Most companies can't measure leadership development ROI because they never built the instrument that would read it: no defined behaviour, no baseline and no follow-up beyond a satisfaction survey. The return is not hidden. It was never measured, and I would say that is the single most expensive habit in leadership development.
I sit across the table from CEOs who have spent six or seven figures on leadership development, and when I ask what it delivered, most of them go quiet. The answer isn't always disappointing, though sometimes it is. There simply isn't an answer at all. Nobody wrote one down. The reason has nothing to do with how slippery leadership is as a concept. It has everything to do with what they decided to track in the first place.
This isn't a hunch about how these programmes usually go. McKinsey researchers Pierre Gurdjian, Thomas Halbeisen and Kevin Lane looked closely at why leadership programmes fail, and one of their four mistakes sits underneath most of the others: companies, in their words, "pay lip service to the importance of developing leadership skills" while carrying no evidence to quantify the value of the investment. Say that back to yourself slowly. The organisations spending the most on leadership are frequently the ones with the least idea whether it's working.
Three of my articles cover this ground from different angles, so here is how they divide it. This one diagnoses why measurement fails. How CHROs prove leadership development is changing business performance gives the evidence chain a CHRO can put in front of a chief executive. How to measure leadership capability across an organisation covers the measurement of capability itself. Read this one first if you suspect your numbers are not telling you what you think they are.
The pattern is easy to recognise. Someone presents a slide with an attendance number and a smiley-face average. Everyone nods. Nobody asks what the programme actually changed, because nobody built the means to answer that question, and asking it out loud would only expose the gap. It's a silent failure, not a loud one. The invoice gets paid, the calendar clears, and the organisation moves on believing something useful happened, because it wants to believe that, not because anyone checked.
The Discipline You Need to Measure Leadership Development ROI
The distinction that gets missed matters more than it sounds like it should. It's not that leadership ROI shows up somewhere down the track and businesses simply haven't waited long enough to see it. It's that most businesses never built the instrument that would read it, whenever it arrived. You cannot measure something you never defined, never baselined and never checked twice. That is a measurement problem, not a patience problem, and treating it as the second lets everyone off the hook for fixing the first.
Ask a typical L&D leader how last year's flagship leadership programme performed and you'll get a satisfaction score. The workshop was valuable, the venue was good, the facilitator was engaging. That tells you whether people had a pleasant few days out of the office. It does not tell you whether a single leader in that room now makes better calls under pressure, delegates work they used to hoard, or handles a difficult conversation any differently six months later. Those are two entirely different questions, and only one of them gets asked.
Why do companies fail to measure leadership development ROI?
In my experience the failure comes down to five habits, and each has a source in the published evidence as well as in practice. The table sets out what each one looks like, why it happens and the repair. Most organisations have at least three of the five.
| Failure | What it looks like | Why it happens | Repair |
|---|---|---|---|
| No named behaviour | The programme goal is 'better leadership' or a topic | A theme is easier to buy than a decision is to define | Name the specific decision or behaviour that must change, in terms two observers would agree on |
| No baseline | There is nothing to compare the end state against | Assessment feels like a cost before the work, not part of it | Assess every participant on the named behaviour before the first session |
| Reaction data only | The report is a satisfaction average | It is cheap, immediate and flattering. McKinsey notes that trainers learn to game it and deliver a syllabus more pleasing than challenging | Treat satisfaction as a design signal and report behaviour change to whoever approved the spend |
| Checking too early | Impact is judged at the end of the programme and finds little | Applying learning takes time, and confidence gained in the room can fade once people try to use it. Geerts warns of false negatives from end-only measurement | Schedule follow-ups at about three months and again at six to nine months |
| Nobody separates the programme from everything else | A result moves and the programme claims it, or does not and is written off | Leadership development runs alongside strategy changes, reorganisations and market movement | Log the other changes, state confidence and report contribution and not sole credit |
Notice that none of the five is about whether leadership development works. They are all about whether the organisation arranged to find out. That is why I call this a discipline problem, and why more patience cannot fix it. If you want the evidence chain that repairs the last two rows, it is set out in how CHROs prove leadership development is changing business performance.
What a Real Measurement System Actually Requires
A workshop is not a system. A system has inputs, a defined output and a way of checking whether the output arrived. Most leadership development spend skips straight from input (the programme) to a feeling (the satisfaction score), with no defined output and no check in between. Building the missing instrument is not complicated, but it does require five things most programmes never bother to put in place, and they have to happen in order, because each depends on the one before it. Skip the first and the rest are theatre dressed up as rigour.
