The decision to invest in leadership development is often a no brainer, given the positive impact it can have on performance, productivity, employee wellbeing, and even leadership succession planning.
The challenge, however, is that it's not always easy to measure this impact.
After all, the ROI of coaching is incredibly subjective. It's not always measurable in financial terms.
So, what's the solution then? How can you effectively measure the outcomes of your leadership development programs, if you can't necessarily place a dollar value on it?
Well, throughout this article, we'll explore this and more.
The impact of leadership coaching
Let's start with the fact that not all managers are natural leaders.
In fact, many lack the necessary leadership skills to inspire and coach their direct reports, which then negatively impacts productivity, morale, and so on.
Which is just one of the reasons why leadership coaching is so important—it enables managers to develop and hone the skills they need to lead their teams to success.
But what are the other benefits of leadership coaching?
According to the 2022 LinkedIn Workplace report, developing the next generation of leaders is a top people priority for many organizations.
After all, baby boomers—those born between 1946 and 1964—currently account for 31% of the current workforce, with as many as 50% of them in leadership positions. And given that many of these baby boomers are heading towards retirement, the intellectual capital loss could be devastating for companies that aren't actively preparing for this.
So, when it comes to leadership succession planning, it's not about developing individuals for their next promotion, it's about looking at the bigger picture and identifying leadership talent, assessing for gaps in leadership skills, and providing the necessary training, developing, and coaching opportunities that will nurture emerging leaders, and help build a strong leadership pipeline.
Attracting and retaining talent
Leadership coaching can help attract and retain not only the managers themselves, but also the people they lead.
Well, in addition to giving managers the development opportunities that so many of them seek, it also helps shape them into exceptional leaders. More specifically, it equips them with the knowledge to bring out the best in their teams, while enabling them to develop and hone the most crucial leadership competencies—including, but certainly not limited to, empathy and resilience.
In fact, given that 'people leave managers, not companies', deciding to invest in your leaders can have a significantly positive impact on employee retention.
Developing leadership competencies
Any great leadership program will be underpinned by a leadership development framework, that being a document that defines the way in which any manager within the organization should lead their team, and the competencies and skills they should possess.
But despite this framework being used to inform the program build—particularly the focus of masterclasses and live sessions—there will also be elements of the program that is unique to the individual manager.
But what do we mean by this?
Well, through one-to-one coaching, these managers will be supported in identifying their own personal weaknesses, and subsequently be provided with a plan to develop and hone the specific skillset they may be lacking, with the goal of helping them to become exceptional leaders.
Enhanced leadership performance
In addition to helping managers identify and improve on their weaknesses, leadership coaching can also help them make the best use of their strengths.
In fact, whether you're looking to support experienced managers, new managers, or even the most senior of leaders within your organization (or all three), leadership coaching can provide them with a sounding board to talk through their challenges, and reflect on their own personal development.
Greater performance improvements.
Better team outcomes
According to the Journal of Applied Psychology, leadership coaching has a positive impact on team processes and performance.
But why is this?
Well, many leadership coaching programs will strive to help managers:
- Build confidence and competence in their roles
- Handle difficult conversations
- Have coaching conversations
- Find meaning in their work
- Become a coach to their team
- Establish wellbeing within their team
- Improve team resilience
All of which help them (and the team they lead) develop the seven habits of highly effective teams.
How to measure the impact of your leadership development programs
While the benefits of leadership coaching are apparent, the challenge remains that it's difficult to measure the impact, and therefore to determine the ROI of coaching.
But it can be done. It's just subjective to your business needs.
But what does this mean exactly?
Well, to start with, outcomes need to be tied to your goals, your strategy, and the culture you want to build. Which means you need to know what you want the coaching to achieve from the get go.
It's important to remember though that not all outcomes can be measured in monetary terms.
Instead, outcomes may include:
- The ability for managers to have better and more meaningful conversations with their employees.
- An increase in team productivity.
- A more inclusive culture within the organization.
- More productive meetings (and less time wasted in these meetings).
One key point to bear in mind is that when trying to measure the ROI of your leadership coaching initiatives, you should be focusing on the value to both the individual employee and the company as a whole.
According to Dr. Peter Hawkins and Eve Turner in "Systematic Coaching: Delivering Value Beyond the Individual", you should outline a comprehensive approach to considering every aspect of ROI in a coaching engagement.
In fact, this image from AceUp summarizes it perfectly.
So, while the ROI of leadership coaching might not always be measurable in financial terms, it can be measured in other ways, such as through:
- Employee engagement
- Individual and team performance
- Individual and team motivation
- Employee retention
Measuring leadership effectiveness
One of the most effective ways to measure the impact of your leadership development programs is by evaluating the performance of your leaders.
In other words, the impact they have on their team and the business as a whole.
So, how can you go about measuring this impact?
Look at habit formation
Start by assessing whether the managers across your organization (and the teams they lead) are adopting good habits.
Why's this important?
Well, teams that form good habits are indicative of a good leader. In fact, the strongest teams are built on a foundation of the seven habits, which include:
- Giving and receiving feedback on a regular basis
- Having great developmental one-to-ones
- Having clarity over purpose and expected behaviors
- Continuously improving meetings
- Setting and reviewing both goals and action plans
- Reflecting on what is and isn't working as a team
- Experimenting with new ways to support wellbeing
Consider company profitability
While profitability alone can't determine leadership effectiveness, if you're looking for more tangible evidence, then it can certainly be used to paint a picture of just how good a job each team is doing at contributing to the bottom line.
