I recently read a study in 2019, that found that running first-time managers through a Leadership Development programme delivered a 29% ROI within three months, and a 415% annualised ROI. That’s a great return without question, however, I immediately start to think what that ROI could be if only businesses invested in developing leadership capabilities much earlier in the career lifecycle. What could that ROI be if it was targeted at different communities or in different contexts? I suspect the ROI % would be much greater and delivered for much longer across wider parts of the organisation.
Focusing on the right thing
The trap that most businesses fall into, is the association of ‘Leadership’ with seniority. Once you reach a certain grade, you secure the tag ‘Leader’ and acquire the perks of attending strategy reviews, and leadership offsites, and most importantly, you will be enrolled in the organisation’s flagship development programme reserved for this special group.
As I have said widely elsewhere, businesses need to move from a model of the ‘power of the few’ to the ‘influence of the many’, which means investing in developing and connecting a leadership mindset and behaviours across the enterprise irrespective of a person’s role, function, seniority or career stage.
So the investment should focus on three elements:
- Developing a mindset in which people put themselves ‘at cause’, take accountability, and seek to make a difference. These are people who are then willing to influence their world through action, decisions, motivation and commitment as opposed to being good at creating explanations as to why something could not be delivered or achieved.
- Developing high-performance leadership behaviours around four clusters: Thinking (researching, insights, decision making, conceptual agility), Developing (earning trust, collaboration not cooperation, building capability), Inspiring (Creating confidence, communicating with impact, enrolling others), and Delivering (Proactivity, committing to outcomes and designing from the future, and commerciality and value).
- Developing leadership capabilities for people that are relevant to the context in which they are operating
Why, then, invest in leadership through these lenses, as opposed to the traditional ‘it comes with seniority’ lens? Here are several good reasons you might not have thought of.
Problems, challenges, and opportunities don’t just exist at the top of the organisation for traditional leaders to own, they exist everywhere, touching every aspect of an enterprise and its operations. They just vary in terms of scale, impact or urgency. Creating a culture of leadership where people have the behavioural capability to work with and inspire others to make a difference, enables the business to address these challenges or realise these opportunities every day, week, month and quarter. The alternative is to leave them to grow until they hit the radar of the senior folks which inevitably drives time, complexity and cost into the scenario. Invest in leadership to avoid this risk and create an agile and adaptable response mechanism to capture commercial advantages earlier.
Experts (people with extensive knowledge and experience in a given domain) are a community within organisations whose potential is consistently locked away. When we asked 1200 experts how much of their potential did they think they were delivering to their business, not one single person said it was greater than 40%. However, when there had been an investment in developing their leadership capabilities, the behaviours we mention above, whilst retaining their technical expertise nobody said it was less than 80%! Think of the value that is available to your business if you take a community that wants to work with like-minded experts, and you develop their ability to make those connections and then make a commercial or strategic difference to your organisation by how they apply their expertise.
Bringing numbers to life
Another context in which you can invest in leadership capability is the Sponsors and Programme/Project Management community who drive business, technology or regulatory investment programmes. Our research into 300 programmes shows that only 52% of these will deliver any value. However, if you can embed and sustain three conditions: a relentless focus on outcomes, a clear and practical operating vision, and unusually high levels of collaboration, then you can move the success rate up to 94%. I believe that investing in leadership mindset and behaviours has a direct causal relationship to the presence of these conditions, with an available ROI that is too eye-watering to ignore.
Let’s take as an example, a change programme with an initial budget of £5m, a duration of 18 months, and an expected business value of £10m annually once implemented. The programme has a single Sponsor and Programme Manager, 10 Project Managers or agile equivalents, and 20 team leads.
An absence of Leadership capabilities connected across this team would, based on our research, likely translate into:
- More than £1.5m overrun
- 6 months of delay
- More than 30% of requirements are not met, consuming further budget if these are pursued
- Over 15% reduction in business value realised
The cumulative negative impact is likely to be at least £4.5m, which equates to almost the original budget being spent again or lost. Investing £150,000 in the leadership capability around this programme will create the conditions that are essential for success and avoid the £4.5m loss.
By investing in leadership more widely, much earlier in the career lifecycle, and in specific contexts you will see more clearly and more abundantly the emergence of those with the mindset and capability to progress to more senior roles in the organisation. The investment in these people can then be more targeted on the more technical aspects of leadership – Mergers and Acquisitions, Strategy Development, Scenario Analysis, Commercial Acumen or Financial Management for example – to build on the behavioural capability they have already established.
In summary, don’t drive your investment in leadership development by seniority. Do it early, make it widespread, put it in context and target communities. Not only will you see a clear ROI, you will create a higher-performing culture populated by a diverse and richly engaged population. What’s not to like about that?
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