My years as an Army Officer taught me the value of investing in people with potential. In the army, we spend hundreds of thousands of dollars every year developing the skills needed to effectively lead a team through different challenges and obstacles. We make sure to tap the right people for the job so we always stay ahead in the game and succeed in our missions.
The most successful companies spend billions of dollars each year on leadership development. They prioritize developing leaders and ensure a healthy leadership succession. Excellent leadership can help ensure your business grows and thrives amidst these challenging times.
This article discusses why leadership development is crucial in business and what benefits you can enjoy with a healthy leadership bench. We’ll also talk about the biggest mistake you can make as a business leader — not investing enough in leadership development — and what you risk losing. Finally, we’ll discuss how much companies worldwide spend on leadership development so you get a clear grasp of its enormous impact and relevance.
Why Some Businesses Fail to Maximize Leadership Potential
The lack of adequate resources and reluctance to invest in intangible concepts often hinder some business owners from establishing a solid leadership development program, resulting in leadership gaps within the organization.
According to the 2023 Global Leadership Forecast, there is a shortage of quality leaders equipped to fill critical organizational roles. In fact, only 12% of the companies surveyed were confident in the strength of their leadership bench.
Businesses that have a robust and reliable leadership bench are:
- 6 times more likely to engage and retain their top talents
- 3 times more likely to deliver maximum financial performance
- 5 times more likely to positively address issues on employee burnout
If business owners don’t invest enough resources in leadership development, they risk losing top talents and suffering the adverse effects of not having a strong leadership bench.
Why Successful Businesses Invest in Leadership Development
Investing in leadership development is crucial to ensuring a business grows and thrives despite challenges in a dynamic and demanding environment. Some business owners may be daunted by the additional expenses this entails, but it’s vital to understand that the benefits far outweigh the costs.
Leadership development helps boost employee engagement and reduce employee turnover, leading to more opportunities to build a healthier leadership pipeline.
Take a look at these statistics:
Individual Enhancements
- Leadership training participants show a 25% increase in learning and a 20% improvement in overall job performance.
- The same study revealed a 28% increase in leadership behavior application and an 8% improvement in overall team performance.
- An 88% behavioral improvement was also noted after executive coaching.
Organizational Improvements
- A 22% increase in organizational activity was noted after the completion of leadership training.
- Companies that promote inclusive leadership development were 4.2 times more likely to financially surpass those that didn’t.
How Much Do Companies Spend on Leadership Development?
Companies are estimated to spend as much as $50 billion per year on leadership development. Establishing a solid succession pipeline is among the top priorities of successful business owners, along with retaining high-potential employees and fostering creative thinking and innovation.
A Chief Learning Officer survey in 2017 gave us a more concise picture of how much companies generally spend annually on leadership development per person:
| Percentage of the 1,500 Professionals Surveyed | Average Expenditure Annually Per Person |
| 36% | $1,000 – $3,999 |
| 32% | Less than $1,000 |
| 18% | $4,000 – $6,999 |
| 8% | $10,000 and higher |
| 6% | $7,000 – $9,999 |
As well, this data from the Training Industry paints a clear picture — companies are committed to prioritizing and spending on leadership development because they know the best leaders can help ensure growth and success:
| Year | Global Expenditure | North America Expenditure | Rest of the World Expenditure |
| 2018 | $366.2B | $166.8B | $199.3B |
| 2019 | $370.3B | $169.4B | $200.9B |
| 2020 | $357.7B | $165.3B | $192.4B |
*Note that the slight dip in the training market expenditure in 2020 can be attributed to the COVID-19 pandemic.
Now, let’s look at the latest data from The Business Research Company’s Corporate Training Global Market Report 2023. From $363.26B in 2022, the training market is expected to rise to $380.70B by 2023. With a compound annual growth rate (CAGR) of 4.8%, the global training market is expected to reach $460.04B by 2027.
How Much Do Leadership Development Programs Cost?
