What Leadership Development Returns

THE SPEND

DDI puts global spend on leadership development at more than $370 billion a year, with roughly $170 billion of that in North America. It is an industry estimate rather than an audited figure, and what counts inside it varies: coaching, e-learning, formal programmes, offsites. Other analysts scope the market far smaller, so treat it as an order of magnitude. Leadership development is one of the largest lines in corporate training and nobody disputes that.

What comes back is harder to establish.

WHAT THE BUYER SAYS

McKinsey surveyed more than 500 senior executives for "Why leadership-development programs fail" (McKinsey Quarterly, 2014). Fewer than one in ten believed their leadership programmes had significant impact. The same piece reports that only 7 per cent of senior managers polled by a UK business school thought their companies developed global leaders effectively.

Korn Ferry's leadership development survey, drawing on around 7,500 organisations, found 53 per cent rating their return as fair to very poor.

Both are self-reported, and perception is not measurement. A programme can work and be underrated, particularly on a short horizon. These are the people signing the invoices, though, and most of them do not think they are getting their money back.

THE TRANSFER PROBLEM

The gap between what people learn and what they do is the oldest finding in the field, and the most widely misquoted.

You will see it written that only 10 per cent of training transfers to the job, usually credited to Baldwin and Ford's 1988 review in Personnel Psychology. That attribution is wrong. The 10 per cent came from Georgenson in 1982 as a hypothetical illustration, Baldwin and Ford quoted it as an estimate, and everyone since has quoted them. Ford and colleagues went back and traced it in 2011. There is no study behind the number.

What the evidence does support is that a substantial share of training does not convert, and that what does convert decays. Saks found around 40 per cent of trainees failing to apply anything immediately, roughly 70 per cent faltering within a year, and about half of training investment producing no measurable improvement. Arthur and colleagues put the loss of acquired learning at somewhere between 52 and 92 per cent within twelve months, which is a range wide enough to tell you how unsettled the measurement is.

Transfer also varies with design. Reinforcement, manager support and follow-through all move the number. The honest summary is that the problem is real, long documented, and its exact size is genuinely contested.

WHY IT LEAKS

Leadership development works on what a leader knows. It builds awareness, vocabulary, frameworks and skill, and under normal conditions that holds.

Under pressure, something older takes over. The behaviour a leader falls into when a deal is slipping or a board is unhappy was learned long before the training, and it sits in implicit memory rather than in anything a course can reach. Those responses run without passing through conscious deliberation. Much of that literature comes from clinical and trauma research, so applying it to leadership behaviour in organisations is an informed extrapolation rather than a direct finding, and we would rather say so than pretend otherwise.

It explains the pattern in the survey data. A leader can know exactly what good looks like, describe it accurately in the room, and still do the other thing on Tuesday afternoon, because knowledge was never the constraint.

WHAT IT DOES NOT PROVE

Programmes are not useless. McKinsey's own argument is that they fail for four avoidable reasons and should be run better, which is a different conclusion from ours and worth reading on its own terms.

The transfer research does not say training is worthless. It says most of it does not convert without conditions that most organisations never create.

And the spend figure is an estimate. Anyone quoting it to two decimal places, us included, would be inventing precision that does not exist.

WHERE WE SIT

SSC works on the reflex rather than on the knowledge. One ninety-minute session, one pattern, the one carrying the weight.

Our own evidence is thinner than the evidence above and we are not going to dress it up. We hold named case studies and client testimonials. We do not yet hold cohort data, because we measure at T0, T2, T6 and T12 and the cohort is young. When we have it, it goes on this page whichever way it reads.

So the claim is this. The industry's own numbers show a large spend, low perceived return, and a transfer problem that has not shifted in forty years. We think that is because the material sits somewhere the methods cannot reach. We are testing whether going at it directly works better.

SOURCES

DDI, Global Leadership Forecast and related ROI research ($370+ billion global estimate).

Gurdjian, Halbeisen and Lane, "Why leadership-development programs fail", McKinsey Quarterly, January 2014. Korn Ferry, global leadership development survey (n approx. 7,500).

Georgenson, D. L., "The problem of transfer calls for partnership", Training and Development Journal, 1982 (origin of the 10 per cent estimate).

Baldwin, T. T. and Ford, J. K., "Transfer of training: a review and directions for future research", Personnel Psychology, 1988.

Ford, J. K. et al. (2011) on the provenance of the 10 per cent figure.

Saks, A. M. (2002) on transfer rates and decay. Arthur, W. et al. (1997) on loss of acquired learning over twelve months.