- Name the decision, not the topic: Before you book a single session, write down the specific decision or behaviour this programme needs to change, in language specific enough that two observers watching the same meeting would agree whether it happened.
- Baseline it properly: Use a real assessment, not a gut feel from HR, to establish where each leader is starting from on that specific behaviour. This is the number everything else gets measured against, and it has to exist before the programme starts, not after.
- Build the checkpoint into the calendar, not the wish list: Put a 90-day and a six-month review into the programme's actual budget and calendar at the outset, the same way you'd schedule a project milestone. A checkpoint that isn't scheduled is a checkpoint that will not happen.
- Report the number that matters to the person who signed the cheque: The CEO or CFO who approved the spend should see the behaviour-change number, not the satisfaction score. If the only report that reaches them is a happiness average, you have told them nothing about return.
- Give the result an owner who isn't the facilitator: The person accountable for the result should not be the person who ran the workshop. Otherwise the only number anyone has an incentive to report is the one that flatters the programme.
Why Satisfaction Surveys Are the Wrong Instrument
Run a satisfaction survey and you'll learn how people felt leaving the room. That's a real thing to know, and it isn't nothing. But it measures the wrong layer. It measures the classroom, not the job. McKinsey's research puts a number on why that gap matters so much: adults typically hold onto only around 10 percent of what they hear in a classroom lecture, while learning by doing lifts that figure to nearly two thirds. A satisfaction score taken at the end of a lecture-heavy workshop is measuring the layer of learning least likely to survive the walk back to the desk.
That single statistic should change how you read every glowing feedback form that ever crosses your desk. A high satisfaction score after a classroom-style session tells you the content landed well in the room. It says almost nothing about what survives contact with a Monday morning full of real decisions. If the programme was mostly lecture, most of what was taught is already gone before the behaviour it was meant to change ever gets tested.
This is where engagement and impact get swapped for one another without anyone noticing, and it happens so smoothly that most executives never catch the substitution. Engagement is easy to see: full seats, good energy, warm applause at the close. Impact is harder, because it only shows up later, in a different room, under different pressure, and nobody sent anyone to go and look. A programme can score highly on the first and deliver almost nothing on the second, and the only reason that goes unnoticed is that the second was never measured to begin with.
- Whether the room was comfortable and the schedule respected people's time
- Whether the facilitator was likeable and easy to follow
- Whether the content felt relevant in the moment it was delivered
- Whether people would recommend the session to a colleague
Every one of those four questions is worth asking. But not one of them is the question a CFO actually needs answered before approving a leadership development budget. What follows is what a satisfaction score cannot tell you, no matter how high it climbs.
- Whether a leader delegates differently three months later
- Whether a difficult conversation gets handled with more skill and less avoidance
- Whether the specific behaviour the business needed to change actually changed
- Whether the money was well spent, against any defined standard
10%: retained from classroom lectures: Adults typically retain only around 10 percent of what they hear in a classroom lecture, even after very basic training sessions, per McKinsey's 2014 article on why leadership development programmes fail.
~2/3: retained from learning by doing: The same article reports retention of nearly two thirds when adults learn by doing, which is the layer most satisfaction surveys never touch.
How can you measure leadership development when a perfect ROI number is out of reach?
McKinsey's authors do not leave the problem at diagnosis. They describe three approaches, and I find all three more useful in practice than a single return figure. The first is to assess the extent of behavioural change, perhaps through a 360 degree feedback exercise at the beginning of a programme followed by another after 6 to 12 months. The second is to monitor participants' careers after the training: how many were appointed to more senior roles one to two years later, how many senior people went through the training, and how many left. They describe a global bank whose managers analysed recent promotions and showed that candidates who had been through a leadership development programme were more successful than those who had not.
The third is to monitor business impact, especially when the training is tied to real projects. McKinsey describes American Express quantifying the success of some programmes by comparing the average productivity of participants' teams before and after training, and a nonprofit that sought the revenue increase attributable to its programme by comparing a trained group with a group that had not been trained. None of those is a perfect experiment. Each is a defined measure, taken before and after, with a comparison, and that is the discipline I mean.
