Arrow Leadership International Ministries

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THE ROI OF LEADERSHIP DEVELOPMENT: INTEGRATING RESULTS AND LEADERSHIP DEVELOPMENT

You’re the board chair of a mid-small sized urban ministry organization or church. Your pastor or CEO has just recommended that your organization invest $8,000 in his or her Leadership Development over the next two years. But how do you know that this would be money well spent? What impact will it have on your achieving your mission’s goals and objectives? Could the same be achieved with an investment of just $1,000? What would happen if you spent $20,000? Or nothing at all?

The challenge of assessing the Return on Investment (ROI) of apparently soft, people-oriented initiatives like leadership development has been with us for years. Indeed, it is interesting that in the Christian world here in North America where it seems that everyone is telling us they are doing leadership development that there is an inability (or unwillingness) to measure these programs. Additionally, we are not seeing evidence of Kingdom impact as a result of all this leadership development.

“Currently, we have no systematic means of assessing the quality of job we are doing in identifying, training, evaluation, and supporting pastors…it is paramount that we put the process under the magnifying glass…” George Barna

This inability to measure outcomes causes some ministry organizations and donors to refuse to invest in leadership development. Others question the value of such programs and still others try to implement internal programs based purely on their immediate needs and the instinct that this is the right thing to do. There is little focus on ministry results.

Arrow believes it is possible to measure the ROI of a leadership-development initiative; however one must first understand the challenges involved.

There is no doubt that measuring the return from a leadership-development initiative is challenging. This is due to a number of different factors.

Perhaps the most significant is the fact that leadership development in itself is a very complex subject. In many cases there is confusion simply about the definition of the term leader. Some define leaders as those in an authority position; others focus more on the behavior of individuals, regardless of their position. Our language around leadership often does little to help us in this respect. When we talk about improving leadership capacity and capability we are often unclear as to whether we're talking about individual leadership development or organizational capacity. Typically, leadership development involves not only a focus on developing the individual leaders skills, but also developing relationships between individuals (team development), as well as developing organizational systems (organizational development).

The situation is further complicated by the fact that leadership development does not necessarily have an immediate return, but instead is best regarded as a long-term investment. Improvements to effectiveness that can be attributed to an increased leadership capability within the organization are often not evident until a year or more after the leadership intervention. With such a time delay it is difficult to derive a true cause-and-effect relationship.

In addition, leadership and its results are often described as subjective. This is the nature of the concept. Leadership involves people and the perceptions of these people. Consequently, in measuring the impacts of leadership development we will, by definition, measure the perceptions of others. Many are uncomfortable endorsing valid measurements based upon these apparently subjective perceptions.

DOES IT MATTER?

What is commonly referred to as leadership development is, most often, leader development. In other words, a leadership-development initiative is put together in the hopes of making individuals more effective leaders. This assumes that when individuals are more effective leaders, they will produce better outcomes for the ministry organization.

Although rarely acknowledged, similar assumptions are present in many training initiatives. Upon close examination, it is possible to see many parallels between the assessment of the effectiveness of leadership-development programs and more conventional hard-skill training programs.

For example, suppose the ministry wishes to develop the computer skills of its staff. Courses are designed, and participants attend with the objective of increasing their computer literacy. On completion of the course, the course quality is typically assessed by asking staff about their change in skill level as a result of this course. However, does the ministry take a long hard look at the value of their investment? How has the apparent increase in computer literacy impacted the results? Was this hard-skills training a sound investment? Typically these questions are not asked, and training investments are considered worthwhile simply if participants have acquired new skills – regardless of the value of that acquisition.

Three years after Arrow’s engagement with a leader in our leadership-development program, an assessment does take place. This is done through the use of a 125-question inventory in which participants are asked to comment on their leadership skill and behavior. This has been enhanced with a 360-degree survey of five people surrounding the leader at the start of their development journey asking about skills and behavior. Feedback is sought from the participants themselves including both on their perception of the leadership-development experience and changes in their own leadership ability. These are layered on top of one another to identify ‘movement’ in their leadership as a result of the investment.

This assessment is valuable in looking at behavioral change in leaders, and as we say at Arrow – “Behavior doesn’t lie.” We’re attempting to measure the extent to which individuals have become more effective leaders. The value of the investment spent on leadership development would also have to be .

Despite the many parallels between the assessments of both hard- and soft-skill training courses, most organizations seem to have significantly less problem justifying expenditure on hard-skill courses, than on soft-skill courses such as leadership development. Why? Perhaps the answer lies in our assumptions concerning what skills managers must have and what skills the organization is responsible for developing, versus what is simply a natural and innate ability. Few would question the importance of a leader being computer literate. It is generally accepted that as the world of technology changes, so organizations have the responsibility to ensure that their leaders remain current and well skilled.

However, with leadership development it is different – despite the fact that our knowledge of leadership is growing in leaps and bounds. Perhaps this is because leadership is a socially constructed concept, something that happens both inside and outside the workplace. It has more to do with who we are as people, than with the organization itself. Thus we assume that because we have grown up in a social environment, we should have the social skills necessary for us to lead. When we make this assumption, we can see why organizations need a clear justification for spending money on leadership development.

The fact remains that without some form of measurement that directly relates the investment in leadership development to bottom-line results, those in charge of organizations will be tempted to rely on their assumption that these soft skills “just develop” in individuals.

Leadership development is an organizational-change initiative. The degree of the required change defines the breadth and the depth of the leadership-development process. By focusing on the outcomes both organizationally and individually, it is possible to develop the leadership

capacity and capability in the organization that will ensure business success. A clear focus on outcomes has two benefits. Firstly, it ensures that the leadership-development process is effective and relevant, and in so doing allows for the successful implementation of strategies.

Secondly, it permits leadership development to be assessed in a manner similar to any other business initiative, which allows for the ongoing adjustment of leadership development to meet business needs in an even more effective manner. It also elevates leadership development to

the position of key strategic initiative in an organization, as employees and managers come to realize, through the measurement process, the impact that an effective leadership- development process can have on organizational results.

Leadership development is soon viewed not as a cost, but as a critical initiative necessary to achieve business success

We urge organizations to reflect on how they are currently focusing ministry or business results and the extent to which they are using the power of leadership development to achieve these results. In particular, we suggest you consider the following:

1. What strategies do you have in place to achieve your organization’s results?
2. To what extent have you linked business results with leadership development?
3. How could you better align leadership development with the organizational strategic imperatives?
4. When considering leadership development, ask yourself some tough questions. For example: “Why am I doing this?
5. In what ways will this organization benefit? How can I measure and assess this?
6. Spend time clearly defining the desired outcomes of a leadership-development initiative. Ensure these are clearly linked to organizational strategies.
7. Make sure that the competencies you are developing in your leaders are clearly linked to the required results.
8. Do not ignore the impact of building relationships and networks between individuals and using the leadership development process to improve organizational systems.
9. Work only with leadership organizations or consultants who have a rigor and depth to their work.
10. Commit to research and measurement of the impact of your leadership-development initiative – knowing that this is both sound practice and that it will in itself enhance the leadership skills of your people.