Can you believe we’re in the last quarter of 2025? I’m hearing a lot from organizations that are mapping out spending for next year and figuring out how leadership development fits into their budgets. Amid today’s economic uncertainty, areas that are seen as discretionary—like learning and development—can seem like an easy target for cuts.
Again and again, though, I’ve watched companies discover that these “savings” are ultimately erased, as unprepared leaders create costly problems over time. Here’s the bottom line: The cost of NOT investing in leadership development dramatically exceeds the investment itself. If you’re an HR or L&D professional, I know you know this. But I also know that it can be challenging to convince budget decision-makers. So I want to help. In this article, I’ve compiled some of the most powerful evidence that leadership development delivers an impressive ROI, all supported by my firsthand observations as a longtime coach and the creator of the New Lens® learning platform.
The Hidden Cost of Unprepared Managers
Low employee engagement can be a strong sign of inadequate leadership development. Before I explain why, let’s consider the scale of the problem: The cost of employee disengagement in the U.S. alone is approximately $2 trillion in lost productivity annually. Two trillion dollars of wasted potential, every single year.
When disengaged employees leave, the financial hit becomes even more tangible. The cost of replacing an employee ranges from about 200% of annual salary for leaders and managers, to 80% for technical professionals, to 40% for frontline workers. And these figures only capture the direct costs. The broader impact includes disrupted team dynamics, lost institutional knowledge, decreased morale among remaining employees and reduced productivity during transitions.
What does employee engagement have to do with leadership development? Managers account for 70% of the variance in team engagement. In other words, your managers are the single most influential factor in whether your employees are engaged, productive and committed—or disengaged, underperforming and actively job hunting.
Managers Are Struggling
But these all-important employees are also having their own engagement struggles—another sign that they haven’t been adequately prepared for the growing challenges of leading others in today’s intense business environment.
Manager engagement has declined sharply, falling from 30% in 2023 to 27% in 2024. The drops have been particularly steep among younger managers (under 35) and female managers, who are shouldering unprecedented pressure. When managers are disengaged, the effect cascades throughout their teams. According to Gallup, 52% of employees who voluntarily left their jobs said their manager or organization could have done something to prevent their departure. Even more revealing: About 42% of all turnover is viewed by employees as preventable—meaning they believe the organization or manager could have taken action to retain them.
Yet despite the critical role managers play, only 44% report having received any formal management training. Untrained “accidental managers” land in their roles based solely on organizational need, not their own readiness or enthusiasm for leadership.
The Business Case for Leadership Investment
Does leadership development really move the needle on critical issues like productivity, engagement and retention? The findings on ROI are remarkably consistent across studies, and they paint a compelling picture:
Companies that provide targeted training to their employees see a 17% jump in productivity and a 21% increase in profitability. An Accenture study found that for every dollar invested in training, companies received $4.53 in return—a 353% ROI.
Organizations with well-rounded training programs generate 218% higher income per employee and can boast a 24% higher profit margin than those without formalized training initiatives. These aren't marginal improvements—they're transformational differences in organizational performance.
When employees are highly engaged—largely driven by quality management—turnover drops by 51%, well-being improves by 68%, and productivity increases by 23%. Organizations with strong onboarding processes improve new hire retention by 82%, and effective training can reduce employee turnover by 30% to 50%.
70% of employees would consider leaving their current job for a company that invests more heavily in employee development.
Well-structured programs deliver measurable results: a 25% increase in learning outcomes, a 20% improvement in job performance, and a 28% boost in effective leadership behaviors.
Learn More About Leadership Development ROI
Of course, simply having a leadership development program does not guarantee these results. Organizations globally invest $60 billion annually in these programs, yet many underperform or fail entirely because of poor design, delivery and evaluation. Choosing a program with a solid ROI can feel overwhelming, but we have a wealth of resources to help you find the right fit for your organization.
As a starting point, check out our webinars which include powerful trends and practical ideas from our experience and executives at leading companies, especially “The 3C’s of Driving Employee Growth & Retention” and “3 Hurdles When Implementing a Leadership Development Program & How to Avoid Them.” (And don’t forget to sign up for future webinars!)
As always, please do get in touch if we can help. We’ve been at this for 17 years! From New Lens to executive coaching, our offerings are proven, practical and tailored to your needs.
Don’t wait for performance to drop before taking action. Discover how the New Lens® platform helps organizations support managers with bite-sized, actionable learning—built for today’s fast-paced, high-stress environments.
