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When an organization develops its leaders, it increases their ability to contribute more to the organization (i.e., an improvement in human capital). Essentially, leaders who perform better after a development activity are more valuable for the organization, although their salary levels remain about the same.
Normally, the amount of leaders considered above average (i.e., above the 50 percent mark in leader performance) is 50 percent.Organizations using DDI’s development systems,however, find that 75 percent of their leaders are above average. Thus, the DDI client organizations are realizing improvements in leader performance of 25 percentage points.Leaders participating in development programs are 25 percent more capable than they were before the development activity.
To be conservative, we can say that there is a ceiling on leader performance and that a leader cannot possibly improve performance by 100 percent. Past studies have shown that there is
about a 40 percent deviation in performance for a given role. The best performers in a group are 40 percent more valuable than the average;the worst performers, 40 percent less valuable.
If a leader is 25 percent more valuable than he or she was before development, the total return can be calculated as follows. The newly developed leader achieves 25 percent of the
possible $24,000 improvement in performance.Therefore, the average improvement in value for a leader developed through DDI systems is $6,000 (.25 x $24,000). If we consider that the standard deviation in performance improvements from DDI programs is about 14 percent(11 percent to 39 percent), we can express
possible improvements as a range of $2,640 to $9,360. To calculate a true ROI, however,organizations must also consider the costs for developing leaders. Nevertheless, the benefits of improved leader skills are readily apparent.
Documented Results
Over its many years of designing and delivering leadership development solutions, DDI has repeatedly documented its ability to produce behavior change in leaders. This summary presents a cross section of studies and results from a broad range of clients. In addition to this summary, DDI has many other examples
of behavior change. Studies conducted by non-DDI researchers also have clearly established the effectiveness of behavioral modeling for producing change.