From Leaders to Dollars: Exploring the ROI of leadership development

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Leadership. It’s one of the business world’s biggest keys to success. That’s why so many professionals invest in leadership development, especially with a skilled coach. Perhaps you’ve even given some thought to finding a coach of your own — but then stopped to wonder...

Where’s the proof that the coaching pays off? What’s the ROI?

Fair questions. After all, we’re in an age of sophisticated metrics and highly detailed data, which we use to set our goals and measure our success — and we want to see serious returns in any investment we make.

So let’s dig into it. Let’s take a close look at leadership coaching and talk about how to measure the impact.

First, what does leadership coaching do? It maximizes your chances.

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“You’ve got a gift, Roy...but it’s not enough. You’ve got to develop yourself.” Those immortal words were spoken by Ed Hobbs to his teenage son Roy as he practices pitching in the opening scenes of The Natural. And wow do they ring true when it comes to leadership.

Whether it’s an uncanny knack for seeing market opportunities or a way with words that inspires your teams, you no doubt have natural talent — the all-important start of what it takes to be a highly successful leader. But it’s truly just the start.

To go beyond where talent can take you, you have to cultivate and supplement it with the right skills, traits and techniques.

That’s why stars in every industry, from sports to entertainment to business, have hired coaches to help nurture their talent — they want to take every last available step to gain an advantage and be an elite performer.

Does that mean a pitcher who learns from the right pitching coach is destined for the Majors? There are no guarantees. Does it mean a leadership coach will help a company shatter sales records? Not necessarily. But the right coaching will allow you to achieve the best performance according to your potential. It will develop your talent to take you as far as possible.

How (and how much) does leadership coaching pay off?

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What’s the real ROI of leadership development? You can sum it up with a simple formula: When you instill confidence in the people around you, your team is more productive and your company is more profitable.

How much more productive and profitable can you expect leadership coaching to make you? It’s impossible to put an exact percentage or dollar amount on it. But the correlation is clear. For example…

This study in Training Industry, which examined new leader training at Verizon, found that leadership development created an ROI of 29% within three months post-training and a final annualized ROI of 415%.

Those are serious numbers. Here are a few key areas of ROI that are more qualitative but every bit as valuable.

It’s not just your teams who will gain confidence — you will too.

The best leaders know (or learn) how to empower their employees to take control and own the work. That means they themselves learn how to let go of the reins, which can take plenty of reconditioning.

Leadership coaching gives you the confidence and comfort it takes to give your teams the freedom to do their thing. You’ll quickly see that the greater the autonomy they have, the more inspired they’ll feel — and the lower the overall stress you’ll both experience.

And you’ll build a company culture that’s more positive and kind.

Culture is another tough one to measure — no one’s counting laughs per day (LPD?) or using some sort of I-Love-Coming-to-Work Index. But you certainly know how retention works, not to mention how good it feels for admiration and belief to go both ways between you and your employees.

That’s company culture, and leadership development builds it in a big way, by helping you grow skills and learn techniques to make your team feel more engaged, empowered, valued and heard. That translates to them being more inspired and committed — and to them believing in you as a leader.

Why keep investing in coaching? It’s an ongoing relationship.

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Tiger Woods has had high profile golf coaches throughout his whole illustrious career. But…why still? What’s a coach possibly going to teach a golfer who’s won five Masters? Well, Tiger doesn’t need his coach to tell him to keep his head down when he putts — he needs, for example, his coach to help him find new focus and inspiration when the road back from injury seems endless.

When coaching is effective, it’s not just about teaching techniques and skills — it’s about listening, empathizing and helping clients form next steps. In your case, that would perhaps entail doing the initial work of assessing your skills and identifying your challenges, but then being there to let you blow off a little steam when unforeseen challenges arise — and to offer perspectives that help you overcome those challenges and make your way back to the path toward success.

While the exact ROI might be impossible to measure, the impact itself is indisputable — investing in coaching helps leaders empower their employees, which leads to more committed and confident teams who generate greater results.

Still have questions? Reach out to me. I’m here to answer them.