Singapore - Organisations may be pouring money into leadership development programmes, yet scepticism about the tangible value of such investments remains.

While companies pay serious attention to developing key leadership talent, there has always been a challenge of assessing the return on investment (ROI) of leadership initiatives because HR was never required to demonstrate it for the longest time, says Dr Stephen L. Cohen, senior vice president of global product management for Right Management. "So nobody could say if these [programmes] are effective."

Despite the lack of evidential effectiveness from the leadership programmes, there has been a shift in the organisational mindsets regarding leadership talent strategies, especially in the last five to ten years. "Organisations now understand that their most important assets are their human capital," Dr Cohen points out. "CEOs are now asking ‘what we are getting back on that return'."

And there is a solution that HR can use to reassure their CEOs that investment in leadership development would be a sound business decision. Dr Cohen highlights the best way to gauge the ROI is "looking at the change in behaviour in the leaders" before and after training experiences.

Besides noting the differences and improvements in leadership behaviour, Dr Cohen further advises HR to factor in the operational outcomes of their business' value chain for a more accurate ROI measurement. Citing employee retention as a business outcome, Dr Cohen explains the manager who can retain their staff longer than other peers, particularly if they have undergone the leadership programme previously, will have demonstrated value.

Furthermore, that manager would have also reduced the cost of turnover as a result of successful leadership capabilities since an average organisation's turnover cost per hire is usually one or two times a person's salary. "If I have no turnover and my colleague has four or five people who left, I can already calculate that I've saved quite a bit."