Your highest‐yielding (under‐capitalized) asset: the ROI of leadership

Abstract

Purpose

Leaders have a significant impact on a company's return on investment (ROI), although one that is not easily measured by traditional means. The article explains the benefits of developing leaders and explores cost‐efficient ways to wisely shepherd these “hidden assets” who contribute directly to the bottom line, thus capturing the ROI in developing leaders.

Design/methodology/approach

This viewpoint article is based on the authors' 40 combined years of experience as executive coaches and leader mentors. The article includes real‐life examples of how leadership development benefits the bottom line.

Findings

The article discusses ways organizations might measure the value of their leaders as related to ROI, explores ways to describe direct contributions to the bottom line that only leaders make, and offers cost‐effective ways to build the “leader bench” and ensure viable succession through mentoring. Leadership development brings companies to a place where ROI measures the company's real value to all its stakeholders.

Practical implications

Companies must look beyond quarterly results and focus on their leaders' long‐term impact on ROI, then implement programs – such as a professionally guided leadership mentoring process – to develop leaders and ensure that a deep “bench” of leaders is available.

Originality/value

The article's value lies in its exploration of the significance and necessity of leadership development for an audience of top organizational executives, whether they are in a position to initiate or take part in leadership development.

Citation

Shenkman, M. and Gorbaty, B. (2007), "Your highest‐yielding (under‐capitalized) asset: the ROI of leadership", Business Strategy Series, Vol. 8 No. 4, pp. 277-282. https://doi.org/10.1108/17515630710684321