After all, company success is largely reliant on team success. And team success is largely reliant on its leader.
Use a leadership assessment tool
A leadership assessment tool will help you identify a leader's capabilities in various situations, while also highlighting both their strengths and weaknesses.
While there are lots of different leadership assessment tools available, some of the most prominent ones include:
- 360 Degree Assessment
A 360 degree assessment can be one of the most effective approaches to finding out how a leader is perceived by different stakeholders.
It enables you to collect feedback from various different people, from their direct reports and peers, to their own line managers, and in some cases even from customers.
This insight is then analysed to better understand the manager's strengths and weaknesses.
- Myers-Briggs Type Indicator (MBTI)
Myers-Briggs is an assessment tool that has been used for more than 50 years. While it's a fairly complex assessment, it's also incredibly effective at revealing insights into a person's character, including their traits and capabilities.
- The Enneagram Personality Test
Another common leadership assessment tool is the Enneagram personality test, which categorizes a person's behaviour into one of nine types. According to the theory behind this tool, humans are born with a dominant personality type that can be shaped by both environmental factors and personal experiences.
Each personality type is characterised by a set of dominant behaviors, motivations, and fears.
The tool does, however, acknowledge that we may also have traits of other personality types, which is why it also includes 27 different personality sub-types.
Gallup's CliftonStrengths assessment tool is typically used to identify where an individual performs best. More specifically, it's used to highlight their top five strengths.
Unlike Myers-Briggs and Enneagram, CliftonStrengths is not a personality test. Instead, it's a performance-based tool that is designed to help individuals—in this case leaders—understand their innate skills.
Monitor team outcomes
Another way to measure the impact of your leadership development programs is by monitoring the outcomes of the team's they lead.
After all, a team's success is dependent on that of its leader.
But what exactly do we mean by team outcomes?
Great teams are often the result of a great leader, which is why it's so important to start by looking at their performance.
With this in mind, look at whether the team's are meeting their collective goals, whether they finish projects on time, and how they are contributing to the organization's overall success.
Teams that feel psychologically safe are proven to be more motivated, productive, and all around happier.
Which then has a knock on effect on performance.
Here's the thing though—psychological safety is largely dependent on the actions of the person leading the team.
After all, how can someone be expected to perform to the best of their ability if they fear asking difficult questions, sharing their honest opinions, or taking risks?
It is ultimately down to the manager to create a team environment where this is not only possible, but is actively encouraged. An environment where teams feel empowered, trusted, valued, accepted, and included. An environment where they also feel challenged.
But how do you measure psychological safety?
Well, with a tool such as Saberr, you're not only able to measure the levels of psychological within a team (for example how comfortable they feel raising tough issues), but you can also track just how well the team (and the manager) is doing with developing the habits that improve teamwork and build trust. Habits such as regularly reflecting on what is and isn't working, and establishing behavioral norms.
Engaged employees is often another result of great leadership. In fact, highly engaged individuals tend to be well supported by their managers.
Which is why an employee's net promoter score (eNPOS) is another metric that should be considered when evaluating leadership performance.
Employee retention rates
People leave managers, not organizations. Or so they say. Which is why a high employee turnover within a team can indicate that there are problems.
Team health checks
Conducting periodic team health checks can help with assessing leadership performance.
By understanding what’s working well in the team, and where improvements can be made. More specifically, a team health check can help you understand:
- Whether or not the team feels psychologically safe.
- Whether the team members feel valued.
- If there is open and honest conversation within the team.
- What relations are like within the team, and between the team lead and each team member.
Ultimately, these health checks enable HR and senior management to pinpoint the teams (and therefore the managers responsible for these teams) that require additional support.
The cost of failing to invest in your leaders
Sure, leadership development is an investment that can come at a cost (although it can certainly be more cost-effective than you might imagine).
But there are also costs associated with choosing not to invest in your leaders.
Costs such as:
- Inconsistent leadership styles, resulting in mistrust, lack of productivity, resentment, and a lack of psychological safety.
- Undervalued employees that at best are unproductive and unmotivated, and at worst decide to quit, contributing to higher levels of employee turnover.
- Employees that aren't being developed and therefore aren't performing to the best of their ability.
- Reduced profitability due to teams not performing as well as they could be under an undeveloped leader.
The good news is all of the above can be prevented.
At Saberr, we can work with you to design high-impact, scalable, and cost-effective leadership programs for managers of all levels—first time managers, more experienced managers, and even senior leaders.
How do we do it?
By combining experiential coaching with digital.
This means that we not only enable your managers to develop and hone critical leadership skills through masterclasses, coaching and live sessions, but we also shift mindsets for true behavioural change. Then, we reinforce this learning with our digital platform. A platform that leverages nudge technology and machine learning.
That's not all we do though. We also help you measure the impact of your leadership development programs.
In fact, built into all of our leadership programs are mechanisms to gather data. Data that then allows us to identify recurring themes and quantify the impact these programs are having on team outcomes.
Want to know more? We've covered everything you need to know about our leadership development programs (including examples) here, or alternatively you take a look at our website where we've gone into more detail about our approach to leadership coaching.
Or you can always give us a call and we'll be happy to learn a bit more about your needs and guide you in the right direction.