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Business and Management

Why Do Invest in Leadership Development

Despite some claims to the contrary, return-on-investment research that directly links leadership development implementations to financial return is rare. This is because it is very difficult to document accurately. You can also look for LDP Connect meetings & webinars on leadership development.

ROI is generally based on two measurement components: quantitative and qualitative. Quantitative ROI is normally expressed as a quantity that is clearly measurable in dollars, time saved, headcount, improved margins, or other metrics that would stand up to inspection by a CFO.

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Qualitative ROI, on the other hand, relates more to benefits based on less measurable factors such as customer perception, effective leadership, and employee engagement or recruiting and retention success.

How do you convince the CFO that the ROI is truly generated by leadership development? The real difficulty, and hence the scarcity of research data, stems from the fact that organizations are not static but are extremely dynamic. 

For instance, if a newly trained manager takes over the production department, how can you prove that improved output of the employees in the department resulted from a leadership development program, new process or equipment, improved supplier quality, or the new manager's leadership? You probably can't.

Leadership training should not be given in isolation. The employees of the organization should know who is going through leadership development training or coaching and tell how it should impact them.