4 Reasons to Invest in Leadership Development

Portrait of young business woman holding paper work, looking away, side view, thinking about why leadership development is important

Why Is Leadership Development Important?

Independent studies by the Conference Board, Bersin by Deloitte, HR analytics experts McBassi & Company, and our own researchers consistently reach the same conclusion: Leadership development is one of the most pressing issues facing organizations today.

Why is leadership development so important? Because it represents a great chance for organizations to seize a competitive advantage in their industries.

If your business commits to developing its leaders, you can expect to gain a significant competitive advantage by improving the bottom line; attracting, developing, and retaining talent; driving strategy execution; and increasing your success when navigating change.

Our data backs this up. When we surveyed more than 5,000 program participants around the world — as well as 8,765 of their colleagues — 99% of the participants surveyed said they achieved success on their target goals related to communication, self-awareness, implementing change, and other areas.

A whopping 97% also told us:

  • The program better prepared them for future leadership responsibilities.
  • Lessons learned were relevant to their leadership challenges.
  • Colleagues who went through one of our programs were able to translate what they learned into organizational impact, especially when it came to management capabilities, overall effectiveness, cross-boundary collaboration, and openness to diverse perspectives.

How Leadership Development Leads to Sustained Success

4 Reasons Why Leadership Development Is Important

So why is leadership development important? According to the research, leadership development enables organizations to do the following 4 things that drive sustained success:

  • Improve bottom-line financial performance.
  • Attract and retain talent.
  • Drive strategy execution.
  • Increase success in navigating change.
Infographic: Strong evidence shows that investments in leadership development... - Center for Creative Leadership

1. Improve Bottom-Line Financial Performance.

Companies that rate highly for their investments in human capital deliver stock market returns 5 times higher than those of companies with less emphasis on human capital. Leadership development builds capacity to reduce costs, drive new lines of revenue, and improve customer satisfaction.

2. Attract, Develop, and Retain Talent.

Leadership development boosts employee engagement, increases the organization’s ability to deal with gaps in the talent pipeline, and reduces the headaches and costs associated with turnover. Great leaders attract, hire, and inspire great people. A manager without strong leadership skills will struggle to attract and retain high-performing employees.

In addition, it’s often significantly less expensive to develop, coach, and promote people internally over the long run than to hire someone externally, which makes leadership development a good investment.

3. Drive Strategy Execution.

Effective leadership development isn’t development for its own sake. Organizations need a leadership strategy that closely connects with the business strategy and equips employees with the leadership skills needed to implement it. Leadership development allows organizations to shape the culture and strategy of the business.

In the words of The Conference Board: “Leadership development has enormous power in both shaping and changing the culture and strategy of business. Developing, coaching, and promoting people internally is significantly less expensive than the costs typically required to hire someone externally.”

4. Increase Success in Navigating Change.

Leadership development increases people’s ability to lead in a disruptive world. When organizations look beyond developing senior executives and high potentials to unlock the full potential of their talent pools, agility is magnified.

Why Invest in Leadership Development? To Attract & Retain Talent

According to the Bersin by Deloitte report High-Impact Leadership Development, organizations with stronger “leadership maturity” are 11 times more likely to have a high number of leaders who can build talent for competitive advantage. And they’re 7 times more likely to have a high number of leaders who can inspire people to follow them.

Watching talented people walk out the door causes tremendous expense for organizations, from morale, advertising, recruitment, and relocation costs, to time spent training new employees.

Unfortunately, the report found that capable leadership talent is very rare. Only 60% of leaders in organizations show commercial acumen and business judgment; 48% are seen as driving change and innovation; and only 44% build talent for competitive advantage.

Sophisticated leadership development programs develop a deeper, richer pipeline of talent, which is why organizations today are seeking to unlock the full potential of their talent pools at all levels.

Access Our Webinar!

Watch our webinar, Lessons from Senior Leaders: What Leadership Development Means Today, and hear senior HR leaders describe how, after unparalleled disruption in the pandemic, many are now thinking differently about what leadership development is and the role it can play in the future.

The Lasting Impact of Leadership Development

So, why is leadership development important? Because when done right, it unquestionably delivers impact. (Not all leadership development is created equal. Learn what works — and what doesn’t, in our article, Leadership Development Works — We Have Proof.)

A detailed analysis of more than 1,000 alumni of our flagship Leadership Development Program (LDP)® found that 99% reported success in strengthening the leadership skills most important to their work performance — communication, influencing across the organization, self-awareness, and implementing change.

Meanwhile, 98% reported a strong positive impact on their overall organization in areas critical to strategy execution, including:

  • Cross-boundary collaboration,
  • Organizational management, and
  • Openness to diverse perspectives.

In addition, evaluations of our online program for frontline leaders, which requires just 30 minutes a day, found similar results:

  • 90% of participants in our Frontline Leader Impact program found the course easy to access and navigate; and
  • 99% of participants said the course had a positive impact on their leadership skills.

Such virtual leadership programs can help organizations minimize disruption and strengthen individual leadership skills, as well as improve employee engagement, retention, development, and organizational culture.

Our researchers have also found that organizations that value leadership development are better at developing their leaders and placing the right people in the right roles — which, in turn, drives greater innovation and stronger financial performance.

Learn more about the studies and these 4 outcomes of leadership development in our white paper on how leadership development drives performance.

Ready to Take the Next Step?

Now that you understand why leadership development is important, be sure you’re investing in your people. Take advantage of CCL Passport™, which gives you unlimited access to our world-renowned content and our most comprehensive package of proven, transformative leadership solutions. If you license our content, you can bring our proven research, programs, and tools in-house to leaders at all levels of your organization.

November 20, 2021
Leading Effectively Staff
About the Author(s)
Leading Effectively Staff
This article was written by our Leading Effectively staff, who analyze our decades of pioneering, expert research and experiences in the field to share content that will help leaders at every level. Subscribe to our emails to get the latest research-based leadership articles and insights sent straight to your inbox.

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