We have all likely heard the saying, “People don’t quit companies, they quit bosses.” Development Dimensions International, a leading researcher in the corporate world, estimates that one poor leader costs a company more than $126,000 a year due to low productivity, turnover and negative staff morale.
When we look into the reasons for poor leadership, it often can be attributed to lack of readiness and training to be effective in a new role. Many employees are promoted based on their technical skills or performance in their current roles, not necessarily their ability to lead. But leadership requires a different set of skills, such as emotional intelligence, effective communication, conflict resolution and team motivation. Without proper training, new leaders may find themselves unprepared for these challenges.
Investing in leadership development is a strategic move that can yield substantial financial benefits for organizations. Companies offering effective leadership development at all levels are 2.7 times more likely to be among the top financial performers in their industries (Global Leadership Forecast, 2023). Further, institutions that invest in both organization-centric and person-centric training opportunities have significantly stronger bench talent for succession.
Professional sports teams regularly develop their bench strength, as injuries and trades can happen without notice. Movement between companies is also common in the corporate world, but organizations often fail to develop employee bench strength in the same manner. Only 12% of companies report confidence in the strength of their bench.
Organizations that invest in development and succession plans show significant increases in employee engagement and retention; they are five times more likely to prevent employee burnout, and three times more likely to be among financially top-performing firms. This is because engaged employees are more productive and contribute positively to the organization’s bottom line.
Gallup’s research indicates companies with highly engaged employees outperform their peers by 147% in earnings per share. Leadership development helps managers and executives learn how to engage their teams effectively, fostering a culture in which employees are committed to their work and the goals of the company.
Several organizations in Southwest Florida are role models for investing in leadership development. In 2022, the Lee County Clerk of the Circuit Court & Comptroller developed “Clerk University,” a multiple-year program to develop skills including conflict communication, emotional intelligence and change management. With more than 60 leadership-level employees at the clerk’s office, it has seen 0.3% voluntary turnover year over year, which can be partially attributed to its investment in the development of its leaders.
Lee Health, Southwest Florida’s largest employer, also invests significantly in its bench by providing both in-house and external training opportunities. This investment has resulted in 83% of promotions to leadership coming from within the organization in fiscal year 2024.
Not all area businesses have the financial resources to develop in-house training — but despite financial limitations, organizations can take advantage of a wealth of training and development opportunities including freely available workshops through chambers of commerce and local schools, as well as web-based training available on LinkedIn and Coursera. The key is to make these opportunities intentionally part of a corporate learning plan and to recognize and reward individuals who seek to develop their skill sets.
Investing in leadership development does not just make good sense, it makes good cents. It is not merely a cost but a strategic investment that yields significant financial returns. Enhanced performance, improved employee engagement and retention, better decision-making and a competitive edge are just a few of the many benefits that contribute to the overall financial health and success of an organization. By developing capable leaders, organizations are better positioned to navigate challenges, seize opportunities and achieve sustained growth and profitability.
— Meagan Baskin is an associate professor in the Lutgert College of Business and director of the Southwest Florida Leadership Institute at Florida Gulf Coast University.
