Written By: Rich Mesch
September 7, 2022 – 4 min read
Businesses spend billions of dollars a year on leadership development. In particular, they spend billions of dollars on developing sales leadership. Few would question whether leaders drive value for the business; they teach, organize, and even shape company culture, but how do you measure the impact of leadership development? Given the level of investment, isn’t it reasonable for the business to expect a return?
Measuring the impact of leadership development can be confusing and mysterious, but it’s not that different from measuring other business impacts. The trick is knowing what to measure.
This may seem obvious, but a lot of organizations miss it. Leadership development is about changing behavior, and behavior is observable. So, before you start measuring for increased revenue, measure whether your leaders are actually using the behaviors they learned. If the answer is “no,” then none of your other metrics will matter.
It’s hard to know if things have improved if you don’t know where you started. Begin any measurement initiative by measuring where you are now and then set a baseline. Every measurement you do after that will be much more meaningful because it’s easy to demonstrate how your leadership efforts moved the needle.
Leadership is more than a good idea; it’s a tool the business uses to achieve its goals. Many organizations measure their leadership development effectiveness through participant satisfaction surveys (like smile sheets). While that data is useful, it’s not meaningful to the business. How will leadership development drive the priorities of the business?
A lot of organizations focus too quickly on the big picture metrics. They ask things like “Are we making more money?,” “Are we being more innovative?,” and “Are we controlling costs?” These are valid metrics, of course, but it’s difficult to measure them in a meaningful way in the short term. If you expect that you’ll run a leadership class and then see a significant increase the next month, you’re going to be disappointed — it doesn’t work that way.
Leading Indicators are metrics you can measure in the short term, so you can determine if you’re on the right path. Start with the basics: Are leaders actually using the behaviors they learned? If so, are they doing it consistently? Are they doing it well? What is the immediate impact? Are problems being solved?
If you don’t like your leading indicators, odds are good you won’t like your lagging indicators either.
It’s tempting to measure “Is revenue up and cost down?”, but focus instead on Intervening Variables — those aspects of the business that drive revenue and cost control. For example:
This kind of measurement can build a causal chain that demonstrates that leadership development improved the culture and hygiene of the business, leading to improved business results.
Measuring the impact of leadership development can be challenging, but it doesn’t need to be mysterious. Following a few thoughtful, structured steps can allow you to demonstrate value to the business.
If your sales leaders aren’t growing or you’re having difficulty finding ways to establish a good candidate for sales leadership, consider reaching out to a professional organization like PDG.
Sales leadership is a business skill just like building spreadsheets — it can be taught. Contact us if you’re interested in what we can do to turn your sales leaders into sales champions, or read our ebook, The Future of Sales Leadership, to learn how to prepare them for what’s next.