Leadership Development ROI

042: Leadership Development Return on Investment: For Organizations, Teams and You

Intro: Welcome to the Fast Leader Podcast, where we explore convenient yet effective shortcuts that will help you get ahead and move forward faster by becoming a better leader. And now here’s your host, customer and employee engagement expert and certified emotional intelligence practitioner, Jim Rembach.

“Developing your company’s talent and leadership pipeline can be an overwhelming task but your burn is over with ResultPal you can use the power of practice to develop more leaders faster. Move onward and upward by going to resultpal.com/fast and getting a $750 performance package for free.”

Jim Rembach:    Okay, Fast Leader Legion today we have a special episode. We are going to address a question that was submitted on the Fast Leader website. We have a tab where any of you can submit a question and you never know it might show up and we’ll address that particular question. We have a special guest to talk with us about it. And today we have Pele Ugboajah that is going to help us with this, and we’ll give it to him in a second. But this particular question that we’re going to address today is really multifaceted, has a lot of different impacts that are both individual in nature, workgroup and team in nature as well as organization in nature because it gets down to the question of ROI. What is my ROI both as an individual, as part of a group, as part of an organization? And we’re going to focus in a little bit around leadership development. 

The particular question that was raised by Paul, and I play for you in a moment, was about maybe his individual ROI, we’ll address some of that coming up, think about ROI in a little bit different context and the reason we want to do that is because it is multifaceted, it is different for everyone and that’s will be part of our discussion is going to be like today. But any question that you have or any issue that you’re struggling with just go to the fastleader.net and click on the tab, what you struggling with, and leave us with a message.

So, now let’s listen to Paul:  

 “Hi. My name is Paul and I’m struggling as leader with getting return on investment. I endlessly put in more than I get back and I want that to change somehow.”

I’m sure that many of us including myself find times were doing just that, we feel like we’re struggling, we’re putting a lot in and not getting the things back there we’re desiring or what we want our objectives are not getting met and the performance that were trying to get just doesn’t occur. We’re going to talk about that particular issue of ROI and getting things back and focusing on leadership development. Helping us today is Dr. Pele Ugboajah, who’s a PhD in Organization and Management and has a specialization in Leadership. His dissertation and research focused on the effects of narrative on entrepreneurial leadership. And you may say, “Why are we having Dr. Pele for saying entrepreneurial leadership because I’m telling you today this concept and focus on entrepreneurial behavior, growth, and innovation is vital for us to not just thrive in today’s marketplace but just to survive.  Dr. Pele are you ready to help us get over the hump?

Pele Ugboajah:    I am ready. 

Jim Rembach:    Okay so now, normally we go through and we talk about the inspiration. We talk about leadership quotes. We talk about several things associated with what has helped us learn and grow as leaders of self and others on the show. But when you start thinking about this issue of leadership development and ROI, what do you think is some of the fuel and the driving passions behind people wanting to do anything associated with?

Pele Ugboajah:    Jim, thank you for that question. I think that your colors statement and the thing that he’s seeking clarity on, is really the evidence that we need that—leadership is something that really needs to be addressed in organizations. This is great evidence for the fact that at an individual level this particular leader is seeing the symptoms and the struggles of being a leader, and so I thank you for that. As far as what we see, we see exactly what’s happening to this individual. We find that this is what we call leadership effectiveness, not necessarily ROI unless one could argue that ROI at an individual level really is effectiveness.

So, this is something that we see a lot and as you lead me towards your question I’d be happy to talk about this one specifically. 

Jim Rembach:    Okay. Now, let’s stop for a moment and do just a quick explanation of what is ROI and how do you calculate it. And if you look at the simple explanation, what we do is we look at what benefits that we may get from any activity. Again, we’re going to focus in on leadership development and learning here on this episode. And talk about the benefits that we may get from that and we’re going to talk about a particular case study a little bit where the study that anybody can pull down, and it’s on leadership educators.org, and I’ll put a link on the show notes page so that you can get to this case study, where they looked at the return on investment and doing a managerial assessment of a proficiency program for the Georgia Extension System. For those that aren’t familiar with extension systems they have to do with the agricultural support for a state, their state run organizations and groups, I will make that available and they talk about, what was the investment of going to this leadership development program and what was the impact?

