Some organisations invest heavily in leadership development and others less so.
There are many conflicting calls on the resources of councils, so how can they ensure they are getting a return on their investment from their spending on leadership development?
A traditional way of measuring the return would be to track and measure improvement based on short- and long-terms goals and expectations for the individual and the organisation. This should be relatively straightforward but it is surprising how many organisations do not have a full understanding of the business need for the leadership development and, in particular, the business outcome they would like to see.
There are several ways to measure ROI. Using a combination of self, supervisor, peer and sponsor surveys to measure progress against behavioural goals, any change in behavioural impact can be assessed. Impact on the business can be measured through evaluation of performance measures, looking at the outputs and outcomes from an individual or the team that they lead.
But it’s turnover and retention that I want to focus on.
Sumit Harjani, writing for Harvard Business Publishing in October 2016, cites the differences between middle managers who had participated in a leadership development programme and others at the same level in the same organisation who had not. His team looked at career progression, attrition, performance rating, team attrition and team engagement. Post-programme change measurements clearly showed the positive scores for managers who had participated in the programme and flat or negative scores for the control group, the non-participants. The study also found 40% of the participants were promoted or given complex roles in the organisation, compared with 10% of non-participants. Also, the attrition rate in teams managed by the participants reduced by 20% whilst it increased by 20% in those teams managed by the non-participants.
Whilst I am sure some readers will be cautious in acknowledging these results and will be questioning the selection of the participants or whether there were some other factors at play, the question that arises is not how you get an acceptable ROI, but what the cost is of not investing. This can be mostly an indirect cost generated from poor retention rates from higher turnover, increased recruitment and induction costs and maybe even exit payments. These costs could be on top of any lower business performance measures.
Resources may be tight and reducing the investment in leadership development may be an easy option in terms of managing a budget, but there are so many consequences that may arise from this decision. In fact, given the complexity of the challenges that lie ahead for local government, this may even be the time to increase investment.
Sue Smith, former chief executive, Cherwell DC and South Northamptonshire Council