The ROI of Leader Development

Who needs Leadership Development?

Companies reporting strong leadership development programs are 1.5 times more likely to be found atop Fortune Magazine’s “Most Admired Companies” list.  -Consulting Psychology Journal, 2003, “The Return on Investment of Leadership Development: Differentiating our Discipline”

Companies who invest in leadership development outperform the competition.  -Business Week, 10-10-05

Reputation Matters

Non-financial factors, like corporate reputation, have become increasingly important in determining corporate value and are heavily influenced by organizational character.

Stakeholders expect more than compliance. They want to see an affirmative and proactive interaction that goes beyond that which companies are required to do.

-Chief Executive Officer, 2004, “Earn a Return on Your Reputation”

Why invest in integrity-based development?

“If people don’t grow, the company doesn’t grow.”  -Steve Reinemund (former CEO, PepsiCo)

“Strategic leadership and people development systems can drive a firm’s revenue, profitability, and market share.”  -Jackson Leadership Systems, Inc., 2006., “Leadership Development ROI: Using Talent Management to Drive Market Value”

“Among employees who say their company offers poor development opportunities, 41% plan to leave within 12 months (versus only 12% who rate their opportunities as excellent). High turnover isn’t cheap – the cost of losing a typical worker is approximately $50,000. For managers, the cost is much higher.”  -Business Week, 1999

What is the ROI?

One hundred firms ranked in the top third in terms of their talent management, succession planning, and executive development systems show dramatically better fiscal outcomes than those in the middle third:

  • Average increase of 5.2% in per employee productivity; valued at $44,380 per employee
  • Average increase of 16.3% in cash flow; valued at $9,673 per employee
  • Average increase of 6% in market value; valued at $8,882 per employee
  • Increase company-wide profit margins by as much as 47%.
  • Increase in sales (up to 6.5%)
  • Notable decrease in turnover

-Jackson Leadership Systems, Inc., 2006, “Leadership Development ROI: Using Talent Management to Drive Market Value”

-Consulting Psychology Journal, 2002,“The Return on Investment of Leadership Development: Differentiating our Discipline”

The market value added (MVA) of companies whose annual reports reference an ethics or business code as a management tool on internal control averaged $8.1 billion (2.5 times) greater than those corporations whose annual reports failed to mention adhering to a business or ethics code.  -Scimitar Ridge LLC, 2003, “Business Ethics: Three Critical Truths”

Hear how TLG can increase your leadership ROI

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