Is Leadership Development a Luxury or Necessity?
Leadership development appears to be one of those luxury items, something that the company can live without. And it is, or is it? What happens when you have leaders that need to develop good skills and the resources are just not invested? Employees these days are not willing to work in poor work conditions. Despite the current economy and unemployment rates, employees are still willing to give up a “good job” when they feel they are treated well by managers and leaders. The cost to the company can be huge.
Over the past few articles I have outlined the impact of not addressing poor leadership, employee turnover, reduced productivity, and poor team performance. I’ve outlined the potential costs to the company and impact to the bottom line. Recently, I talked with a company where this is exactly what happened. They decided to not invest in leadership development. The work environment continued to deteriorate for employees and turnover has occurred.
The result: an open position on the team, lowering the ability of the team to complete jobs and meet deadlines; the need for leaders to invest time in hiring and retraining; and ultimately more loss for the company and the delay in having a fully functioning team.
Investing in Leadership Development
Had the investment in leadership skill development been made what could the outcome have been? Higher performance of the entire team, improved work environment and culture, and reduced turnover. A stronger company and stronger bottom line result.
For many leaders or business owners, leadership skill development is viewed as a perk, a non-essential investment, but the impact of failing to make this investment can be devastating to work teams, especially when an unskilled leader or manager is involved. Some leaders have pretty natural skills, while others have never been in leadership before and have had poor role models. These folks need skill development. They need to understand their role and the impact that they have on the workforce.
Positive Outcomes of Leadership Development
When organizations do invest in leadership development positive outcomes are achieved for both the company and the individual. Leadership skill development can occur in house or via training and executive coaching. Executive coaching helps to solidify skills once they are learned. The coach can provide feedback and additional opportunities for learning during skill acquisition and retention.
A leadership budget should take both parts of the puzzle into account. Leadership skill development and monthly executive coaching. Costs can vary from a few thousand per year (4000) per staff person to 25,000 or more depending upon the level of training and coaching. When evaluating the investment consider the impact of the loss of just one staff person. Using the 150% of salary – just one employee leaving the organization that is a $35,000 per year employee can cost the company $52,500 in replacement and retraining costs, as well as time lost from leaders and other employees due to the shortage. The savings that could occur by investing upfront in leadership development using these numbers could be $25,000 to 48,000.
Business owners that fail to see the value of investing in leadership development for their managers and growing leaders kick themselves later when costs come back to the company.
Creating a strong leadership development program within your company is a wise investment and in the long run saves money and increases income with increased team performance and productivity.
Leadership is one of the four pillars of business success. Without good leadership it is impossible to create a strong organization. Sure you can operate with bad leaders, BUT it costs you — time, resource, staff and money. Don’t make the mistake of ignoring leadership development.
Donna Price is a strategist, working with entrepreneurs to increase profits using the 7 Profitability Accelerators. Create your system for success.