82% of leaders often fall into the category of accidental managers—meaning they don’t have any formal leadership development or management training.

From middle managers to senior executives, leaders are at the forefront of strategic decisions within your organization. But the impact of leadership goes beyond just business decisions. Employees look to organizational leaders for guidance and direction, which ties into everything from employee retention to employee engagement.

The right leadership development program can put your leaders (and organization) on the path to success. Don’t rely on cookie-cutter training programs. Instead, you need a leadership development strategy that helps your leaders achieve their professional goals while driving organizational success. 

In this article, we’ll discuss why leadership development should be a priority for your business and how you can strategically build a leadership development program that actually works.

What is leadership development?

Leadership development is the process of creating more effective current and future leaders through learning and skills development opportunities. 

Individuals can informally develop their leadership skills through experience and other resources. But more often than not, leadership development comes as part of formal learning and development opportunities within the workplace—ranging from training to coaching and mentorship. 

Regardless of the type of leadership development program, the goal is to help existing and potential leaders build the skills they need to empower their teams, make better decisions, and effectively contribute to company growth.

The importance of leadership development (+ the stats to prove it)

We said it once and we’ll say it again: leadership development isn't just good practice; it's essential for any forward-thinking company. Don't just take our word for it—let the numbers do the talking.

Leadership development and corporate training is a $357 billion industry

When it comes to business—money talks. And if we follow the money, it leads us right to leadership development. 

According to Training Industry, organizations in North America spent $165 Billion on leadership training in 2020 alone.

So why the massive investment into leadership training and development?

Good managers can drive 27% higher revenue per employee

Investing in leadership pays off. When you have a team of strong leaders, that payoff comes in the form of business performance and revenue.

Good managers have the ability to motivate their teams and help them do their best work, improving work quality and productivity.

But not every organization is reaping the benefits of having effective leaders.

Only 40% report that their company has high-quality leaders

And the quality of leadership continues to drop, with a 17% decline in 2023—the steepest drop in over a decade. 

When companies are spending billions of dollars on training and development, this decline is a surefire signal that organizations are struggling to identify key areas of impact or failing to implement effective programming.

Only 5% of organizations develop leaders at all levels 

Leaders exist at all levels of an organization—particularly in larger companies. And while 83% of organizations believe it’s important, the vast majority only focus on growing leaders at the top.

This means people managers with a direct line to front-line employees or managing individual contributors often get left behind. It also leaves mid-level leaders and potential leaders without the opportunities they need to progress in their careers, which creates gaps in leadership succession. 

The impact of leadership development

Career development is certainly important to individual employees. But the opportunity to learn and grow shouldn’t be viewed as a perk for your teams. 

When you look at leadership development through a strategic business lens, you can adapt developmental goals to your business needs—which can benefit the workplace in more ways than one. 

1. Leadership development helps employees build effective leadership skills

We often distinguish leaders from non-leaders based on their job titles and rank in the organizational hierarchy.

But here’s the thing: simply putting an individual in a leadership role doesn’t necessarily make them an effective leader—even if leadership is inherently a part of their job. The reality is that only around 10% of managers have a natural talent for leadership. Others need to build the skills necessary to successfully lead a team.‍

‍That’s where leadership development comes in. Not only does it make for better leaders but the impact of those skills trickles down and reaches far beyond individual performance.

2. Effective leaders help organizations attract and retain top talent

In the modern workplace, employee retention consistently ranks as a top priority. And when over half of workers have left a job because of their manager, it’s obvious that leadership is a huge piece of the employee retention puzzle.

Leadership development creates leaders who can successfully support and motivate their teams. Over time, this influences job satisfaction, employee happiness, and ultimately retention. 

Investing in leadership development can also help you retain those top leaders. Making sure that top performers and leaders within your organization have access to individualized career development opportunities can go a long way in keeping your best people happy and engaged.

And of course, when you do need to hire external talent—a history of career growth opportunities and strong leadership positions your organization as a desirable place to work.

3. Leadership development supports strategic succession planning

Leadership development goes beyond your current leadership team.

Even in the best companies, talented leaders leave for new opportunities or get promoted into senior roles. This leaves you with big shoes to fill. 