One of the things that they use as the program benefit was actually reducing turnover of people who were in their program and being the leaders in their program. The point being is that there’s a lot of ways that you can assess program benefits when you’re thinking about being a leader, developing leaders, and then you look at the cost of actually doing that, if you want to turn it in percentage you multiply it by 100 and that turns into percentage, so what it is, it’s program benefits provided by program cost multiplied by 100, and again we’ll put that on the show notes page. 

That’s a very simple explanation of what is ROI, and that’s ROI as a percentage. So Pele, when you think of an organization and you start looking at this ROI calculation, again we want to focus in on leadership development because you know I think you’re going to share with us some statistics associated with leadership development and the impact that it currently having you on and the world at a global scale. But if you were to think about an organization what are they looking at in regards to benefits, to go into the ROI calculation?

Pele Ugboajah:     Okay, so, for organizations, I suppose we have to look at whatever returns they were seeking when they put in leadership development program. It’s a very fluid and changing landscape. ROI for one person is going to be different for an ROI calculation for another person or individual or company. They say that beauty is in the eye of the beholder, in some cases ROI is in the eye of the organization. A company has to say, really what is our cost benefit? You’re just doing analysis, why did we pay to develop leaders? And what did we get out of it? Some companies may not get money out it, it may not be about money it may just be about culture, it may be about temperament, it may be about how people feel when they come to work and in the morning on Monday. And so all of these things need to be somehow qualified or quantified to begin the judgment call on whether or not something is contributing toward ROI or not. I hope that answers your questions, it’s a very broad question. 

Jim Rembach:     It is. There’s one point for me that stood out that I oftentimes find something that can create some deeper level of understanding and insight. We often talk about leadership and the things associated with leadership, and again we’re talking about creating an environment by which a lot of the things that are supposedly intangible becoming very tangible. All of us have heard about doing time studies, right? How long does it take to do a particular piece of work or a task? The same thing applies when you start thinking about leadership and getting work done within an organization and so that can become quite tangible when you’re starting to talk culture. 

In today’s organization we have to work across many different functional groups. And guess what, if we have an issue with being able to work within those workgroups, with being able to—stepping up and being a leader within those workgroups and take responsibility when we have to, what’s going to happen to that work? It’s not going to get done very quickly and it’s going to create a lot of problems. We’re going to miss deadlines and I think—who of the Legion has been part of the project, a projects, when you look at your last 10 that you’ve been part of, and goodness knows, we know that work today is all just loaded with projects. How many met their deadline? And when they met their deadline, how do they meet their deadline? Oftentimes it’s coerce, ‘if you get this done by this time it’s going to mean X’ that’s not how we actually want to create a culture that’s going to thrive.

So, when you think about that tangible aspect of culture and being able to work within those workgroups that is something that we can calculate and sees a very impactful benefit to actually helping raise the level of leadership throughout the entire organization.  When you start thinking about tangible and intangible and some of the things that are associated with this calculation, is there something that stands out to the people missed very often that they need to consider?

Pele Ugboajah:     I think your point about tangible versus intangible is extremely valuable because we have a tendency to look toward what is tangible. We look at things like sales results, we look at how many customers required over a certain period time, but the funny thing is that it’s the intangible things that allow us to achieve those tangible things. And those intangible things are things like behavior. And behavior begets culture like one is a parent of the other. If you have a lot of behaviors that a lot of people ascribe to hence comes your culture. 

So, I think the core intangible, if you want to use that as a good descriptor, is behavior. What exactly is behavior, let’s get down to some definitions. Behavior is described amongst the academic behavioral community but really in terms of common sense, as whatever an individual does or says. Let me repeat that, whenever you do something that is measurable and observable or you say something, again, measurable and observable you have just behaved in a certain way. And so, our task really is to help our leaders, help our organizations get down to the granular level of seeing, understanding and measuring behavior so the people can improve those behaviors over time. So I think behaviors is that intangible you’re talking about. As behaviors change in organizations results also change.

Jim Rembach:     And I think that’s a great point. And also as you were talking I started thinking about at an organizational level some of those things that may seem hard to calculate but can be and a lot of things at an organizational level, we’re talking about brand impacts. When we start talking about missing those deadlines, it doesn’t necessarily impact the individuals or even the workgroup it could impact the brand and it really doesn’t matter if you’re in a B to B or in a B to C environment thinking about that overall brand impact in wanting to be associated with the company and not want to be associated with the company, those can be some very high  strategic level impacts that often can go into that actual calculation or that benefit of any type of development program an activity that you go about. 

