What’s the Real Cost of Leadership Development?

Perry Holley:
Welcome to the Maxwell Leadership Executive Podcast, where our goal is to help you increase your reputation as a leader, increase your ability to influence others, and increase your ability to fully engage your team to deliver remarkable results. Hi, I’m Perry Holley, a Maxwell Leadership facilitator and coach.

Chris Goede:
And I’m Chris Goede, executive Vice President, Maxwell Leadership. Welcome and thank you for joining. As those that have been listening for a while, you know, everything that Perry and I talk about is based really off of the methodology of the five levels of leadership. If you’re new, then I’d encourage you to go back. Well, maybe not to episode one, because that was like 400 episodes ago.

Perry Holley:
It was eight years ago, and it wasn’t very good.

Chris Goede:
But I would encourage you to go to MaxwellLeadership.com/ExecutivePodcast, and there you can submit a form and ask some questions, leave some topics you love for us to talk about. More importantly, if you or your team are looking for a leadership journey, we would love to be able to help you with that. Well, today’s topic is what’s the real cost of leadership development? Super excited about this because for me and, you know, we talk about this is we look at it and we go, well, what’s the real return on investment?

Perry Holley:
Yeah.

Chris Goede:
Because we are then answering that question to executives around the world. But I think executives as well as myself and yourself have answered this question. What is the real cost of leadership development when we’re leading teams and trying to develop our people? And so we’re going to talk about that. And I know a lot of leaders out there are thinking about their finances that are responsible for that P and L and reviewing budgets and all kind of stuff. And then where does leadership development fit in that? So what we’re going to talk about is we’re going to unpack a little bit of this is one of your longtime friends, co workers, some research, incredible leadership guys, Dr. Jack Zanger and Joe, Dr. Joe Folkman, and what they have actually discovered throughout this report. And you brought it to me and said, hey, let’s talk about that.

Chris Goede:
So we’re going to dive in. We’re going to talk about what their conclusion is. And it is, I love this. I’m super excited about. Leadership development doesn’t cost money. And so it actually saves money and not just a little. And so, man, I’m super excited to dive in because this is what you and I are in conversations about every day in the rooms.

Perry Holley:
Yeah. And I, I’m always following Jack and Joe and their work. And they, if you’re not familiar with Zinger Folkman. They do a lot of surveys and they do a ton with 360 assessments and what, what followers are saying about leaders and where the gaps are. So it’s really. They have some great stuff and Jack’s books and Joe’s books are fantastic. But the study here I thought was interesting. But they studied across organizations for a couple of decades looking in to see what these.

Perry Holley:
They tracked leaders in three year cohorts and then measured the effectiveness of these leaders over time. So I thought that was significant. And what they discovered was what we normally would talk about at level four. Level five. Level four of the five levels of leadership and that we call it the leader’s greatest return is level four is about people development and how leadership compounds when you get to level four because it’s more than than you. And they saw that a steady increase in leadership capability across the entire company once. Not, not just in the senior leaders and not just the managers but everywhere. I thought okay, that’s, that’s significant when that kind of investment being made.

Chris Goede:
Rising tide raises all boats. Right. The simple thing. And so and John says everything rises and falls on leadership. And I love that you bring the reference back to the Level 4 reproduction. This is something that you can’t do unless you’re developing yourself first and you will attract people like you. And so if you’re not raising your level level of leadership and then you’re not reproducing yourself, then you’re in for a world of hurt when it comes to production because you’re just going to be doing it yourself and not like Perry said with others around you. And so in the research that they did they actually said hey, this is going to be a trickle down effect where not only you invest in yourself but then you start reproducing and developing other leaders and the entire organization is going to benefit from it.

Chris Goede:
They also go on to say leaders that are in the top 10% produce strong teams. Leaders that they surveyed that were in the bottom 10%, they produced weak teams. And so leadership effectiveness just doesn’t stay contained in one department. It’s actually going to go across each one of our. Your organizations. I think about Maxwell Leadership we have multiple different verticals and and you look for like where are those breakdowns? We just did an assessment and looking into culture and I think you see this in downward to the teams, maybe even to the peers, maybe even upward to senior leadership if you’re not investing in leadership development.