Investing in leadership development for potential leaders creates a robust internal talent pipeline to help fill these future roles seamlessly from your existing pool of employees.

Not only does it initially cost 18% more to hire external candidates, but employees who are promoted internally tend to perform better in their new roles. 

High-performing internal hires are also less likely to quit, so you’ll find yourself with vacant roles less frequently. 

4. Leaders impact employee engagement across all levels of the organization

Leadership and people managers are the link between your company and your employees. 

Having effective leaders is critical to maintaining employee engagement—which we know impacts everything from employee productivity to business performance. In fact, 70% of employee engagement can be traced back to an employee’s relationship with their manager.

But only 36% of employees feel like their leadership is supporting them in a way that makes them feel engaged in the workplace. 

Leadership development gives leaders the skills they need to build trust and support their employees. When employees strongly agree that they trust the leadership of their organization, they are 4x as likely to be engaged.

Leadership development also improves happiness and engagement in leaders themselves. With 53% of managers reporting feeling burnt out at work, it’s important to equip leaders with the right skills and networks to stay resilient and feel connected in the workplace. 

5. Leadership development opportunities foster diversity, equity and inclusion (DEI)

Organizations need formal development programs to elevate and empower underrepresented employees. While organizations continue to make strides toward diversity at the leadership level, we know that employees from diverse backgrounds often get left behind.

For example, in 2023 more than half of Fortune 500 board seats are still held by white men.

When we leave leadership development to chance, we know employees from diverse backgrounds—like women of color—are less likely to have access to opportunities and connections that help them step into senior leadership positions. 

When formal leadership development programs are part of your DEI and overall business strategy, you can start filling those diversity gaps in your current and future leadership teams.

Developing a leadership development program that makes an impact

Leadership development programs can be difficult to get right. It’s why we see companies make massive investments with little return.

Sure, something is always better than nothing. But if you’re taking the time and resources to invest in your leadership, you want your program to effectively target the challenges and opportunities within your specific organization. 

Here are things to consider before developing a leadership development program, so you feel confident it will actually make an impact.

• What makes a good leader? What skills and core competencies does your organization value in leaders? This creates a universal understanding of what leadership is and isn’t in your company, which helps current and future leaders know what to strive for.  This then informs how you carry out programming and what goes into your curriculum.

• How does the development program align with organizational goals? It’s not unusual to see organizations jump on talent initiatives because they see other companies doing it. There’s no question that leadership development can be impactful. But it’s important to understand why your company needs it and how it will help further your overall goals. For instance, is your organization navigating through significant restructures and business transformations? Perhaps you’d want to equip leaders with the skills and mindsets essential for leading change. As a result, the objectives and frameworks of this program would vary to meet distinct needs.

• Who needs buy-in? We know that initiatives don’t work if key stakeholders across the organization aren’t fully invested. Not only do you need decision-makers to give you the green light, but you also need buy-in from your leaders. If leaders themselves don’t see value in leadership development, they won’t participate or make it a priority.

• How will you define program success? Talent experience programs are implemented far too often without clear success metrics. By defining your leadership development goals early on, you’ll be able to see—and communicate—the return on your investment.

6 steps for creating a leadership development program

There’s a lot that goes into building a high-impact leadership development program. But if you’re creating your first leadership development program or looking to make some changes, here are a few key steps that can guide you along the way.

1. Identify any gaps and challenges in your leadership needs

Leadership development as a concept is intentionally broad—it gives you the flexibility to create a program that fits your organization's goals. However, this also means many companies find themselves providing aimless training programs that don’t quite target the areas of growth that their leaders need.

Employee surveys, focus groups, and other internal assessments can help you identify any current challenges. Meanwhile, understanding future business objectives can help set your leaders up for success in the long run.

For example, let’s say your goal is to improve leadership diversity. Then you need a program that prioritizes elevating employees of diverse backgrounds. On the other hand, if you’re targeting employee engagement, your curriculum should focus on the skills leaders need to drive higher engagement. These are both leadership development programs, but they look entirely different. 

By defining your objectives first, you can design a program to specifically meet your needs and get the results you want.

