Should Companies Pay To Train Employees on Leadership?

Is it valid? Is there an ROI? How do you vet a trainer? Here’s how to figure all that out

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Like a lot of trends in business, leadership training isn’t new, but it’s suddenly hot.

I’ve been founding and working at startups for over 20 years, and I’ve spent over half of that time as a formal and informal advisor to other startups. While all companies have a need for experienced advisors, startups tend to need them more than most. While their leadership might have a lot of talent, they sometimes don’t have a lot of experience navigating every scenario that could make or break their fragile company.

For a company that’s more mature — let’s say your standard Fortune 500 stalwart — there’s usually at least a layer or two of upper management with plenty of leadership experience, for what that’s worth.

I’ve recently gotten more inbound from folks who want to sell this new brand of leadership training — coaches, trainers, or mentors on demand — and it’s on this side that I discovered some of the reasoning behind leadership as a desired employee skill. Some of these trainers are really sharp, with extensive leadership in their background, and are committed to doing leadership training right, not just hosting a motivational seminar in some drab hotel ballroom.

I’m a huge proponent of fostering soft skills like leadership in the workforce, and I believe there’s a glaring lack of it. And I know for a fact there always has been that lack. I remember once, like 20 years ago, I was consulting for an old-school mega-company and recommending that one of the IT heads give his people more authority to make simple decisions on their own to get things moving faster.

He looked at me with a dead stare, incredulous, and asked, “Now why the **** would I do that?”

But I also get it. I’m familiar with the experience of having too many chefs in the kitchen. I believe that when you propose to train an entire workforce on leadership skills, you also better consider the congruity of leadership styles. I’ve also got examples where I consulted at young, hot companies with a dozen or more people who were convinced that they were running the show. Chaos. Entitled, paralyzed, toxic chaos.

The problem with leadership training is the ROI

On the other hand, the people holding the purse strings were far more skeptical.

I can totally understand that. I’m a formal advisor to several startups. In over 20 years as an entrepreneur, I’ve seen a lot of shit. I’ve been through my share of internal and external struggles and calamities and emergencies and hostile actions and legal nightmares. I’ve built and launched and tweaked and pivoted dozens of products; I’ve hired, fired, expanded, and collapsed workforces.

Advisement is me reaching back to all of these scenarios in my past to address similar scenarios in someone else’s present by saying, “This is what I did.” My advice also includes a healthy dose of leadership, which is the same thing, but strategic instead of tactical, or: “This is how I handled it.”

If I came to you as an advisor and told you I could make you a better entrepreneur, you’d be skeptical. If I then said I could make you a better entrepreneur by showing you what I do to launch more and better products at higher margins and more quickly, you’d be less skeptical.

But if I told you that I could make you a better entrepreneur by making you a better leader, you’d probably still be skeptical — even though you need both the tactical and strategic skills to be successful.

The difference is ROI, and a lot of the times when the person writing the checks for leadership training gets skeptical, it’s usually because the person selling that training hasn’t made the hard case for:

Their leadership program -> increase in engagement -> increase in performance -> increase in productivity -> increase in revenue.

The leadership trainers are usually very good at describing a real problem in the workforce. They’re also very good at tying revenue backwards to productivity and backwards to performance. But they usually get tripped up tying performance back to engagement — that is, the employee taking ownership of their results and output — and they totally strike out trying to tie engagement back to their program.

Data is the missing ingredient

When I come in to advise a company, the first thing I look for is data on revenue so I can walk it all the way back to data on planning, building, marketing, and selling a product or service. I also do this with growth data, tying revenue back to how the organization works to produce output.

I believe the data case is probably there to be made for a company that believes it needs more leaders on the floor. But much like it is for product or growth, that data is unique to each company.

The reason I don’t write about or otherwise address topics like “How to tweak your Facebook ad copy to increase product revenue” is because not every company runs Facebook ads, and even among those who do, that’s rarely their problem.

Same with growth. The reason I don’t write stuff like “How to tweak your pitch deck to impress venture capitalists” is because there’s probably only one in a thousand cases where it’s just a bad pitch deck otherwise keeping a promising company from landing investment. Usually there are a hundred other problems that are more responsible for a startup’s lack of investment interest.

Any company thinking about training their employees on leadership should at least have a hunch — if they’re not already able to show it empirically — that their revenue is being impacted by a lack of leadership. And any trainer who proposes to solve the problem should also be able to draw those lines and show how their solution can bridge those gaps.

Someone, at some point, must be able to show ROI using data.

I do believe leadership training is more than a trend. It’s been missing from the business education lexicon since I’ve been in business, and I can relay dozens of anecdotes where putting more leadership on the floor made a company more successful.

Until someone can show the causal data that proves ROI on a leadership program, leadership training will remain a service, not a product. But when someone can prove that ROI, well, that’s a hell of a market inefficiency to be able to solve.

This post was originally published in BuiltIn.

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Written by

I’m a multi-exit, multi-failure entrepreneur. Building Precision Fermentation & Teaching Startup. Sold Automated Insights & ExitEvent. More at joeprocopio.com

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