On timing, the academic and practitioner guidance agree. Jaason Geerts's 2024 framework advises collecting data at the outset, throughout, at the conclusion and six to nine months afterwards, and a consultant quoted in SHRM's 2025 article advises waiting at least nine months after training before asking participants whether they applied it. A checkpoint that is not in the calendar and the budget from day one will not happen. If your last programme has no baseline, the honest move is to say so, set one now for the next cohort, and refuse to retrofit a number.
What do the headline ROI figures actually tell you?
You will meet confident returns, and it helps to know how much weight to give them. A 2023 survey of 752 professionals carried out by the training platform New Level Work reports an average return of $7 for every $1 spent on leadership development, within a range of $3 to $11, and SHRM's 2025 guidance repeats the average. The same report says 56% of the companies surveyed had calculated, or were calculating, the return on their programmes.
I read that finding alongside McKinsey's, and I think both can be true. A company can calculate a return from survey estimates of revenue, retention savings and internal promotion savings and still hold no measurement of whether a named behaviour changed. The figures are built from survey responses and come from a vendor in the field, so I treat them as evidence of what the market now expects and not as a benchmark to put in front of a finance partner. What they do tell you is that the question your CFO is about to ask is a common one.
The arithmetic itself is simple. SHRM gives it as total tangible benefits minus total programme cost, divided by total programme cost, multiplied by 100. The hard work is in the first term, and it only exists if the baseline and the follow-up were there to produce it. Patti Phillips of the ROI Institute, quoted in the same SHRM article, makes a point worth repeating to a nervous sponsor: a negative result means the programme needs to be improved, which is the information you were trying to get.
The Real Cost of Not Measuring
This is where the cost actually sits, and it is bigger than the wasted training budget. A leadership function nobody can measure is a leadership function nobody can defend. When the next downturn arrives and someone finally has to justify the line item, "people said they enjoyed it" will not survive that conversation. I've written before about what actually causes leadership development programmes to fail, and a missing measurement discipline sits near the top of that list every time I've gone looking for the real reason.
In my experience boards are starting to ask the question directly, including boards that used to wave the line through. A board that once approved a leadership development line item without much scrutiny will ask what it bought, in the same breath it asks about marketing spend or a technology rollout. An L&D leader who can only answer with a satisfaction average is not just under-prepared for that meeting. They are describing a function the business has no real way to trust, at exactly the moment trust is what's being tested.
The same discipline applies to individual coaching spend, not just group programmes. When I've walked through the real numbers behind executive coaching ROI, the organisations that could actually answer the question had done the unglamorous work upfront: a baseline, a named behaviour, a follow-up that wasn't optional. The ones that couldn't answer it had skipped straight to the workshop and hoped the number would show up on its own.
If you want the fuller playbook for tracking capability at organisation scale rather than programme by programme, I've laid that out separately in how to measure leadership capability across an organisation. It's the difference between running one honest experiment and building a standing system that keeps reporting the truth long after this year's programme is finished. That's also the real dividing line between a leadership programme and what I'd call evidence-based leadership development: one runs on hope, the other runs on a number you checked twice.
It's also why the baseline comes first in the way I am designing CapabilityAI, before a single session gets booked, and why leadership assessments exist as a distinct, repeatable instrument in their own right, rather than a one-off survey attached to the end of a workshop.
The Question to Ask Before the Next Programme
Before you approve the next leadership development spend, ask one question first: what will we measure, and against what baseline? If nobody in the room can answer that in a single sentence, you are not funding leadership development. You are funding a pleasant couple of days out of the office and calling it strategy.
Fix that, and everything downstream gets easier. You stop guessing whether the programme worked. You stop defending a budget with a feeling instead of a number. And the next time someone at the top of the business asks what leadership development actually bought the company, there's a real answer waiting instead of a long silence. The only leadership investment worth defending is one you started measuring before you ever needed to defend it.
Write the measurement sentence before the next budget is approved
Before the next leadership development budget is approved, ask the sponsor to complete one sentence in writing. By the end of the programme these leaders will make this specific decision differently, and the result will be checked against this baseline at the ninety-day and six-month reviews. If the sentence cannot be written, hold the money. If it can, name the person who will receive the behaviour-change number rather than the satisfaction average.
A checkpoint also needs a routine that outlasts the event. The team collaboration and effectiveness framework is one example of a staged, written protocol designed to outlast a single afternoon, which is the kind of follow-through a ninety-day review depends on.