Perry Holley:
Yeah, well it’s funny, it kind of Reminded me of the law of the lid, which law? Number one of the 21 law, laws of leadership. And saying that your, Your ability to lead or your ability to influence is a lid on your effectiveness, how effective you’ll be. I ask you a question. I was on a call this morning with a leader and he. He said, Perry, he’s. He’s really been big on to personal growth. He’s really. I was really admiring his level of discipline marvel.

Perry Holley:
It kind of rivals ours. And I thought he really poured in it, Pouring, pouring into himself. But he said, I’m going to stop for a bit because I’m not seeing. I think I’m doing too much and I’m not applying enough. And I. He’s asking for my permission to. Is it okay for me to stop, not do as much personal development for a first season? And I, I think about it. What would your answer be to that? I.

Chris Goede:
Well, I have a point of view. Perry, what do you think? No, I’m just kidding. I know where you’re going, man. I think that’s a big. It’s a big challenge for me because I think we have more. We have access to more content now than we’ve ever had at our fingertips. And the question is, then, what are you doing with it? And I struggle with that because you’ve challenged me to, you know, read and to listen on audible and to podcast as much as you can. So I have a system in the morning.

Chris Goede:
And I was just thinking about this. A couple days ago, I got done reading. I went back and re. Listened to a book that. That by Dan Martell and buy back your time trying to figure out my schedule and everything else that you tell me I need to fix. And then I’m like, okay, that’s great. Yeah, I remember those. Some good nuggets, but did I write them down? Did I apply it? And so I think there’s something there.

Perry Holley:
Yeah, Yeah, I do, too.

Chris Goede:
It’s like, how do you consume at a pace that allows you to not apply everything, but apply a nugget or two that you’re learning before you keep going? I, I don’t want to say like that, though, because then people like, well, I haven’t applied that principle, so I’m not gonna. Yeah, yeah, I’m gonna do away with your irreducible minimums that you talk about. So it’s a great question, and I haven’t answered it for you because I’m talking all around it because I’m convicted by that.

Perry Holley:
But you’re on the right path. Is it well in the right path? My point of view is that yeah, let’s just reading. To be reading and pounding through content is not the goal.

Chris Goede:
Correct.

Perry Holley:
And so what is the goal?

Chris Goede:
What’s the nugget?

Perry Holley:
Yeah, So I said, I said what’s your biggest challenge you’re facing right now? He goes, I’m hiring a bunch of young people that find the job challenging and it is challenging and I don’t think that they’re sticking with it. And I thought how aware are you are up to speed? Are you on the, on gen Z and what does motivate them and what does drive. He goes, not really. I go, what if you focused your reading, your personal growth on an area that you need to apply and then apply it and don’t. And let everything else go for a minute. You don’t have to be, you know, doing all the things we do. I think you and I read kind of widely in space with product productivity and management and time, you know, time management, productivity. I don’t use it all.

Perry Holley:
So getting more specific on what are you actually trying to learn and applying it in your day to day and see if you can get some growth from it. He seemed relieved and, but he also said, you just identified an area I have no, I need to dive into. What do you recommend? And then I was able to give him something to, from some of our resources to look into. And now he’s going to, you know, on our next call he’s going to come back and tell me how he’s repositioning his message to young people to help them, not, not cast down on them. You’re a bunch of weaklings. No, he, they have a lot to add and he wants to draw it from them and help them and say I never thought of it that way. Yeah, I said build bridges, not walls where they’re at.

Chris Goede:
Yeah.

Perry Holley:
So.

Chris Goede:
Well, I love that. Just personal application. Really quick even for me thinking about what you just said is everything that we do listen to because it is pretty wide. I should be asking myself this question of, of where I’m at right now as a leader. What am I Gonna, what’s the one nugget I’m gonna take away from this next 45 minutes of content and then, and then work to apply that that day.

Perry Holley:
It kind of goes to this lesson is that are you, you the leader obviously developing yourself because you can’t give what you don’t have. So are you pouring into others? You can’t pour into them if you’re not pouring into you so you need to have something. But I don’t think we need to go as broad and as you know, thick and deep as we think we need to. No, I want to be targeted in that. But then for you leader, are the people on your team overwhelmed and they’re not doing anything. So this is where this leadership development comes in. And another thing that Zinger Folkman tied to this was how they tied leadership development and this compounding to employee engagement and saying that the leaders that were investing in leadership development at all levels in the organization, we’re seeing much higher levels of employee engagement. And those that didn’t do much were very low.

