very analytical in calculating ROI. The question is how the leaders can see the value before investing? The fear of wasting money, not getting the promised results, or people leaving with those new skills, stops many leaders. We have to address the emotional concerns. Get the leader to see where they would have limited themselves without the right soft skill training. Where their investment in others has paid off. Get them to take steps into the investment to prove it works. Also, where the company will be without the right trained leaders in those sales, marketing, and operational positions. How it limits their capabilities and performance. To get to x performance requires this skills that training provides.

Effectively communicating the ROI of leadership development is essential for showcasing its impact. Begin by crafting a concise and compelling message that highlights both quantitative and qualitative outcomes. Utilize visual aids such as graphs and charts to present data clearly. Emphasize key metrics like increased productivity, reduced turnover, and improved team performance. Use concrete examples and success stories to illustrate the program's influence on individual and team growth. Tailor the message to the audience, whether it's executives, stakeholders, or employees. Lastly, invite open discussions to address questions and concerns, fostering a deeper understanding of the value that leadership development brings to the organization.

Whether an individual or the organization you work for has sponsored a leadership development event, it is critical to communicate the ROI of the time and money spent. Commit to circling back with the decision makers after the event to provide insights and feedback on the event itself as well as whether to schedule future events of the same type. Begin with a short story that summarizes where the attendees’ leadership skills were prior to the event. Then share the facts and numbers. What specific skills were learned, have those skills already been put to use, and what changes are already taking place in the work environment. The most impactful sharing is in a brief conversation with tangible takeaways like slides or an executive summary.

At the end of the day it is all about communications, though, I challenge that word in itself. Swap "communications" with "dialogue" and you change the world. A compassionate leader seeks to understand and connect. For sure spread the word on the positive impacts of the development programme, but be equally prepared to listen and learn too. Broadcast shares your thoughts. Dialogue creates ownership

Communicating and celebrating the results of your leadership development is the bridge that connects data to action. Focus on communicating the value and impact of your investment by sharing the success stories, the milestones achieved, and the positive changes that have resulted. Beyond the numbers, share the stories of transformation and success through testimonials, case studies, and powerful narratives. The evidence we present must be more than a collection of data points, but a reflection of the thriving culture and the empowered workforce. Highlight the lessons learned, insights, and discoveries, the best practices that have emerged, and the recommendations that will pave the way for continuous improvement and innovation.

I would ask the following three questions: (1) What worked? This allows us to lock in all of the best practices that contributed to ROI (2) What didn't work? This allows us to eliminate any programs or investments that were inefficient or ineffective. (3) What are some creative options? This is an opportunity to keep iterating, evolving, and discovering new ways to elevate the collective skills of your leadership teams.

If leaders don't take the time and make the investment in developing their leadership competencies while would anyone else in the organization strive to make themselves better?

Measuring the ROI of leadership development is not a static endeavor; it's a dynamic of learning and adaptation. What works, we celebrate; what doesn't, we refine. We adapt and adjust our goals, metrics, methods, and strategies to meet the changing needs and challenges of our leaders, teams, and organization. Let's embrace change as a catalyst for continuous improvement. Leadership development is not just a box to check; it's a commitment to nurturing and igniting potential, embracing continuous learning and improvement, and pushing the boundaries of what’s possible.

You have to recognise that any development or transformation is a journey not a destination. It is never over. We can always learn and improve. Compassion is "understanding with positive action" and by definition drives continuous improvement as you strive to constantly listen to the needs of your people and respond positively. The return on your investment if their commitment - enjoy!

The creation of an environment and culture of learning should precede any training or development efforts. Suggest examining how the organization handles mistakes, not those out of negligence but honest mistakes. If the organization first seeks to assign blame versus identifying a process issue or correction needed to prevent or minimize the impact of errors then a learning culture does not exist. It's contingent upon leaders to allow their teammates to make mistakes, self correct, and learn. People must feel safe to learn and grow.

I'm going to give my spin to the adage, 'Change or perish' into 'Calibrate or perish'. For any enterprise, a constant review and improve process or 'calibration' is critical for survival. When it comes to the measurement practices of the ROI of leadership, this is no different. Once process cannot serve the enterprise in all situations and forever. Right at the time of setting goals, it may be useful to add in 'constand development and evolution' as one of the goals that permeates into the culture of the enterprise. This ensures that there is no complacency and at the same time, growth is valued at all costs.

"Be the change you want to see in the world". What Mahatma Ghandi meant by that was to walk the talk. Don't look down from your ivory tower and "develop your people" - develop yourself too!! Do not create a special, exclusive "senior team development programme" - do exactly the same as you do unto your team. Learn the same philosophies. Learn the same models. Follow the same path. Leadership is much simpler when the leader and the follower speak the same language! Be humble, park your ego and follow the same path - you will inspire your teams to join you. Part of your measure should include your own development and impact

As we track the progress and impact of our leadership development initiatives, let us not forget the immeasurable value of personal growth and fulfillment experienced by our leaders. The ripple effect of empowered leaders reaches far beyond the bottom line, influencing the organizational culture and inspiring teams to excel and thrive.

Managers are in place to make sure things get done the right way. Leaders are in place to make sure the right things get done. Leaders need to trust the managers in place (not do their work for them) while moving barriers so the team can function at a high level.

The ROI in leadership development can be measured through a combination of quantitative factors, such as increased productivity, reduced turnover, and revenue growth, along with qualitative aspects like improved team collaboration, employee engagement, and leadership effectiveness. Surveys, town halls, and 1:1’s are examples of some ways to assess the qualitative aspects.

The capacity of your organization depends on the capacity of the voices of leadership. Investing in leadership communication skills will produce the largest ROI. Invest in communications training. Some executives prefer 1-1 coaching, to practice delivering confidential or sensitive information. Other executives can benefit from group coaching - where they can deliver content and get feedback from trusted peers. The bottom line is that we as leaders can always use more practice. Treat communication skills like a world class athlete. Instead of "I'll practice when I have time" - shift to "I dedicate time for practice"