3 Reasons Organizations Invest in Leadership Development

One of the most powerful questions you can ask is, “Does providing executive coaching for corporate leaders have a direct impact on my organization’s bottom line?” Smart managers recognize the importance of cultivating their top talent by providing leadership development coaching at all levels of the organization.

The Hay Group, a global HR consultancy, found that approximately 25% to 40% of all Fortune 500 companies employ the services of an executive coach.

Statistics Showing ROI of Executive Coaching – a Leadership Development Tool

According to the ICF Global Coaching Client Study Executive Summary, “The vast majority (86%) of those able to provide figures to calculate company ROI indicated that their company had at least made their investment back. In fact, almost one fifth (19%) indicated an ROI of at least 50 (5000%) times the initial investment while a further 28% saw an ROI of 10 to 49 times the investment. The median company return is 700% indicating that typically a company can expect a return of seven times the initial investment.”

These figures demonstrate that leadership development in an organization is critical to increasing productivity levels which have a direct impact on the ROI. This is why advanced leadership skills development for managers and executives is now part of the standard leadership training program for executives in top firms like HP, Cisco, Google, Wells Fargo, IBM and many others.

3 Reasons Why Organizations Invest in Leadership Development

Here are 3 strategic reasons why Fortune 500 companies and top progressive organizations today invest in talent development and leadership training, and you should too:

  1. Cheaper than bringing on new recruits.

    Educating, training, and promoting your own employees to higher levels of leadership can be a lot less expensive than hiring someone from the outside. Think about it–you’re looking at advertising costs, headhunter fees, sorting through resumes, paying for transfers or relocations, paying out signing bonuses, in-house training, and many other hidden costs. Some studies suggest that 50% of new recruits at the executive level don’t last more than nine months. Invest in your current staff to help them grow.

  2. Saves time and reduces heavy workload.

    If you ask most managers, they’ll agree that the process of hiring and training new staff is both time-consuming and frustrating. Most managers don’t hire and train on a daily basis, so they’re generally not that well-prepared to do the job. Plus, if downsizing has led to managers taking on more responsibilities this can only add more pressure to their already-heavy workload. If you’ve done a good job retaining your top talent (even during a low cycle), why would you not want to further develop and make use of your star employees for key openings in your firm? If you regularly assess your succession plan, you’ll know exactly where to spend your training and coaching dollars to create the ideal team of future leaders.

  3. A win-win for you and your employees.

    Why is leadership development in an organization a win-win for the organization and the employees? By training top talented employees and leading management executives in-house the company wins because essentially a succession plan is rooted in your firm giving you (and senior executives) the peace of mind that you have future leaders in place when you need them. Leadership development for current employees helps preserve and grow skills within the organization, keeps product and proprietary information within the company walls, lets your staff know they’re valued, and encourages your most dedicated workers to stay on as they’re constantly presented with exciting new opportunities for growth.

There’s no doubt that investing in your best employees, top managers, and key executives is a very smart, bottom line friendly tactic used by many leading firms today.

Effective leadership development for an organization means keeping your people happy and helping them grow on a personal and professional level. If you do this, they will return the favor with their loyalty.

Are you looking for executive coaching services for your organization, but don’t know where to start? Fortune 500 companies and leading organizations including HP, Oracle, Wells Fargo and Google, put their trust in Joel Garfinkle. Recognized as one of the top 50 coaches in North America, Joel offers customized corporate coaching programs designed to meet your organization’s needs and increase your ROI. Contact Joel and get started today!