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The Business Case for Leadership Development

Wow, when did we get to May? With only two months left in this financial year, teams are busy finalising budgets for FY24 and ensuring optimal allocation of the last of FY23 budgets.

In this challenging landscape, marked by economic ambiguity and volatility, making informed decisions on budget priorities becomes increasingly important.

There has been talk of rolling restructures and potential redundancies while economists’ debate whether Australia will face the impending threat of a recession and a tightening of venture capitalists' investments. The landscape is cautious.

One thing that needs to continue to be a focus in FY24 and beyond is the investment in your leaders. And here is why:

  • Managing change requires strong leadership, communication and empathy. Leaders need to build the capacity to lead people through change even when experiencing it themselves.

  • With the potential for an economic downturn, leaders must be adaptive to learn their way forward and make decisions in environments they may not have experienced.

  • We need a long-term strategy rather than being reactive to the here and now. Strategically focusing on leadership development ensures organisational resilience when faced with adversity.

  • The last few years have presented a talent shortage for organisations; people have stepped up into roles and are stretching in their day-to-day without necessarily having the skills.

  • Leaders tend to focus on productivity gains through new tools and processes; however, much waste in organisations is due to poor leadership and conversations that were never had or were poorly handled.

  • Retaining high performers by providing opportunities for learning, growth, and development helps to motivate top talent, reducing the risk of turnover.

  • Organisations need to differentiate themselves and showcase their resilience in a climate where venture capital investments have tightened. By investing in leadership development, companies can establish a reputation for strong leadership capabilities, attracting potential investors, partners, and customers who value stability.

Claire Gray - Leadership Development

It is often difficult to measure the impact of leadership development as it can be intangible. It has an indirect benefit and the flow-on business impacts cannot necessarily be isolated to leadership development alone. However, from my experience, I am confident it will improve employee engagement, which leads to a productive and motivated organisation, an increase in performance and a better bottom line. Here are some stats to understand the return on investment and benefits of prioritising leadership development:

  • The Journal of Applied Psychology (2017) found that participants that underwent leadership training improved performance by 20% in the leader and a 25% improvement in overall business outcomes.

  • Research from GBS Corporate Training (2017) states that productivity is decreased by 5–10% due to poor leadership, which can cost organisations millions each year. This is in addition to a 7% loss in annual sales. Better leadership can attribute to a 9–32% reduction in voluntary turnover. And according to a recent study, the recruitment cost has doubled to $23,860 per employee—proof that turnover is costly (Wightman, 2022).

  • DDI reports that one poor leader costs a company more than $126,000 annually due to low productivity, turnover and staff disengagement. People leave a boss, not a job. In fact, an industry trends study suggests seven out of ten employees quit their boss rather than their company (Williams, 2022).

  • We know that the more engaged an employee is, the more productive and higher performing the organisation. Gallup reports that the single biggest reason that employees are not engaged is poor leadership.

As you can see, it is critical to invest in leadership development in FY24! Please reach out if you would like to chat about your plans to develop your leaders. Looking at my calendar, I only have five days available before the end of the financial year. Let's chat if you are looking to invest in your leadership or team development and utilise your budget before the end of the financial year.

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