Leadership development programs vary in style, format, and activities offered, and the costs largely depend on these. However, it’s important to remember that higher costs do not always guarantee quality and effectiveness. What’s crucial is that your business’ leadership development plan is tailor-fitted to your unique needs, circumstances, and goals.
Depending on your budget, needs, and preferences, you can search for a program designed to provide accurate solutions to your organization’s leadership concerns.
Let’s take a look at some ballpark figures:
1. In-house Leadership Training
In-house training is great for targeted groups with specific needs. You can customize the program based on where the business currently stands and what you aim to achieve given a specific period. Essentially, you can control the plans of action, training styles, desired outcomes, and the profiles of the participants and instructors.
In-house leadership training programs generally cost $2,000 – $4,500 per day, or about $250 – 400 per hour for a group of 15-20 participants.
2. One-on-One Leadership Training
One-on-one training provides opportunities to work closely with senior leaders for a more direct approach to sharing knowledge, enhancing skills, and enriching experiences relevant to leadership. Coaching and mentoring are the usual action plans here, where the coach or mentor can identify the learner’s unique strengths and weaknesses, allowing for a more customized approach to leadership development.
One-on-one training typically costs $250 -$350 per hour, but rates can increase to around $500 per hour if you work with a top executive or a seasoned coach.
3. Distance Learning Leadership Courses
With the latest technological advances and enhancements efficiently accomplishing tasks, online courses are appealing alternatives for many leaders and organizations. They allow you to learn within a convenient time, at your own pace.
Distance learning is perhaps the most inexpensive alternative. Free leadership courses are available online, while at the other end of the spectrum, some programs can cost as much as $5,000 or more.
4. Continuing Education Leadership Courses
Colleges and universities offer leadership training courses, which are great alternatives for your leaders, especially if you’re keen on not disrupting work schedules and dynamics. These courses are generally designed for working professionals, so classes are typically conducted after work hours or on weekends.
Continuing education courses offer undergraduate and MBA programs. Depending on the type and duration of the program, these instructor-driven courses range from $8,400 – $33,000 per year.
5. Experiential Leadership Training
Businesses from around the globe invest billions of dollars annually for leadership development, but sometimes, these investments go to waste because the programs fail to deliver the results they promised.
If you don’t effectively link learnings to specific actions and practical applications, the impact of your leadership development program will be lost.
Experiential training offers a more exciting and impactful approach to leadership development. Participants are exposed to high-stakes environments where they are compelled to exercise critical leadership skills through meaningful experiences.
It’s similar to learning how to drive a car. Did you learn how to drive by watching videos, browsing through articles, and listening to lectures? Of course not! You learned by hopping behind the wheel, revving that engine, and driving away. Sure, your first few attempts were probably hair-raising, not to mention fraught with danger because you likely made numerous mistakes, but that’s how you learned.
As the saying goes, “Experience is the best teacher,” and this is precisely the mantra behind experiential training in leadership development.
At Sancus Leadership, we can customize training programs to address your specific concerns, needs, and goals. We’ll take you to the most fascinating locations where you can exercise crucial leadership skills while you take in the beauty of nature and learn to adapt and react to varying environments and conditions.
Here are some outdoor leadership activities that help with leadership development:
- Camping: teaches collaboration, task delegation, and communication
- Mountain climbing: teaches resilience, strategic thinking, and time management
- Rock climbing: teaches critical thinking, self-leadership, and decision-making
Book us a free leadership call today to learn more about how we can help you develop the kind of leaders your business needs!
Key Takeaways
Leadership development is crucial in business because it allows you to develop the potential of your top talents so they can become the leaders you need in the future. Remember, your business will not remain exactly the way it is today, no matter how successful it is, nor will the market. You need to be capable of adapting to change, identifying opportunities, and executing strategies to stay ahead in the game.
Investing in leadership development today is the best way to ensure your company thrives in a demanding and dynamic business environment.
