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“But Is It Worth It?”: Measuring the ROI of Leadership Development

by Duncan Ferguson on

A while back, I was having a conversation with a potential client about his organization’s leadership challenges and corresponding development needs.  As our discussions continued, he asked for examples and testimonials from some of our past engagements. In particular, he asked us to include ROI (return on investment) data for leadership development from these clients. In other words, he was requesting evidence that the investment of money, time and resources in leadership development would produce tangible organizational performance improvement.  This request was not unreasonable or unusual, but it is difficult to prove.

It is not hard to measure whether a leadership development intervention can enhance an individual’s leadership capability.  360-degree feedback processes can be repeated to assess improvement in key competency areas. Developmental plans can be monitored to ensure execution. Engagement surveys provide ongoing collective insights on whether important leadership behaviors and traits are advancing. Extrapolating whether any of this translates into improved individual, team or organizational performance, however, is a bit trickier.

So How Do You Measure ROI?

As most of us do these days, I turned to Google for an answer. “Can you measure ROI for leadership development programs?” I queried.  It produced almost 3 million hits – proving, if nothing else, that the leadership consulting business is quite healthy. There were plenty of formulas, studies and frameworks claiming that Leadership Development ROI is provable. Several came from credible sources such as the Harvard Business Review and the Center for Creative Leadership. However, as I dug into the articles, I found it all either too obtuse – or, to use a technical term, a bit “squishy.”

I came away from this fact-finding mission with an apparent confirmation of my hypothesis: that it is difficult, if not impossible, to draw a solid line connecting leadership development and a performance ROI. So then, you ask, why invest in leadership development at all?  I think it comes down to a matter of faith; namely, the belief that engaging with enlightened and positive leadership principles will inspire people and organizations to reach their potential.

If you subscribe, as I do, to this leadership philosophy, you probably have read Daniel Pink’s book on human motivation, Drive, and agree that his findings make sense. Perhaps you found yourself acknowledging that Chicago Cubs manager Joe Madden’s intangible leadership skills were the critical factor in helping the Cubs claim their first World Series title in 108 years. Maybe you simply remember working for someone who brought out the best in you, allowing you to perform at your highest level.

The Investment Is the Payoff

In our Best Boss study (conducted by myself, Toni Pristo, and John Furcon in partnership with Vantage Leadership Consulting), we heard amazing testimonials to leaders who elevated the performance of all those around them.  Consider this quote from a participant in our study:

“I have never worked harder or had more challenging successes than when I worked for [my Best Boss]. I gave him and the organization 150%, if not more. When I failed, which I did, I was harder on myself than he was. He only wanted to know what he could do to help me succeed the next time.”

Can you develop leaders to embrace the kind of characteristics and behaviors that drive this kind of performance? Sure.

Can you prove it on a spreadsheet? Probably not.

Given this, let me make one suggestion. Ask some people to tell you about the best bosses in their life and just watch their faces and listen to their responses. I promise you this will be all the evidence you need for investing in your leaders.

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