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Leadership Learning: The Real Costs of Not Doing Leadership Training

Layne McDonald. Ph.D.

A genuine leader is not a searcher for consensus but a molder of consensus. - Martin Luther King Jr.

A report from the Said Business School at Oxford University in the UK found that British businesses and public sector organizations are wasting almost $140 million on executive education programs that are poorly conceived and delivered.

The study said that 35 percent of HR directors and 21 percent of other executives believed that their current training and development programs met corporate strategic aims. Most of the money was spent on individually developed courses for senior executives.

If those businesses want to quit wasting all that money on lousy management training, I know where they can get their money’s worth. And it does not have anything to do with more academics designing special courses, events, and outings for senior staff.

Here is a novel idea, folks. Why not spend your money on leadership training and development down in the trenches, where it will do good?

Most companies do not do enough of that. In 2003, just 7 percent of training budgets in the US were spent on first-line leaders, most of which were for learning administrivia and prophylactic HR.

The fact is that front-line leaders do not get much training at all, and precious little of it is about leadership skills. Companies think they are saving money by not investing in front-line leader training.

True, no budget line-item absorbing funds might be spent on the executive dining room or the CEO’s office art. But there are what economists call “opportunity costs,” the costs of not training front-line leaders.

There is the opportunity cost of lost productivity. Good frontline leadership builds both morale and profitability.

There is the opportunity cost of lost leadership. Great companies develop most of their leaders. If you go outside for leadership, you incur recruitment and transition costs.

Finally, there is the cost of lawsuits. Good frontline leadership creates organizations where cases are less likely. And if the company is sued over a supervision issue, the defense will be more accessible if the leaders have been doing their jobs.

How about your company? Do you develop your leaders? Do you help them develop the skills they need to improve morale and productivity and avoid lawsuits? Think about that the next time you consider the training budget.

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