Jack J. Phillips, Ph.D.

Grateful Leadership and ROI – Do They Mix?

A recent survey of Global Leadership Development Directors revealed that record amounts of expenditures are being allocated to leadership development.   With spending increases, the interest in showing the impact and ROI in leadership development increases.  The survey shows that eighty-eight percent of the respondents indicated that there is now an emphasis on ROI for leadership and development. The principle reason for this emphasis is competitive pressures on costs and funding.  In terms of the measurement process, the attached table shows that 34% of leadership programs are being measured at the application level, tracking how individuals are applying the leadership competencies. Surprisingly, 21% of programs are being measured at the impact level, tracking the consequences of the leader behavior on business measures, such as productivity, sales, quality, cycle time, incidents, accidents, waste, engagement, efficiency, and cost. A record number of programs (11%) are being measured at the financial ROI level showing the monetary value of the impact of leadership development compared to the cost of the program.

Given the need for accountability, it is important to address three questions:

  • How is this achieved?
  • Can a leadership approach such as Grateful Leadership produce this type of results?
  • How should you tackle this issue?

 

Here are my responses:

Evaluation at the impact and ROI levels can be accomplished by establishing business alignment at the beginning of a program, having participants indicate which measures will improve with the use of these competencies. Next, smart objectives for application and impact levels are developed. Next, data are collected or monitored for Application (Level 3) and Business Impact (Level 4). This requires that the impact of the leadership program be isolated from other influences. Also, the impact data are converted to monetary values using conservative principles. These monetary benefits are compared to the fully loaded cost (direct and indirect) for the leadership program, using a standard ratio from accounting. These steps are explained in detail in our book Phillips, Jack, Patti Phillips, and Rebecca L. Ray. Measuring Leadership Development: Quantify You Program’s Impact and ROI on Organization Performance. New York: McGraw-Hill, 2012.

We would argue that an approach like Grateful Leadership has the potential of delivering a more powerful impact and higher ROI than other approaches to leadership development. Research dating back 50 years, suggests that Grateful Leadership is a very powerful process to drive team performance. Grateful Leaders are those who see, recognize, and express appreciation for gratitude for their employees’ and other stakeholders’ contributions and for their passionate engagement, on an ongoing basis.

By creating a culture of appreciation throughout their organization, in which people truly feel valued, these leaders motivate their followers to strive for continuous improvement (Level 3) and always greater results (Level 4).

The recommended approach is to start measuring at the application level as soon as possible on a small sampling basis. Best practice is 30% of programs are evaluated at that level each year. Next, some programs should be pushed to the impact level of evaluation. Best practice is 10% of programs are evaluated at this level each year. While most leadership programs should not be evaluated at the business impact level, programs that are expensive, important, strategic, and attract the interest of the executive team should be considered for impact evaluation level. Finally, when there is a need to “show the money” an ROI evaluation should be explored. An ROI calculation (or forecast) can be helpful to executives who need to see the monetary benefits compared to costs, the ultimate evaluation.

The key is to be proactive with this process and not wait for a senior executive to ask for it. Waiting for the executive request places you on the executive agenda with a short timeline and puts you in a defensive posture.  A proactive approach allows you to take the time you need to experiment, apply, and adjust, a luxury you won’t have if you are on the executive timeline and agenda.

These responses are very brief and much more detail is available. To learn more visit www.roiinstitute.net or contact us at info@roiinstitute.net. Want to socialize? Follow, Like or, Visit the ROI Institute on FacebookTwitter and Linkedin.

Jack J. Phillips, Ph.D. is a world-renowned expert on accountability, measurement, and evaluation. Phillips provides consulting services for Fortune 500 companies and major global organizations. The author or editor of more than fifty books, he conducts workshops and presents at conferences throughout the world.

His expertise in measurement and evaluation is based on more than 27 years of corporate experience in the aerospace, textile, metals, construction materials, and banking industries. Dr. Phillips has served as training and development manager at two Fortune 500 firms, as senior human resource officer at two firms, as president of a regional bank, and as management professor at a major state university.

Dr. Phillips has undergraduate degrees in electrical engineering, physics, and mathematics; a master’s degree in Decision Sciences from Georgia State University; and a Ph.D. in Human Resource Management from the University of Alabama. He is chairman of the ROI Institute, Inc., and can be reached at (205) 678-8101, or by e-mail at jack@roiinstitute.net.

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