When it comes to capital investment and other purchasing assessments, businesses are highly adept at measuring ROI down to the last cent. These calculations serve as a reliable rationale for most business decisions, but there is at least one investment area in which ROI has yet to prove its worth as a benchmark. Let's say you're a senior HR executive of a large corporation, and the deadline on a major decision is quickly approaching. You have to decide whether or not to send a group of mid-level managers to a leadership development course. The cost is a couple thousand dollars per manager, and it's up to you to quantify the potential return on your investment. Where to start?
My point is this: Although there are several proposed metrics for the organizational impact of leadership development on managers, it's hard, if not impossible, to forecast the exact financial return from something such as leadership development. According to BNET, corporations spend an average of 36 percent of revenue on human capital expenses, but only 16 percent say they have more than a moderate understanding of the return on human capital investment. There is no longstanding theory regarding the ROI of leadership development, employers clearly see an immense benefit from investing in their mid and senior-level managers. Great leaders not only generate higher net income and increase morale, but they also have an innate ability to identify and exploit the potential of their employees.
So when firms get the chance to send their promising managers to a course aimed at raising self awareness, building relationships, and increasing communication skills, among other things, it almost seems like a no-brainer.
Can you put a price on true leadership?
-Sam Battan, Business Intern, Executive Education Team