So not at the team level. Let’s take it down a notch because every single one of us, unless we’re a solopreneur, are part of particular team or workgroup. So, we start thinking about a benefit associated with going through the leadership development process and improving leadership skills, that pipeline, and that bench strength of leadership. What are some of the things that come to mind when you start thinking of smaller workgroups?

Pele Ugboajah:     Well, I think you made a valid point about larger organizations having not only organizational culture and behavior to contend with in terms of measuring but also customer behavior and culture to find a way to understand because that’s the way you understand the impact of your  brand. It’s how your customers are behaving, again back to the behavior word, what are they doing and saying? Those same concept apply precisely in the same way that teams and organizations, teams within organizations. However, we can now begin to—because we’re talking about smaller teams, we can now begin to talk more specifically about leadership and leadership impact. Because it is very visual, we can see it happening—you come to a team meeting, if you are a fly on the wall in a team meeting you could literally see if you got good leadership happening in this particular team or not. 

It goes back to several formulas for what it takes to be a good team, things such as trust, things such as—the openness and willingness to challenge the status quo, transparency and so on, so, there’s some basic building blocks of what a team is and should be. When you see those things absent in a team that is your indicator that leadership is not happening and you can begin to use those as measurements for behavior to understand whether or not good leadership exists or not in a team. 

Jim Rembach:     I think that’s a really important point. For longest time I’ve been looking and focusing in on the works of Dr. Shea McConan and he talks about there’s seven key elements associated with those outcomes or those behaviors result in, and he talks about the importance of feeling valued,  conflict management, ownership, openness, motivation, feedback and difference management and those being the core pillars associated with being able to get that trust and that openness and getting work done faster knowing that somebody’s got your back and it also potentially rolling that up at an organization level. I think you and I were participating in a conversation the other day with a Chief Learning Officer of an organization, she was talking about this issue that she deals with in regards to this whole top down problem. And I mention the case study was a Harvard Business Review study, it was printed back in 1970, and it talks about why change programs—don’t change anything essentially. And it’s just that, it’s the top down piece pushing things down, starting at the very top and expecting them to have a long term value and impact to the organization as they get down, it just doesn’t happen. You get a short term blip but it’s not long term impacting and it’s just not sustainable. 

When you start thinking about the team, one of the things I see a lot of organizations do that as I’m learning more and more about this whole concept of motivation that could be a detriment. As a matter of fact, there’s one particular tool that I look at their demo on their solution and what they were essentially doing was creating an artificial coercive motivation so that these things can happen as far as getting results, right? When you start talking about teams and comparing their performance with one another at what point does it become unhealthy?

Pele Ugboajah:    That’s an important question and I think that’s why we have consultants because the better consultants you are the better you can make what is very potentially explosive into a very positive nice process. The rules are always the same, we have to understand if people trust each other. You’ve got to know whether or not this ability to address conflict, we need to know how committed people are. And all of these things such as avoiding accountability or some people who don’t focus on results but only focus on themselves, all of these pillars if you will of what makes a good team had got to be analyzed, quantified, qualified and use as a lens to understand whether or not you have a functional leadership in that team or not. Because in the end, the character of a team is very reflective almost on one-to-one level about the quality of a leader. Bad leaders produce bad teams. And bad teams are symptomatic of leadership.

Jim Rembach:    It’s funny you say that. I was actually in a tradeshow a couple weeks ago and overheard somebody talking about, “I wish I could get my team to do the things that I need them to do when I’m gone.” And I almost want to say, “Well, that is because you’re not a good leader.” But of course, I refrain from doing that but I think that’s kind of the old adage that goes to—what it is that happens when you’re not there? And I don’t know if it’s necessarily a situation where one individual as a leader can totally change the situation where there’s negative performance in that. It literally requires a collaborative effort. But creating the environment and using your learning and development opportunities to put in the behaviors that will enable you to do that is important. So, let’s focus on Paul. Now, when I shared with you Paul’s message you had a very different perspective than I did. Please share that with me?

