Showing the Value of Leadership Development is a Must in Today’s Climate

Great Leaders are Critical Now and Leadership Development is a Necessary Investment

Few would argue about the importance of having great leaders and the need to invest in leadership development to help those leaders perform at their best. But the key question is, “Is leadership development delivering the value that is needed?” Here are a few questions to ask about your leadership development efforts:

  1. Do you have clear data that shows the impact of leadership development connected to key business outcomes (even the public sector has business outcomes)?
  2. Do you have any data that shows the leadership development is worth it, comparing the cost to the monetary benefits?
  3. Have any of your executives ever made comments about how leadership development has made a difference in the performance of the organization, a division, or a unit in the organization?
  4. Do your executives see leadership development as a cost or an investment?
  5. Do you have difficulty getting all the funding you need for your leadership development needs?
  6. What will happen with the leadership development budget if there is an economic downturn? Will it be reduced or eliminated?

Unfortunately, many leadership development providers have some disappointing responses to these questions, leaving some unsettling challenges.

What is the Value of Leadership Development?

As shown in Table 1, leadership development delivers five levels of outcomes and form a logic chain of value.1

Table 1. Five levels of leadership development outcomes.

Level Definition
Level 0 Input The number of people involved, time of involvement, cost of program.
Level 1 Reaction Do leaders see value in the leadership development program? Is it important to them? Is it relevant? Are they committed to using the skills and competencies? Would they recommend it to others?
Level 2 Learning Have leaders acquired or enhanced leadership competencies and skills with new perspectives and ways to be effective?
Level 3 Application Have the leaders used leadership development skills? Extent of use, frequency of use, and success with use are important. What are the barriers and enablers to use?
Level 4 Impact What is the connection to important impact measures such as retention, productivity, quality of work, timeliness of work, incidents, accidents, project completion, and many other impact measures?
Level 5 ROI What are the costs versus the monetary benefits, calculated as a benefit cost-ratio and ROI, expressed as a percent. This answers the question, “Was it worth it?”

These are all value statements. Major leadership development programs should not be evaluated by just one of these levels, they should be evaluated on all of these levels. They exist in any leadership program that has been conducted. The problem is we don’t have data to see and show this connection. Because this is a logic model, the lower levels are necessary for the higher levels. Without the proper reaction, the program is probably doomed. Of course, learning is the heart of the program being offered. If they don’t absorb the new skills or competencies, there will be no use of the skills. If they don’t use it, there will not be any impact connected to the program. If there is no impact, the ROI is clearly negative. The concept of the logic model dates back to the nineteenth century.

Progress is Being Made

We know this is a critical topic, and much progress has been made. It’s the number one topic selected by individuals participating in the ROI Certification process offered by ROI Institute. This program, attracting over 19,000 people to date, requires participants to select a program or project to evaluate to the ROI Level to achieve the designation of Certified ROI Professional. Leadership development is the number one topic selected because it is important to the organization, it needs to be evaluated because there is a group of sponsors and supporters who are eagerly awaiting the results.

Progress is being made but not enough. Articles continue to dominate the learning and development and HR space, discussing the success of leadership development in terms that are not very important to executives, offering competencies delivered and used, instead of impact and ROI. Executives continue to raise questions about how leadership development has influenced organizational measures. The chairman of a very large global insurance company made this comment to the leadership development team, “We have invested literally millions of dollars in leadership development, and I don’t see the connection between our business results and leadership development. Can we show the connection? I need to see it.” This is a frustration that many executives are expressing.

Are Leadership Development Authors and Providers Part of the Problem?

A few years ago, we were working with the United Nations Systems Staff College in Turin, Italy, as part of the team developing leadership development that would be available to all the UN agencies. The UN had contracted with the leadership development expert, John Adair, who is the author of a best-selling leadership book.2 We were part of the team along with a group of managers from each of the UN agencies. The goal of the United Nations was to connect leadership development to important impact measures and calculate the ROI for this investment. The UN had adopted the ROI Methodology as their evaluation system of choice.

