Posted by Adaptable Leadership - Building Leaders for Changing Times on 8/25/2008

Is all of the talk about having good leadership just a fad or does it really make a difference to the success of organizations. Do good leaders really matter?

Business Week recently reported that "companies that invest in leadership development programs outperform the competition." Consulting Psychology Journal said, "Companies reporting strong leadership development programs are 1.5 times more likely to be found atop Fortune Magazine's 'Most Admired Companies' list."

Investing in the development of your talent and improving your bench strength can have a profound impact on your company's performance. Extraordinary leaders have a positive impact in a number of ways. Here are three critical outcomes where leaders impact your success:

  • Net Profits - The bottom 10% of leaders in companies lose money for their employers. The middle 80% of leaders make a healthy profit. What's even more important is the impact of the top 10%. The top 10% of leaders nearly double the profits of the "good" leaders in the middle. Investing in leadership development pays it's dividends in net profts.

  • Intention to Stay with the Company - When employees are considering leaving their employer there is no doubt that their committment level is down substantially. If they are less committed they will be much less productive. In addition, employees that don't intend to stay will have a negative impact on morale. Finally, when they leave the cost to replace them is high. Investing in leadership development pays it's dividends in improving an employee's intention to stay.

  • Employee Turnover - Employee turnover costs are substantial ranging from 150% to 250% of an employee's annual compensation. The bottom 30% of leaders have a turnover of 19% while the top 10% of leaders keep their turnover to less than half of that. Investing in leadership development pays it's dividends in reducing employee turnover.

An investment in the development of your leaders is an investment in the future. It is critical to have a strong leadership team for company success. Great leaders pay a dividend in areas that really matter. If these areas are important to you, make sure that you do all you can to help your leaders become extraordinary.