 Pele Ugboajah:     My mind hearing of his message was that he was struggling personally as a leader. And he wanted advice on how he could increase his leadership effectiveness. Now, he did use the word, return on investment, like what he said was, “I’m putting much more in that I’m getting out, it’s something like that. So, he was talking about return on investment at an individual level. However, what he’s really struggling with is leadership effectiveness. One thing we need to definite in addition to all the other definitions we’ve talked about such as behavior and teams we need to define leadership, why? Because there are as many definitions for leadership as there are people on this planet. Let’s find one that we can at least work with. 

I would say, let me just propose one and see if you agree, I would say that the shortest way to describe it, leadership is influence. Leadership is your ability to influence others. You set a vision, you create an environment where others want to follow and achieve that vision. So, when a vision is not being achieved that tells you something about leadership, when no one is following that tells you something about leadership. As you say, if you’re taking a walk and you look behind you and there’s no one behind you all you’re doing is taking a walk, you’re not a leader. And so, I would say that for pulse specific situation he needs to do three things. 

Frist of all, he needs to recognize that he is a leader. He is a leader, however, he needs to nurture his leadership to the point that he desires it to be and to do that he has to learn something about leadership that is in line with his own personality and his own abilities and position. Then he has to practice those things he learn as tangible, measurable behaviors, and then he has to track his achievement process over time within a community of practice and may even preferably with a coach who is consistently focused on his development. So, if those three things that I think Paul needs to do. Learn some competencies and behaviors regarding leadership. Practice them in reality at your job and make sure that you are doing it within the context of a community of practice that can help you achieve your leadership goals.

 Jim Rembach:     I think those are three great pieces that we all could instill as part of our behaviors in trying to get greater effectiveness in whatever we do as far as leading his concern. And I think—Paul, thank you for your contribution, we love you and we hope this helps. But also when you start thinking about that ROI, going back to that calculation play, many of those things that you referred to of those three, there’s some investment required. And so, when you also start thinking about return associated with it, what I often see is that—Oh, gosh, and I’m  going to have this problem too is that we want them to be immediate, we want those returns now, we don’t want them yesterday. And oftentimes we somewhat are a little bit laggard in trying to get those returns, and it’s like, “Gosh, if I have just done this two year ago, or last month for that matter, I would have a different effect or different impact.

But when you start thinking about this timeline and you’ve studied this, the impacts, how long can somebody really expect impact to occur and get greater effectiveness? What’s realistic?

Pele Ugboajah:     First of all, let’s just start with agreeing and admitting to the research job there which says, essentially the 150+ billion dollars that are is spent each year, for example, in the US on training and development is almost universally wasted because 85% of it is gone. The return on investment is only about maybe 5% to 20%. Let’s just say 15% that is a terrible statistic and it is evident that whatever we think we’re doing today, with respect to leadership development is not working. So, let’s just start with that, how do you do it better? I think you point about taking more time and focusing on developing things where time is really well taken. For example, we have an industry called Learning and Development that only focuses on learning, that’s the problem.

 Learning is the beginning, development takes time. You don’t develop in a classroom. I have a saying that I don’t think I invented but I’ve certainly adopted it to myself and my name. You don’t learn to play soccer at a seminar—my name Pele to soccer player, okay. You can’t learn how to play soccer at a seminar, you’ve got to get outside of the seminar and you’ve got to practice soccer, you’ve got develop over time, so back to your question: What is a meaningful expectation in terms of time and leadership development? First thing I want to say is that,  leadership does not happen in the classroom there’s something called the 70/20/10 rule, which says that and this is based on research that we could put down on your links later on. But 10% of learning happens in the classroom, 20% happens outside the classroom while you talk to people within the community of practice and a whopping 70% of real learning happens in the field, outside of the classroom, after job, in the workplace. What that tells me and should tell everyone is that, you learn by doing overtime. 

Now, when I was an executive coach in a leadership development firm, we had coaching and leadership development happen over six months to a year. It is not something that happens in a week, a month, or even three months, why? Because you need time to really get the community of practice working together to help this individual this individual grow. You need time for the opportunity to happen. If want to practice my guitar, I can pick up my guitar anytime I want and just play it, but when you’re trying to practice leadership development it is situational. I can be a leader only if the situation presents itself.  