As we discussed the development process, we were surprised to hear from the leadership development expert that we should not be evaluating leadership development at the Impact Level, and certainly not to ROI. “Behavior change is enough,” he said. He resisted the efforts to make the connection to business measures. Ironically, as we examined his book, he makes a statement about a company in the UK, ICI, that was struggling. The board of directors had decided that ICI’s top priority was to develop managers-leaders. As the story is presented in his book, John worked with them for five years, implementing his methodology. He stated, “Let me cut to the chase. After five years, ICI was the first British company in history to make a £1B profit.” John also added, “I tell you this story, as they say upfront, in order to impress upon you that leadership is not a soft skill, an optional extra for oiling the machinery of industrial relations. It is a key factor in business success.”

We certainly would agree with John’s characterization of the importance of leadership development, and it should be connected to business success.

You might have noticed that there are more leadership books than any other books ever published. Amazon has reported that there are more than 50,000 books on their platform with leadership in the title. You may ask, why are so many books written? Perhaps the better question is, are they successful with the leaders? It would be extremely rare for someone to read a book and have an impact. This is why the leadership development providers provide leadership development training—to make sure that they guide people through the process and ensure that they see and deliver value in what is offered. From the perception of executives, the leadership development must deliver impact, which is their number one desired measure.

What Gets in the Way

What gets in the way of showing the business impact of leadership development? We’ll label those as myths because they are often barriers that either don’t exist or are not realistic. They are impediments to the business success that can and should be delivered to senior executives in the organization.

  1. “Leader behavior is all that is needed.” Sometimes, the provider and purchaser are complacent in showing that there is a change in leader behavior. “That’s enough,” they conclude. Ask the people who pay for the leadership development, the executive group, these questions, “Would you like to see us connect leadership development to the business with key impact measures driven by the leadership development program? Would you like to make sure that leadership development is worth it, expressed as ROI, showing that it delivered more value than it cost?” The person who funds the program would answer a resounding Yes on both questions. The research also supports this conclusion as well.3
  2. “I’m not going to evaluate the Impact and ROI of leadership development until my top executives ask for it.” This is the worst thing to do because three things happen when you wait for their request. First, the requestor has in mind a short time frame for wanting to see the data. The request typically comes after a program has been conducted, and you have not planned this level of evaluation. You would need some time to develop this capability and conduct the studies. You won’t be able to respond to the desired timeframe. Second, you are now defending your program. The fact that you have been asked to show value, in effect, puts you in a defensive position. You would like to be on the offense with this issue. You would like to be proactive and take the initiative yourself. The third issue is that ROI is now on someone else’s agenda. You need to keep ROI on your agenda.
  3. “If the impact and ROI are negative, the program will be discontinued.” This is not the action unless leadership development is the wrong solution, which rarely occurs. If a leadership development program is not adding value, it’s not usually the content. It’s how it was implemented and, perhaps, not supported in the organization. If it is not working, your client needs to know how to correct it. As one VP of a large tech company once told us, “It really doesn’t matter which model we’re using. It’s how we implement and support it that makes the difference.”
  4. “You shouldn’t evaluate a soft skill program at the Impact and ROI Levels.” Some think that critical skills, such as core skills (an alternate label for soft skills) should escape this level of accountability. We should just be happy that we’re implementing the program. Our polling of more than 1,000 learning leaders, reveals some important data.4 The first is that most leadership development doesn’t deliver impact and ROI—at least, that is the perception. Also, most L&D teams don’t have data to show the programs make a difference. Making a difference means application and impact has been delivered. Executives see leadership development as a cost and not an investment. When it is a cost, it’s reduced, postponed or eliminated. Finally, top executives see hard skills as more valuable than soft skills. This is not the case. Soft skills do add more value. We have the world’s largest database of ROI studies, and we can tell you that soft skills deliver much more ROI than hard skills. You have to convince your executives of this reality.

With this in mind, it’s helpful to take some steps to show the value of leadership development. If you ignore it, there can be consequences, but more importantly, wouldn’t it be great to have data showing that leadership development made an impact in the organization? Wouldn’t it be even better to show that it was worth more to the organization than it cost? This is not impossible, but it is achievable with any leadership development, if it is properly implemented.