Perry Holley:
So they had a distinct finding about. And we always talk about employee engagement. Rowing in your boat.

Chris Goede:
Yeah.

Perry Holley:
Or who’s trying to sink it or watching the scenery go by. I thought was interesting that they can tie leadership development to giving me more purpose and drive and engagement in my work.

Chris Goede:
And we we’ve chatted about this in the past where there’s research out now saying people are staying or joining companies. Now it’s in the top three. If you’re presenting them a personal development plan for them, not a career path that’ll be hopefully a byproduct of you being developed. And when you and I early on we wouldn’t have thought about a development plan when we were taking jobs, right. We were like, hey, what’s it pay? How much time do we have off and where, where’s this at? Right. And now they’re saying, oh it’s so important to them. And, and that’s why I think it even drives that engagement level because people are looking for that. Well.

Perry Holley:
And you, I didn’t know the top three stat. You just gave way to bring data. I like that when you do that. It’s really impressive. Thank you.

Chris Goede:
Don’t double check my data.

Perry Holley:
Yeah, you show me the. What’s the source went on that. Yeah, that’s right. But I can confirm what I’m hearing on coaching is we just built, Andy and I were just building a six lesson coaching, six month coaching process for a group and we said we were working with the CEO and he said the top number, the one thing I want is how to have an individual development plan for everybody on the team. And so, so I have a definite point of view on that. So we’re building that into the first lesson I’m hearing. I was with my son and his business in Texas last week. He said how do you do a development plan? I thought what’s going on here? It really is Rising to the top is that if you’re not developing people, they are.

Perry Holley:
There’s so much distraction today and there’s so much anxiety and stress in the system. They’re feeling overwhelmed. And so how can I help you with that? Let’s grow.

Chris Goede:
And I think too man, real quick and we’ll keep moving. In addition to what you’re doing and the work that you and one of our other executive coaches not only having a development plan, but then what, what is, how do you apply that development plan? Right, like based off the question, your coaching call and, and getting to the point of that application. Well, in addition to the engagement and what they were looking at, they also looked at retention and they asked about, hey, are, are you thinking about quitting to employees? And interestingly enough, the bottom tier leaders, 35% were considering to leave. Leaving. If you were a top tier leader, then they only had 7% that were considering that five times higher turnover is under poor leadership. That is a statistic. That is true and we see it. And then you think about the replacement cost.

Chris Goede:
This is actually one of the things we talk about with decision makers when they’re considering the development costs because a lot of them don’t tie those two things together. They don’t tie, you know, the turnover and what it’s costing them versus what they, if they invested them, invested in them to save that turnover, what they would end up saving. And so that turnover could be anywhere between 50% up to 200% of the salary of that individual to be able to, to replace them. And that doesn’t take into consideration historical knowledge. You know, like, I mean, you and I, we’ve been around here a long time. There’s a, there’s a value to that in this podcast studio. There’s, there’s relationships with cl, project delays that will get put on hold because of that, that turnover. Even morale of certain leaders leave or individual contributors leave.

Chris Goede:
There’s going to be a culture and a morale hit. All of those come into a turnover that I don’t think people put into the, the picture of trying to lower

Perry Holley:
that, that turnover percentage and just carrying on with that. The discretionary effort is the part of engagement where people can choose do I want to give you my extra energy or I don’t want to hold that for something else. And Jack and Joe and there’s research, the poor leaders, the people that wanted to hold back that discretionary effort, that only 18% of people gave extra effort. But if you had that engagement level, if you had that development going on that 71% were willing to give more thing about quiet quitting is happening when you’re not developing, and full engagement is happening when you are. And they sound a productivity increase of 20 to 40%. I know a lot of leaders that would like to get 20 or 40% more from their team. I see your hand up, sir. Yeah.

Chris Goede:
If you’re not watching on YouTube, I just raised my hand when he said, I see a lot of leaders that would want more of that. You know, this is something we talk about not only leadership development, but Perry and myself and our team, we do a lot of work on culture. And matter of fact, we have the privilege of speaking into our, our culture here at Maxwell Leadership. And that’s, that’s one of the things that you need to be thinking about is when you’re thinking about investing and developing your leaders, because great leadership will create its rising tide. It’s a, it’s a pull for the other members on the team. People will want to work there. They’ll feed that, feel that they’re engaged. That’s going to help drive that.