And so I have to actually seek out opportunities and hope and wait and look for and create opportunities to practice those behaviors. And to do that you have to spend some time in the workplace coming across those kinds of leadership situations. So, six months is a small but a good minimum, twelve months is even better. And that 12 months has to be structured, it has to be all about practice and feedback, or what we sometimes call, feedforward which means a more positive approach, more futuristic approach to, how do I get better, and it’s got to be something that is measured and recorded hopefully in a format or platform or tool that will allow you to see whether someone is getting better or not. 

Jim Rembach:     Dr. Pele, thanks so much for sharing your wisdom. Now, before we move on, let’s get a quick word from our sponsor. 

“Contributing to the annual $150 billion loss in training and development investments is downright demoralizing so raise your spirits and training ROI by increasing learning transfer with resultpal.com. Get over the hump now by going to resultpal.com/fast and getting a $750 performance package for free.” 

Alright here we go Fast leader listeners now it’s time for the—Hump Day Hoedown. Okay Dr. Pele, the Hump Day Hoedown is the part of our show where you give us good insights fast. So, I’m going to ask you several questions and your job is to give us robust yet rapid responses that are going to help us move onward and upward faster. Dr. Pele, are you ready to hoedown?

Pele Ugboajah:     I’m ready to hoedown. 

Jim Rembach:     Alright.   What do you think is holding organizations back from building their leadership pipelines?

Pele Ugboajah:     Cultures. Most organizations that you’re talking about have cultures that frankly don’t believe that leaders can be nurtured. They believe that leadership comes from nature only. And one could debate that all day, but the fact is a switch needs to go from, “We have leaders who are born that way” to “We have leaders who we can develop overtime. 

Jim Rembach:     Many organizations have eliminated their middle leaders and are now starving for leaders, what should they do?

Pele Ugboajah:     They should start turning everyone into a leader. Just because you’re title doesn’t say Vice President or Director, doesn’t mean you can be a leader in your specific team, group or situations, people should strive for leadership at all levels. 

 Jim Rembach:     What is one of the biggest mistakes do you see organizations make when trying to develop their leaders?

Pele Ugboajah:     They don’t focus on specific measurable behaviors. They focus on this high level pie in the sky descriptions of competencies and vision and not what people need to do on Monday morning when they get back to work. 

Jim Rembach:       What is the best advice to give for those who want to be better leaders?

Pele Ugboajah:     They have to learn something about leadership. They have to practice that thing about leadership and they’ve got to monitor the achievement of their results within the community of practice overtime. 

Jim Rembach:     What is one of the secrets you believe that will contribute to developing leadership skills faster?

Pele Ugboajah:     Practice, 85% of success is from skills and attitude not knowledge. People have to start practicing leadership skills and attitudes.

Jim Rembach:     What do you feel is one of the most misguided recommendations you hear experts give about developing leadership skills?

Pele Ugboajah:     First of all, this idea I think that things like leadership where executive presence are unknown and intangible. You only feel it when it’s there, that’s wrong. You can boil down leadership into measurable and behaviors that people can practice over time, and that’s that a misguided belief in the culture of our organizations. 

Jim Rembach:     Okay, Fast Leader Legion you can find links to the research that we sided in this episode and other bonus information from today’s show by going to fastleader.net/ ROI. Okay Dr. Blake this is my last Hump Day hoedown question: Imagine you were given the opportunity to change a tradition, system of belief that has hindered our ability to create more and better leaders for match we were given the opportunity to change a tradition system or belief that has hindered our ability to create more and better leaders over the past several decades. But you can’t change and wipe away every single thing. You can only choose one tradition, skill or belief so what would you change and why?

Pele Ugboajah:     I would change the belief that leaders are only born and I would suggest that leaders are also nurtured and made over time.

Jim Rembach:     Dr. Pele, thank you for sharing your knowledge and wisdom, can you share with the fast leader legion how can connect with you?

Pele Ugboajah:     You can connect with me by going to www.resultpal.com and I’m available to be contacted through there. And I look forward to any concepts that come my way, I’ll try to help as much as I can. 

Jim Rembach:    Thank you for sharing your knowledge and wisdom, the Fast Leader legion honors you and thanks you for helping us get over the hump. Woot! Woot!

Thank you for joining me on the Fast Leader show today. For recaps, links from every show, special offers and access to download and subscribe, if you haven’t already, head on over the fastleader.net so we can help you move onward and upward faster. 

 END OF AUDIO