Top-Performing Organizations Connect Leadership Development and Financial Success

Leadership development has long been linked to the execution of successful business strategies, but a recent study from leadership development solutions provider Ninth House has uncovered several trends of top-performing organizations as well as a financial link between companies that have top-tier leadership development programs and those that do not.

Ninth House used financial data to identify 20 top-performing organizations in the Fortune 500 and conducted interviews with those companies to uncover how their approach to leadership development sets them apart from their competitors. “There seems to be a clear linkage between organizations that follow leadership development best practices and long-term financial return,” said Jeff Snipes, CEO and co-founder, Ninth House Inc. “If you look at the financial performance of these top-performing organizations, they consistently outperform their competition. Over a period of five years their total shareholder return was greater than their competitors’ in the same industry, and these organizations in general had a higher level of commitment and executive involvement and participation in their programs than the other organizations did.”

Three trends emerged from the study. The first, a broad financial market trend, indicated that companies that have outsourced training, embraced technology, created multiple efficiencies in their learning organizations and generally done everything “right” placed a greater emphasis on talent development as a way to differentiate themselves and create a competitive advantage. “These organizations have already been through enough of the economic cycle that they’ve cut what they could, outsourced the rest and now it’s just a matter of developing their talent to continue to improve performance,” Snipes said.

The second trend established a direct relationship between an organization’s bottom line and its leadership strategy, and roughly 70 percent of the survey’s respondents link their leadership development efforts to business success. Those companies have performed some level of assessment or measurement of their business objectives and adjusted their leadership development strategy accordingly, eschewing universal leadership programs that are more generic and not dynamic or reactive to their business needs.