Never trust a leadership development firm that promises a specific, quantitative ROI upfront.
Here’s why, and what to focus on instead
by Tijs Besieux, PhD
Imagine throwing a handful of pebbles into a lake. Now try to guess where they land on the bottom, using only how hard you threw. Your guess will always be wrong, by a little or a lot. You didn't factor in wind resistance. You didn't factor in the current that drags each pebble before it settles. You didn't factor in the soil, which makes one pebble stop dead and lets another travel a while first. And you ignored the odds that pebbles knock into each other mid-flight and change course. So you can never say for sure where they land, just from the strength of your throw, even though overconfidence bias may tell you otherwise.
The same is true of leadership development ‘Return on Investment’ (ROI).
The ROI question every CHRO asks, and why they are right to do so
Any good CHRO or procurement leader will ask it in a sales call, sooner or later. Hopefully sooner. "So let's say we invest in this leadership development program, what's the expected return?" They are right to be skeptical. Investments in leadership development often fail to achieve the desired impact. A study published in Behavioral Sciences states it candidly: "Globally, organizations invest an estimated USD 60 billion annually in leadership development; however, the workplace application of learning is typically low, and many programs underperform or fail, resulting in wasted time and money and potential harm." (Geerts, 2024). Luckily, talented academics like Hannes Leroy are making great strides in fixing this. Leroy and his colleagues tell leadership-program buyers to reframe the questions they ask providers. Instead of "Will participants experience personal growth?", ask "Will participants grow their ability to lead others?" (Leroy, Anisman-Razin, and Detert, 2024). They make a second point too. A leadership program is not designed to maximize participant satisfaction, one of the core measures in the classic Kirkpatrick model. It is designed to stretch participants' capability and motivation. Sometimes that means starting with discomfort or dissent.
What I used to promise clients
When I started my first job in leadership development consulting, this question rattled me. Whenever a CHRO asked it, I felt immense pressure to give one clean answer. And I knew the science. I had memorized the classic, now thirty-year-old study from the Journal of Applied Psychology. It showed a 38.46% increase in personal loans sold by retail banks after their leaders trained in transformational leadership (Barling, Weber, and Kelloway, 1996). I knew the big meta-analyses too, the ones that pool hundreds of studies. They robustly show leaders' job performance rising about 20% after a program.
I also knew the research on what makes a program work. Do a proper needs analysis. Give each participant 360 feedback. Mix the methods well: share information, demonstrate the behavior, and let participants try it themselves.
And I had studied the numbers of the firm I worked at that time, gathered before, during, and after each program. Participant satisfaction was through the roof. People said they had learned a ton. Often they said they had tried new skills at work. Sometimes we could even link groups of trained leaders to how engaged their employees were, or how productive those employees felt.
So, in my enthusiasm to sell the program, I would cite all of it. The studies, plus our own research. I would claim we could predict the program's ROI to the comma. Surely this would make it look like a no-brainer for the CHRO.
Three engagements that changed my mind about ROI
I now tend to disagree with my past self. For a handful of reasons, one for each pebble. Here are three.
In a recent engagement, one of the company's "top" product leaders left the firm as a direct result of the program. He shared with me: "This program made me painfully aware that, in the context we operate in, products should be designed based on what customers need and want, and not the other way around. We should be inventing on their behalf. Thanks to the 360 feedback I received in the program, a thought that I had for some time got validated. I'm the 'could it be done?' type of guy rather than the 'should it be done?' person."
A few months later, he went back to his first love and accepted a role as associate professor, a much better fit for his passion. Is that early loss, and perhaps long-term gain for the company, and all the dynamics it creates, in the projected ROI? I put "top" in quotation marks on purpose. His products were technologically remarkable, but they rarely answered a real, meaningful customer question.
For a B2B retail company, I gave a keynote titled "How senior leaders should talk to customers." Afterward, the CEO took a bet on me. She decided to call the firm's 15 most valuable customers herself. She opened every call with the question I had suggested: "In the space of our collaboration, what's a meaningful problem you have repeatedly tried to solve but haven't cracked the code for yet?" Years later, we caught up over coffee. Those calls had taught the firm something. Customers were happy with the product, literally bolts and nuts. But they could not get an accurate read on their own stock. It sat spread across 50 or more building sites. That turned reordering into a guess rather than a precise task. This insight led to a product. The company built software that let customers track stock in real time. They paired it with an easy way to reorder and to ship the right amount to the right place.
Customer NPS went up. Retention increased. Cash flow became more predictable. Outcomes like these travel through many years and countless decisions. Are they ever netted into the estimated ROI of a program? Is this something I can now predict will happen for every program I deliver? Certainly not. Leadership development often produces results well beyond the program's likely scope.
