A free Leadership Development Benefits Estimator Tool
A recent study, "The Business Benefits of Management and Leadership Development", commissioned by the Chartered Management Institute (CMI) concludes that "there is clear evidence that the level of investment in MLD (Management & Leadership Development), the alignment of HR and business strategy and the commitment to MLD within an organisation, alongside effective HR practices and the evaluation of MLD has a significant impact on organisational performance".
That is good news and it is a comprehensive and excellent 80-page report which is well worth studying. However it does not answer the question I pose at the top of the article and sadly you are unlikely to find this question answered elsewhere either.
At Dashboard Simulations we have developed a simple Excel-based (Excel) tool which guides you through 3 simple steps to estimate the financial benefits resulting from a specific leadership intervention with an individual Leader.
The 3 steps are:
Step 1 - Identify Leaders Potential Financial Impact
First you look at the potential universe of financial value that the leader engages with and the extent to which their leadership can impact it.
Step 2 - Assess Key Leader Skill Levels, Targets and Weightings
Secondly you identify the key skills of the leader, their current levels and the target improvements in these levels expected from the specific Leadership Development intervention you are planning. You can also weight each of these skills in terms of relative importance to the financial measures.
Step 3 - Estimate Financial Benefits of Leadership Development Intervention
Finally you calculate the financial impact based on the percentage of the "Perfect Skillset" which the intervention is expected to deliver.
Once you have completed steps 1-3 in the tool you can then do steps 4-6.
Step 4 - Aggregate the Benefits to the whole target leader community
You need to identify the benefits of the intervention for each member of a group of leaders then aggregate them. Alternatively if the group is too big to deal with on an individual basis you can do the calculations on a single typical member of the group and just multiply this by the total number in the group. A compromise is to split the group up into a small number of categories (e.g. High, Middle and Low) and make an assessment for each category which you then can multiply by the number of people in each category to get your total benefits estimate
Step 5 - Consider the phasing of the benefits
This will give you the benefits of the intervention per annum. You can then decide how these benefits would be realised over a normal investment appraisal period (e.g. 3 years). You might, for example, conclude that only 50% of these benefits might accrue in the first year followed by 100% in year 2 and 80% in year.
Step 6 - Do the cost-benefits analysis
Now that you have the total timed benefits of the investment it is very easy to compare this with the costs of the intervention over the same period to work out your return on investment
Get your own free copy
This is a very simple approach to Leadership Development Benefits Estimating which can get you started quickly and which you can extend as required. If you would like a free copy of the Leadership Development Benefits Estimator Tool (Microsoft Excel) just send me an email.
About Ken ThompsonKen Thompson delivers keynote conference speeches, workshop facilitation and in-house consultancy in four key business areas:
- Creating High Performing Teams in enterprises including Virtual and Mobile Teams (based on the Bioteams Book)
- Establishing effective Collaborative Business Networks enabling companies to co-operate effectively in areas such as sales and product development (based on the book - The Networked Enterprise)
- How to use the latest social media technologies including blogging and online communities to promote enterprises, brand, organisation or event
- Development of graphical on-line interactive Business Games, Dashboards and What-if Simulators for organisations to support Performance Improvement, Strategy Development and Executive Team Development.
Bioteams Books Reviews
Leading complexity thinkers apply biological principles to enterprises: The Biology of Business is a set of essays by ten researchers and practitioners in Complex Adaptive Systems (CAS).