The Importance of Leadership Development
Our research, as well as independent studies by Gallup and Gartner, all agree: Leadership development is one of the most pressing issues facing organizations today.
Why is leadership development 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 research backs this up. In a survey of more than 13,000 CCL program participants, they reported feeling especially capable improving in the areas of team engagement and developing others. And then, 2 months later, those same leadership program participants estimated achieving an average of 60% improvement in both areas.
And companies with higher employee engagement levels experience 21% higher profitability, according to Gallup’s research. They also have 17% higher productivity than companies with a disengaged workforce.
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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.
1. Improve bottom-line financial performance.
Companies that prioritize leadership development are setting themselves up not just for cultural success, but also for financial success. Leadership development builds capacity to reduce costs, drive new lines of revenue, and improve customer satisfaction.
In addition, Forbes points out how leaders participating in leadership development become more motivated and vested in their organization’s success, establishing a culture that can lead to increased financial performance.
2. Attract, develop, and retain talent.
Leadership development drives 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, setting them up for agility and growth.
We’ve found that the most effective leadership development initiatives connect learning to real-world challenges and opportunities, helping leaders understand how their work supports the overarching success of the business.
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.
The Conference Board’s report, “The Business Value of Leadership Development,” emphasizes the connection between change management and leadership development: “One of the most influential internal engines to drive change is a leadership development program that sets out to nurture management talent that is entrepreneurial, enterprise-wide, and globally recruited.”
Why Invest in Leadership Development? To Attract & Retain Talent
Investing in leadership development is more critical than ever for companies, particularly when — according to a Gartner survey of 3,000 candidates — 67% of employees seeking a new job look outside their organization first. Investing in leadership development, however, can help companies keep great talent within their organization.
Our data from more than 5,400 leaders reveals that after completing a program, 86% saw significant improvements in their overall leadership effectiveness. Not only does this result in more successful and engaged employees, there is also a strong link between commitment to the organization and an employee’s willingness to stay with the company.
Investing in leadership development can help boost retention of high-quality employees and save money in the process. Gartner reports that every departing employee costs an organization, on average, $18,591. On top of that, our research shows that 25% of organizations experience profit loss due to ineffective frontline leaders, further emphasizing the importance of leadership development within an organization.
And if you don’t invest in leadership development opportunities for your employees, they’re likely to seek out a workplace that will. In fact, a recent study found 58% of workers are likely to leave their company if they don’t receive leadership development opportunities.
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.
The Lasting Impact of Leadership Development
Why invest in leadership development? 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.
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