In another recent engagement, leaders spent a full day together in a design session. Their goal was to solve the roadblocks that kept them from customer-first behavior in daily work. One roadblock surfaced during the diagnosis stage. The company had no company-wide KPI showing how everyone's work helped valuable customers grow. So the session produced a proposal for the C-suite: replace a plethora of inward-focusing KPIs with one company-wide, customer-facing KPI, tied to performance reviews and variable pay. The company is stock-listed, so the proposal needed approval from the board's remuneration committee. A change team adopted and implemented it at lightning speed. Even so, it is too early to judge the impact in numbers. Riding optimism bias, you can picture the butterfly effect: leaders and employees across the company working to create meaningful customer value, day in and day out. But are such consequences baked into a program's potential ROI? I would argue no. One of the most-cited meta-analyses on leadership development (Lacerenza et al., 2017, Journal of Applied Psychology) does not even count organizational redesign as a factor that helps leaders sustain the habits taught during the program.
Leadership development is a systemic effort
The impact of a leadership program is systemic. And in a system, the parts influence each other. That makes a clean, specific ROI promise nearly impossible. Much like knowing where the pebbles land from the strength of your throw alone.
Consider a simple back-of-the-envelope count of the variables in play. A program can affect the leader, their team, or the whole organization. That is 3 levels. It can shape capability, motivation, or environment—the major drivers of behavior. That is 3 more. It could impact leader behavior in how they manage relations, tasks, and change. Those are 3 more dimensions. Its impact can show up in the short, mid, or long term. Another 3. And it can move both KPIs and outcome performance. KPIs are the metrics a company tracks to know it is on the right path, like innovation rate or employee engagement. Outcome performance is revenue growth, profit margin, or cash flow. That is 2 more. Multiply them, and you already have 162 possible ‘impact zones’. The list is still narrow. It does not even account for how all these elements shape each other over time.
Why “it depends” is not a good enough answer
So no, you cannot claim a specific, singular ROI upfront. No, my program will not raise leader engagement by 36.92% on average, with a standard deviation of 4.22%.
That said, I do not see this as an alibi. A consultancy should not simply say its program is too layered, too lagged, and too context-dependent to assess, so no ROI can be claimed upfront. That reflects a poor spirit. "It depends" is no better. A good CHRO still has to make the leadership program’s case to the C-team, and that means talking openly about expected outcomes. They will face the same scrutiny they rightly put on the consultant. Remember that every program carries two costs. There is the program itself. And there is the opportunity cost of participants' time, which is often far higher. Make them sit through a 45-minute lecture on how the ‘power pose’ fast-tracks careers, and that is 45 minutes times every participant, gone. Time they could have spent building stronger teams.
A better answer: reframe the ROI question
The fact that you cannot guarantee a specific ROI upfront should not be a problem. Instead, I suggest reframing this very sensible question toward two things. First, how the program enables leaders to develop their behavior. Second, what evidence-based research says about program outcomes, as general guidance rather than precise prediction.
First: does the program actually change behavior?
The only real thing about leadership is behavior. So any program that fails to develop behavior is wasted from the start. Behavior comes from three factors: Capability (can a leader do it?), Motivation (does a leader want to do it?), and Environment (does the context support the behavior over time?). Effective programs target all three. They also state a clear hypothesis about how the program will help leaders develop specific behaviors. The Environment driver is the one programs overlook most. Ignore it, and new behavior slips back into old patterns soon after the program ends. In fact, I would go further. A program that ignores the environment where the behavior appears is mediocre at best, and most often a waste of resources. If a provider cannot clearly explain how the program enables development, both the exact leader behavior and its drivers, I get hesitant. At Cleo Felix, we try to realize this in several ways. We focus on enabling customer-first leadership and define and measure it in fifteen behaviors grouped into five clusters. We gather multi-source data to pinpoint the exact roadblocks in Capability, Motivation, or Environment that keep leaders from elevating customer-first behavior. And, we incorporate C-level decision-making to address such roadblocks, as a vital part of the program itself.
Second: use evidence as direction for the business case, not prediction
The fact that you cannot promise a specific ROI upfront does not mean you skip the business case. You build it on evidence that points in a general direction. Take psychological safety, the felt permission for candor. Three decades of research show that leaders who raise psychological safety make it easier for people to flag risks and mistakes early, before they escalate. One meta-analysis, drawn from more than 5,000 teams, found a 0.43 correlation between psychological safety and task performance (Frazier, et al., 2017). Those numbers do not let me promise that training your leaders in psychological safety will suddenly surface every risk and lift performance. For instance, if you don’t instill a high-performance norm, increased psychological safety could paradoxically lead to endless off-topic dialogue. But the numbers do offer sensible guidance on what such a program might aim for, if connected to other company changes, without overpromising. The gains are established. It is up to the program design and the participants to seize them. We take the same stance at Cleo Felix. Decades of research tell us customer-first leadership helps cut customer churn, raise the rate of relevant product innovation, and that higher customer satisfaction correlates with higher return on assets. We share these insights not as specific promises, but to show why investing in customer-first leadership makes a strong business case.
The program is never the point. It’s the people.
Perhaps my biggest learning in leadership development so far is this. The program itself never does the trick. It is always the people. The leaders, from across the board, who step in and join hands to solve the biggest challenges standing between the company and its customers' growth. A well-designed leadership development program can be the perfect catalyst for leaders to do exactly that.
Resources
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