Estimating return on leadership development investment |
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| Authors: | Bruce J Avolio James B Avey David Quisenberry |
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| Institution: | 1. Department of Management & Organization, Michael G. Foster School of Business, University of Washington, United States;2. Northwest Center for Organizational Research, College of Business, Central Washington University, United States;3. Global Leadership Institute, College of Business Administration, University of Nebraska-Lincoln, United States |
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| Abstract: | When making capital investment decisions organizational leaders are trained to consider the financial return on investment. Yet, the same expectation typically does not exist for investments in leadership training. We suggest that decisions regarding leadership training and development ought to use a similar approach as the process leads to organizations incurring cost for an anticipated benefit, like any other investment. In the current paper, we describe how to estimate the return on leadership development investment (RODI) and the implications for measuring organizational effectiveness from such analyses. Using different guiding assumptions, scenarios, length of the intervention, and level of management participating in the leader development program, the expected return on investment from leadership development interventions ranged from a low negative RODI to over 200%. |
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