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Why Is Leadership Development Important?

Independent studies by CETraC, The Conference Board, Bersin by Deloitte, and HR analytics expert McBassi & Company consistently reach the same conclusion: Leadership development is one of the most pressing issues facing organizations today.

Why? Because it represents a great chance for them to seize a competitive advantage in their industries.

If your organization commits to developing its leaders, you can expect to gain a competitive advantage by improving the bottom line; attracting, developing, and retaining talent; driving strategy execution; and increasing your success when navigating change.

When we surveyed more than 5,000 program participants around the world — as well as 8,765 of their colleagues — 99% of the participants surveyed said they achieved success on their target goals related to communication, self-awareness, implementing change, and other areas.

 A whopping 97% also told us:

  • The program better prepared them for future leadership responsibilities.
  • Lessons learned were relevant to their leadership challenges.
  • Colleagues who went through one of our programs were able to translate what they learned into organizational impact, especially when it came to management capabilities, overall effectiveness, cross-boundary collaboration, and openness to diverse perspectives.

Leadership Development Leads to Sustained Success

So why is leadership development important? According to research, leadership development enables organizations to do the following 4 things that drive sustained success:

 Improve Bottom-Line Financial Performance: Companies that rate highly for their investments in human capital deliver stock market returns 5 times higher than those of companies with less emphasis on human capital. Leadership development builds capacity to reduce costs, drive new lines of revenue, and improve customer satisfaction.

Attract and Retain Talent: Leadership development boosts employee engagement, increases the organization’s ability to deal with gaps in the talent pipeline, and reduces the headaches and costs associated with turnover. Great leaders attract, hire, and inspire great people. A manager without strong leadership skills will struggle to attract and retain high-performing employees. In addition, it’s often significantly less expensive to develop, coach, and promote people internally over the long run than to hire someone externally, which makes leadership development a good investment.

Drive Strategy Execution: Effective leadership development isn’t development for its own sake. Organizations need a leadership strategy that closely connects with the business strategy and equips employees with the leadership skills needed to implement it. Leadership development allows organizations to shape the culture and strategy of the business. In the words of The Conference Board: “Leadership development has enormous power in both shaping and changing the culture and strategy of business. Developing, coaching, and promoting people internally is significantly less expensive than the costs typically required to hire someone externally.”

Increase Success in Navigating Change: Leadership development increases people’s ability to leading in a disruptive world. When organizations look beyond developing senior executives and high potentials to unlock the full potential of their talent pools, agility is magnified.

The Power of Leadership Development to Attract and Retain Talent

According to the Bersin by Deloitte report High-Impact Leadership Development, organizations with stronger “leadership maturity” are 11 times more likely to have a high number of leaders who can build talent for competitive advantage. And they’re 7 times more likely to have a high number of leaders who can inspire people to follow them.

Watching talented people walk out the door causes tremendous expense for organizations, from morale, advertising, recruitment, and relocation costs, to time spent training new employees.

Unfortunately, the report found that capable leadership talent is very rare. Only 60 percent of leaders in organizations show commercial acumen and business judgment; 48 percent are seen as driving change and innovation; and only 44 percent build talent for competitive advantage.

Sophisticated leadership development programs develop a deeper, richer pipeline of talent, which is why organizations today are seeking to unlock the full potential of their talent pools at all levels.

The Lasting Impact of Leadership Development

Why is leadership development important? Because when done right, it unquestionably delivers impact. (Not all leadership development is created equal. Learn what works — and what doesn’t, in our article, Leadership Development Works — We Have Proof.)

A CCL analysis of more than 1,000 alumni of our flagship Leadership Development Program (LDP)® found that 99% reported success in strengthening the leadership skills most important to their work performance — communication, influencing across the organization, self-awareness, and implementing change.

Meanwhile, 98% reported a strong positive impact on their overall organization in areas critical to strategy execution, including: Cross-boundary collaboration, Organizational management, and Openness to diverse perspectives. In addition, evaluations of our online program for frontline leaders, which requires just 30 minutes a day, found that: 90% of participants found Frontline Leader Impact easy to access and navigate; and 99% of participants said the course had a positive impact on their leadership skills. And clients tell us this digital learning initiative can help individuals minimize disruption and strengthen their skills, while at the same time improving employee engagement, retention, and organizational culture.

According to our own data, organizations that value leadership development are better at developing their leaders and placing the right people in the right roles — which, in turn, drives greater innovation and stronger financial performance.

March 30, 2021

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