When it comes to success at the leadership level, the ability to communicate a plan, make informed decisions quickly, and influence effectively are crucial factors that have a direct impact on an organization’s bottom line. One study found that for every five GMs Cox Enterprises sent to a four-day leadership development program with a soft skills focus, the organization could count on adding $3.57 million dollars in revenue. Read the full article, "Turning Leadership Into Dollars," for details.
You know leadership development is valuable. So how do you communicate the value of LD training to a budget-conscious organization in a way that demonstrates the clear impact of LD on the bottom line? We have two suggestions that will help you sell LD to your organization:
1. Identify and engage the stakeholders directly
Find out who is sponsoring the initiative and ask critical questions to identify clear goals for the program. Maybe customer satisfaction ratings are down and the team leader wants to see a 50% increase in satisfaction ratings. Perhaps employee turnover rate is high, not only increasing onboarding costs but slowing down production as new employees get up to speed. The CEO wants to slow the rate of turnover by developing more effective leaders capable of inspiring and engaging employees. Asking questions like, “What specifically would you like to see change?” and “What do you want to see your people doing differently?” will not only make it easier to design a successful program, but will also create measurable goals. Pointing to a specific objective and comparing a snapshot of how it looked before and after your leadership development program will help make the case for LD training’s impact on the bottom line.
It is important to recognize that there can be multiple factors contributing to your organization’s success on the agreed upon targeted outcomes. It would be folly to attribute all of your organization’s success to the effects of leadership development. There is a logical barrier to attempting to make that connection as well as some potential political pitfalls. Instead try to reach an agreement in advance of what part of that success can be attributed to leadership development.
Let’s build on the above turnover rate scenario as an example. Let’s say the stakeholder wants to see a reduced employee turnover rate of 5% over the next 12 months. It is possible, and likely your organization has already done so, to calculate the savings to an organization if this goal is achieved. Try to reach agreement in advance as to what percentage of the associated organizational savings will be attributed to Leadership Development training. While there may still exist some ambiguity as to what that percentage should be, it is an excellent starting point for demonstrating in a tangible way the value of the development investment. Laying this groundwork and being able to successfully deliver the agreed upon goals provides a tremendous platform and organizational buy in when soliciting expanded budgets in the next cycle.
2. During the design phase, keep Kirkpatrick’s Four-Level Training Evaluation Model in mind
When you consider the desired outcome of a leadership development program, the objective is typically a change in behavior. Whether it is a large-scale change in company culture or a smaller shift in the way a team works together, trainers generally aim to reach Level 3 on the Kirkpatrick model: getting participants to apply what they learned in the leadership development program on the job. Organizations are often most concerned with the 4th level, Results or ROI. Will your training program impact the bottom line of the business? The fact is that everyone wants to focus on the 4th level when they set out to sell an LD program to their organization, but they don't know how to do the first three levels. Many trainers are familiar with the Kirkpatrick model, but unfortunately it’s pretty unusual to see training programs that succeed at reaching beyond level two. This is where the first point comes into play. If you ask critical questions of the stakeholders and establish measurable goals for your program ("What specifically would you like to see your people doing differently?"), you are better able to design a program that will have measurable results for your team.
Incorporating post-measure tools (like the Discovery Leadership Profile 360 Plus program or follow-up coaching) will help you track the effectiveness of your desired outcomes and measure whether training really "sunk in" and affected participant behavior or just scratched the surface. Designing a program with a strategic focus on the first three levels of the Kirkpatrick Model will be critical in demonstrating to your organization that your leadership development program will reach that desired 4th level, results or ROI.
Ultimately, we know that training in soft skills has a profound impact on the bottom line. In the article "Turning Leadership into Dollars," all five Cox Enterprises GMs studied were seasoned executives with years of experience in their roles. They knew their jobs inside and out. Their organization was looking for a way to help them become even better leaders. The four-day leadership program DLI designed with Cox Enterprises involved the critical stakeholders in establishing clear, measurable goals, it aimed at reaching the first three levels on the Kirkpatrick Model, and it made a $3.57 million dollar difference. By conscientiously laying the groundwork for your program by keeping both of these suggestions in mind, you will be better equipped to persuade a budget-conscious organization of the value of leadership development.