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Study Finds Corporate Leadership Development Programs Have a Return on Investment of $7 for Every $1 Spent

Leadership Development Investment Directly Leads to Increased Revenue and Savings, according to a Study of 750+ Corporate Leadership Development Managers conducted by BetterManager

A study released today by leadership development platform BetterManager finds that businesses increase revenue and decrease costs when they invest in coaching programs for their employees. In fact, the average ROI is $7 for every $1 spent on leadership development.

BetterManager partnered with research firm The Fossicker Group for the study, which surveyed 752 people responsible for leadership development at a wide range of companies in the United StatesCanada, and the United Kingdom.  The research found that the tangible ROI comes mostly fro m increased revenue and sales as a direct result of leadership development participation. It also found companies saved money through increased employee retention and reduced recruiting costs.

In addition, despite recent economic uncertainty and corporate belt-tightening, the study showed:

  • 84% of respondents said their company still prioritizes investing in leadership development even in a down market
  • 99% said they would maintain or increase their leadership development spend over the next 12 months

“Countless qualitative studies have shown that the benefits of leadership development ripple out across the entire organization,” said Better Manager President and COO John Topping. “But our research is the first global, cross-industry study to quantify a genuine ROI from leadership development with empirical data. People leaders are increasingly being asked to make the business case for programs they implement. This type of tangible return speaks in real dollars and cents and shows that leadership development is a profit multiplier.”

Leadership Development Spend and Focus Varies Widely by Industry
The BetterManager study also found interesting variation by industry in the amount of investment in leadership development and in who receives coaching.

  • The amount of money spent per person went from a low of $25 per person from government agencies to a high of $2,667 per person from law firms and legal services. Holding companies ($1,667) and manufacturing ($1,000) had high expenditures per person as well.
  • The amount industries spend on new and mid-level managers also varied quite a bit. Business services companies spent 32% of their leadership development dollars on new and mid-level managers while government agencies spent 48% of their budgets on lower-level managers. Healthcare and Insurance (41%) and Media & Internet companies (39%) were also near the top of the list for spending on lower-level managers.

“It’s important for managers at all levels to receive the support and expertise that leadership development provides,” Topping said. “This shouldn’t just be for the people with the corner office. As today’s report proves, it’s a worthwhile investment.”