Leadership development has always been one of my strong suits, beginning a decade ago from when I was an Army Officer to my current entrepreneurial pursuits. I’ve always believed in supporting and equipping leaders to handle the various challenges and obstacles that will come their way. For me, not investing in leadership development is akin to not keeping abreast of technology — you won’t go far if you insist on just settling for the good old ways.
Statistics reveal alarming facts about the state of leadership development in the business industry. There is much work to be done, especially if business owners are keen on equipping their best leaders to skillfully lead the team through trials and toward success.
Take a look at some of the most interesting and revealing statistics I’ve come across about leadership development. You’ll see why leadership development is such a crucial aspect in any organization and why business owners must invest in developing their leaders at every level of their careers.
What Leadership Development Is All About
A business’ success depends largely on its leaders. A leader’s knowledge, skills, and experiences will be instrumental in ensuring the team continuously functions as efficiently, seamlessly, and productively as possible.
Not everyone is cut out to be a leader. In fact, only 10% of people are natural-born leaders. However, this doesn’t mean only 10% of the population is eligible for leadership. The truth is leadership can also be learned.
This is where leadership development comes in. It’s an excellent tool for further enhancing a natural leader’s inherent skills and enriching their knowledge and experiences in leadership. It can also be utilized to develop driven individuals and aspiring leaders so they can reach their full leadership potential.
What Happens If You Don’t Invest in Leadership Development
One big mistake business owners make is not investing early in leadership development. Usually, they wait until something goes wrong before they take action.
Keep this in mind — for every year you delay leadership development for your business, you cut about 7% of your annual profits.
As the saying goes, “Prevention is always better than cure,” and this holds true with business leadership because finding solutions to problems (which are entirely avoidable, by the way) will leave you at a crossroads where success isn’t always guaranteed.
On the other hand, if you invest early in leadership development, you prevent these problems from arising and potentially irreversibly damaging your company.
Why Leadership Development Is Good for Your Business
Good leadership plays a significant role in practically all aspects of a business. This is why the most successful business owners invest in leadership development since this is a strategic way to ensure their companies are always in good hands.
Take a look at some of the most appealing benefits of having a good leadership development program up your sleeve:
- Boosts employee productivity. Effective leaders have the power to increase each of their team members’ productivity by as much as 11%. The bottom line is employees feel more eager to contribute to the team when they like their leaders.
- Reduces employee turnover. Surprisingly, 65% of employees would much rather have a change in leadership when they are unhappy with their manager than be given a pay raise. Most employees leave the organization to seek better leadership when this desire is unmet.
- Ensures a healthy leadership pipeline. Tomorrow’s leaders are today’s millennials, who comprise 49.7% of the global workforce in 2020. 52% of this demographic consider career advancement a top priority at work. Investing in early leadership development ensures they adopt the right mindset and acquire the necessary knowledge and skills early in their careers.
- Individual enhancements. Leadership development participants were found to have a 25% increase in knowledge and skills. When they returned to the workplace to apply their learnings, they were observed to deliver a 20% increase in overall performance, resulting in a more driven, skilled, engaged, and productive workforce.
Leadership Development Statistics
A study by Zipdo revealed that 56% of managers have yet to engage in proper leadership training. This is quite alarming since these leaders are at the helm of businesses, responsible for shaping work environments, and influencing productivity and profitability.
This highlights the urgent need to provide adequate and continuous learning for all managers at different levels in their careers. This is the only way for businesses to aim for excellence and raise the bar for success in the leadership arena.
Here are some interesting facts and revealing statistics on leadership development worth looking into:
Business Impact
Leaders play significant roles in various business functions. They determine which goals must be prioritized, how tasks are accomplished, and how crises and conflicts must be managed. Their skills, knowledge, and experiences must thus be developed and enhanced at every leadership stage so they can be well-equipped to handle whatever comes their way.
Unfortunately, based on statistics, even if 83% of businesses believe in developing their leaders at every level, only 5% are actually doing so.
Here are some compelling reasons why you must invest in developing your leaders at every level:
- Inadequate leadership. 77% of businesses believe their leaders lack the skills and know-how to be truly effective at what they do.
- Unrealized potential. 69% of employees say they will perform much better at their jobs if they feel more valued and recognized. Most of these driven individuals are eager to move up the corporate ladder and take on leadership roles in the organization.
- Business profitability. When employees are motivated and engaged, they strive harder to achieve their full potential and contribute more significantly to the business’ success. Companies with engaged employees are 22% more profitable.
Proper Implementation
In the US alone, approximately $160 billion is spent annually on leadership development. This accounts for almost half of the $366 billion spent globally each year. Leadership development can get expensive, so it’s crucial that it is accurately implemented and fully maximized.
A solid leadership development plan will help your business retain its best people and, at the same time, attract top talents from the industry. When it comes to employee retention, 55% of CEOs believe developing future leaders is among their top challenges. However, 63% of millennials — the business industry’s emerging leaders — think they’re not receiving adequate support from their managers when preparing for leadership roles.
This apparent incongruence results in millennials feeling undervalued and unappreciated, prompting them to look for better opportunities elsewhere. This leads to unhealthy, unreliable leadership pipelines for businesses that fail to invest in multi-level leadership development.
It’s not enough to simply invest in a leadership development program. As a business owner, you must ensure that the best techniques are accurately implemented, and your program is tailor-fitted to your organization’s and emerging leaders’ unique needs.
Tapping the Right People
A Gallup study found that companies fail to tap the right people for the job 82% of the time. This alarming statistic shows that many businesses promote unsuitable individuals to leadership roles for the wrong reasons. This results in subpar leadership, employee demotivation and dissatisfaction, and inefficiency in the workplace.
Furthermore, bad leadership can lead to financial losses. If unchecked, this could lead to disastrous consequences for a business. In fact, 1 bad leader can cost an organization approximately $126,000 a year because of workplace conflicts, high employee turnover, and low productivity.
The key is to tap the right people for leadership roles because they will be instrumental in a business’ growth and success. Good leaders also give an organization an edge over the competition.
Final Thoughts
Leadership development should be one of your secret weapons in ensuring your business goals are met, your employees are motivated and productive, and your business thrives amid a dynamic, competitive environment.
We at Sancus Leadership are excited to share our expertise in crafting robust leadership development programs tailored to your business’ unique needs. Book a free leadership call with us today so we can start uncovering ways to develop your leaders into the ideal trailblazers for your business!