Chris Goede:
Recruiting becomes easier, retention improves. We just talked about that. And then your brand, your what you’re known for, the culture of the organization, people are going to want to be a part of that and it’s going to grow. And I love this last statement you put in my notes. Culture is not created by mission statements. It’s created by the leaders inside the organization. And so if you’re not developing them, what does that say about your culture?

Perry Holley:
I know, man. They’re watching you all the time. Yeah. Just to. Before I let you wrap it up, that I just. What I took away from this and why I brought it was because it is, like you said, part of our every day talking with leaders. But if you’re considering that you can’t afford leadership development, the question I think you should be asking is, can you afford poor leadership? And, and go back to your. You quoted John at the very top that everything rises and falls on leadership.

Perry Holley:
If things are going great and you, you’ve got true momentum in your business and things are clicking, way to go. It’s because of your leadership. If it’s not, and you’re struggling and things aren’t. Aren’t clicking, it’s because of your leadership. And I think this is an opportunity to start looking at, you know, what it’s costing you. Really, the real cost of leadership development is going to be turnover, disengagement, slow execution, lost innovation. Boy, we didn’t talk about that. And then Maybe even lost custom if, if they’re not feeling it from you and feeling that momentum from you.

Chris Goede:
If you don’t change, you’re going to like irrelevance. Irrelevance. Right. And change what, what drives change is the development plan as your, as your leaders and inside the organization. So we’ve talked about it from a cost. One of the things I, I wrote down here as we wrap up is it’s actually a multiplier and you mentioned a little bit about that around productivity and what could happen. But man, it’s an investment into your people that will, I promise, if it’s done right, we’ll, we’ll multiply your results and your return. And so the other thing is around cost is don’t, don’t forget about the opportunities that are missed by people that maybe you haven’t raised their lid high enough to be able to even see opportunities for the organization.

Chris Goede:
And so there’s a lot of opportunity missed costs there as well. So here’s what I want to challenge you to do. Take a look at your organization, take a look at your leadership, take a look at maybe it’s your team and if there is a way that we can help you, whether it’s coaching, whether it’s doing some training, maybe it’s even just taking this podcast and, and having some people listen to it and say what would a development plan look like for you? What, what would you like for that to look like and engage them in that conversation. Now they may fall over and pass out. Right. If you haven’t had this conversation before. But I promise they’re going to appreciate it and they’re going to think about it. And so as we wrap up, Perry’s going to give you the URL where you can go and there’ll be a tab there that you can click on and, and just give us a little bit of note.

Chris Goede:
We’ll follow up with you if that’s something that you’re interested in because it’s a game changer.

Perry Holley:
Well, I’ll just add to that that the biggest mistake and I’ve been doing this a long time and I was a real proponent of individual development plans but I was with a Fortune 10 company and it was, the process was highly over engineered and it was too complex and nobody did it. And I would just encourage you go back to our irreducible minimums concept about don’t think I’ve got to oh, I got to call Chris and Perry and we got to make some big Harry audacious 12 year plant. No, like you said, start with listening to the podcast. Share things, do the Maxwell Daily Reader with your team every day. Share ideas, do a book study. And then, and then if you want to have, you want to go further and you think we need lessons or coaching or those types of things, we’re glad to help with that. But I think making it simple so that people will do it is much better than make it complex when people don’t know what to do.

Chris Goede:
Well, and I love that because also, if you’re going to bring it up, follow through on it.

Perry Holley:
Yes. Right.

Chris Goede:
And to your point, yeah, the simpler, it’s still great impact. The simpler the better. But don’t roll it out. Say you’re going to do it and then, and then you, you dwindle. Right. Like if you even if you got to put some, some guardrails around windows of time frame, keep it simple, simple and make sure you follow through on it and then go from there.

Perry Holley:
Terrific. Well, I hope you’ll follow up with that. As Chris said, you can go to MaxwellLeadership.com/ExecutivePodcast. You can find out about our offerings there. As Chris said, there’s a form there you can fill out. If you just would have to have a conversation, we can do that. You can also learn about our other podcast in our podcast family and get the learner guide for this issue for this episode. If you’ also, you can leave us a comment or a question there.

Perry Holley:
And you know, we love hearing from you. We’re very grateful you spend this time with us. That’s all today from the Maxwell Leadership Executive Podcast.

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