The Measure of Leadership Development ROI You're Not Using (and How to Leverage it)

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US companies alone spend almost $14 billion annually on leadership development. Learning and development is a critical long-term business investment, but making the compelling business case executives expect for such an investment is no trivial matter. Senior stakeholders may agree that leadership development is crucial, but they often struggle to tie it to measurable outcomes. Meanwhile, what is measurable is the opportunity cost of training: Each hour an emerging leader spends away from the workplace is an hour of productivity and output lost. 

So how can learning leaders successfully showcase the value an LDP generates? Because the pain point is the opportunity cost, it makes sense to frame a business case around time: the time saved in a business with well-developed leadership competencies. 

Money is Time

Time is not just one constrained resource of many; arguably, in today’s fast-paced world it is the ultimate and most scarce. Capital can be raised and saved, but time slips through our fingers with every moment that passes. All of us, from interns to execs, feel the frustration of wasted time at a more visceral level than wasted money. And just as capital is allocated strategically up-front to yield high-impact results, the same must be done with time.

When you invest time in an LDP that enriches the skills of your HiPos, your ROI presents itself as time returned that can be devoted to higher-value activities to improve the business. Some examples of a time-based ROI include:

Improved Problem Solving

An LDP rooted in experiential learning can prevent workflow bottlenecks by developing the skills to solve problems quickly or prevent them from occurring in the first place. When people are afforded the ability to learn by doing, they can incorporate the competencies acquired into their work much more rapidly. This means less time spent fighting fires and more on strategic activities.

Improved Employee Collaboration

Learning socially allows employees to connect with colleagues at a deeper level, leading to a streamlined workflow in the workplace. By working together effectively, employees reduce time wasted in poorly-organized meetings, cleaning up after miscommunications, and counterproductive internal competition for resources. As a bonus, knowledge sharing and cross-functional networks are fertile ground for innovation. 

Improved Autonomous Decisions

Self-assured leaders with strong communication skills, strategic awareness, and business acumen can make sound decisions closer to where the rubber meets the road: where value is created for customers. A more adaptable and autonomous workforce reacts more quickly to market conditions and conserves time for executives, who in turn can use that time to focus on long-term strategic initiatives instead of overseeing routine tasks. 

All of these time-returns translate into dollar amounts on the bottom line, of course. But thinking through exactly at what rate, in whose budget, etc. is a time-intensive exercise in and of itself, and not necessarily one that generates a great return. But “time saved” is a metric everyone understands and values, and one that LDP participants (or their managers) can estimate themselves and report back in a post-program ROI study.

Getting Participants on Board

Speaking of LDP participants: They are the ones most acutely aware of the opportunity cost of training, and they will most immediately realize its benefits in terms of time saved. Framing the ROI for them in terms of time is helpful in at least two ways:

  • It makes crystal-clear what investment the organization is making in their development, enabling them to recognize themselves as stewards of this investment

  • It helps convey what learning is expected of them and how to recognize that it’s working 

Communicating expectations around time-based ROI has to happen before training begins: When employees aren’t committed to the program before they show up, they are less likely to be actively engaged or willing to participate. In fact, McKinsey reported in a survey they conducted that only 25 percent of respondents found training improved employee performance. Lack of clarity about how “improved performance” should be measured contributes to this perception.  To mitigate this issue, consider compiling some internal marketing materials that communicate to employees how they will benefit from the program, specifically in terms of time saved. When employees understand the value behind L&D activities, they are more likely to engage and retain the skills practiced within the program.

A well-designed LDP will generate value in more ways than just time saved, of course. But you can build a business case for it around the time-saving benefits, a case that will compel both executives and participants. And you can validate your case after the fact through follow-up surveys and focus groups, an activity that will certainly be well worth your time as you improve your programs over time. 

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