What to Do If You Are Evaluating a Program Already Implemented

In many situations, the program has been implemented with several groups, and you are considering whether you should evaluate this program. As we mentioned earlier, you shouldn’t wait for someone to ask you to do this. You need to be proactive. By being proactive, you are suggesting to the client, “We think this program is adding business value. But we don’t know for sure. Let’s evaluate it and see if it is adding business value. If it is not, we will find out why it’s not working so we can correct it next time.” Normally, it’s not the content that causes a lack of results, but how it is implemented and supported.

There are always lessons to be learned when the results are disappointing, and those can be powerful for the next evaluation. Because you initiated the evaluation, your client will be more impressed than disappointed if it is not working. What frustrates a client is that they have to ask for results. Being proactive creates a different posture. You’re now on the offense and you are exploring how this program implementation worked. You may be surprised at the impacts that may already be there.

In several programs that we just recently evaluated, the participants did not know that we would be evaluating at the Impact and ROI Levels. It wasn’t planned at the implementation of the program, yet the results were very positive. One example was the Insights Discovery program (based in the UK) implemented in Indeed, a global recruiting company. This is a personality-based instrument that increases communication, engagement, and coordination in an organization. The results were very impressive and a copy is available on request.

To summarize, if the ROI is disappointing, you’ll know why so that you can correct it. If it is successful, you are surprising and pleasing everyone.

What To Do With Your Next Program

Here are some steps you can take to change how you plan and evaluate leadership development programs.

  1. Plan and design for the success you need. Begin with the end in mind with specific impact measures and align the program with these business goals to ensure you have the right solution. Set specific objectives for reaction, learning, application, and impact. Secure buy-in from all stakeholders to deliver success.
  2. Make it Matter and Make it Stick. Collect data for reaction, learning, application, and impact. Track how participants apply new skills and knowledge through 360-degree feedback. Measure the business impact (the consequences of the application) with action plans, and monitoring performance data.
  3. Make it credible and convincing. Isolate the program’s impact from other factors. Convert impact data to monetary benefits and tabulate the costs of the program. Calculate ROI by comparing the program’s costs to its monetary benefits. Identify any intangible benefits (measures not converted to money) connected to the program, such as improved collaboration and teamwork.
  4. Report and leverage the results. Report the results by sharing data across six key areas: reaction, learning, application, impact, ROI, and intangibles. Use stories to bring the data to life, then refine the program based on feedback to ensure ongoing support and funding.

By following these steps, you ensure leadership development programs are both impactful and measurable, demonstrating clear value to the organization. Case studies of leadership development programs using these steps are available by request.5

Remember, when it comes to delivering results from leadership development programs,

  • Hope is not a strategy.
  • Luck is not a factor.
  • Doing nothing is not an option.

Accountability requirements for major programs have changed.

Change is inevitable, progress is optional.

If you would like to review the impact and ROI studies of several successful leadership development programs following the most used evaluation system in the world, please let us know. Respond directly to Jack J. Phillips by email at Jack@roiinstitute.net

Written By: 

Patti P. Phillips, Ph.D., and Jack J. Phillips, Ph.D.

References:

  1. Phillips, P. P., Phillips, J. J., and Ray, R. (2015), Measuring the Success of Leadership Development: A Step-by-Step Guide for Measuring Impact and Calculating ROI. ATD Press, Alexandria, VA.
  2. Adair, J. (2008), How to Grow Leaders: The 7 Key Principles of Effective Leadership Development. Koogan Page, New Delhi, India.
  3. Phillips, J. J., and Phillips, P. P. (2009), Measuring for Success: What CEOs Really Think about Learning Investments. Association for Talent Development, Alexandria, VA.
  4. Huggett, C., Phillips, J. J., Phillips, P. P., and Weber, E. (2023), Designing Virtual Learning for Application and Impact: 50 Techniques to Ensure Results. Association for Talent Development. Alexandria, VA.
  5. Phillips, P. P., Phillips, J. J., Ray, R., and Nicholas, H. (2024), Proving the Value of Leadership Development: Case Studies from Top Leadership Development Programs. ROI Institute, Birmingham, AL.

DOI: https://doi.org/10.1108/SHR-01-2025-0004

This article was originally published by Strategic HR Review on January 31, 2025.