2. Determine what type of leadership development program you need

When we think about learning and development, we often default to training programs. But the best development programs go beyond classroom-style learning.

Consider the 70-20-10 learning concept. Only 10% of a professional's learning comes from formal training. The rest is informal learning and skills development—70% being on-the-job training and social learning making up the final 20%. 

There’s a time and place for training but leadership development isn’t one-size-fits-all. Employees need personalized development plans that help them lead effectively while achieving their own professional goals.

The best development programs take a community-driven approach, using a mix of:

• Training, tools and resources
• Experiential learning
• Mentorship and sponsorship programs
• Interactive group learning opportunities

By leveraging networks and peer learning, you can put employees in the driver’s seat of their development. A community-driven approach helps people learn the way they learn best—from other people.

3. Identify current and potential leaders in your organization

Large organizations can have hundreds if not thousands of leaders ranging from C-suite executives to mid-level managers. It’s important to provide development opportunities for employees across all levels of leadership, but a company-wide program is not always feasible in one go. (Or even the right investment for your organization.)

So who gets to participate? 

Leadership programs are typically geared towards:

• Existing managers and senior leaders
• New managers and leaders
• High-potential talent
• Individuals expressing interest in leadership roles

You can allow employees to self-select for participation. Alternatively, you can also use internal assessments to select a cohort of participants based on your program goals.

4. Choose the right platform to support your program

Development programs feel like a hassle to implement—but with the right tools, they don’t have to be. 

With leadership development in particular, choosing the right toolkit is critical. You’re dealing with a group of high-performing and all-too-busy employees. For a program to be successful, you need to make it easy for leaders to participate.

Some things to look out for in a leadership development solution include:

• Scalability: Mentorship programs and community-driven learning are highly impactful, but can quickly become tedious with manual matching and spreadsheets. Look for solutions that help you make unbiased matches at scale. 

• Easy integration with your existing apps and systems: Adopting new tools and apps can be a barrier for leaders who already have a ton on the go. For example, look for solutions that deliver matches and program reminders directly within their inbox or existing communication tools.

• Flexible and customizable development programs: Structured mentorship curriculums and development programs that are tailored to your organization can help keep leaders on track, so they can make the most of their learning experience.

• Seamless reporting and insights: Choose a solution that makes it easy to measure progress so you and your employees know that you’re reaching your leadership development goals.

5. Take your program for a trial run

Before you go all in on your leadership development program, consider doing a test run or a pilot project. 

We can’t get everything right the first time around. And sometimes new learning and development programs need tweaks to make the maximum impact—and the feedback and insights from an initial test help identify just that. 

For example, you might learn that your curriculum is missing a topic that participants find valuable. Or that your participants would like to be able to meet their leadership mentor more frequently than initially outlined.

Once you have a program that you know works for your organization, it becomes much easier to implement across the board.

6. Reflect and measure your progress

Remember those objectives you set early on? It’s time to pull those back out.

Hundreds of organizations make development investments that never pay off. Tracking and measuring your progress against benchmarks is the best way to make sure you aren’t one of them.

READ MORE: How to Measure the Success of Corporate Mentorship Programs

Types of leadership development programs 

Not sure what type of leadership development program your team needs?  Here are some high-impact programs that you’ll commonly find used at leading organizations.

1. Executive to executive

There’s this perception that leaders at the top of organizations should have all the skills and competencies needed. Of course, they have experience that they can lean on, but executives shouldn’t be expected to work in a silo. 

Working with and learning from their peers can help even the best executives be better leaders.

With an executive-to-executive leadership development program, senior leaders are matched with experienced executives or even lateral colleagues. The goal is to expand networks and connections at the executive level, so leaders feel connected and supported as they take on different responsibilities.

2. High potential talent

High-potential talent includes employees who demonstrate that they have the skills and motivation to become future leaders within the organization. Nurturing high-potential employees keeps them engaged and equips them with the skills and network they need to be ready to step into future senior leadership roles.

In a high-potential talent leadership development program, employees are matched with senior leaders and mentors who can support them with:

• Building in-demand leadership skills and competencies.
• Increasing visibility across the organization.
• Advancing in their careers through professional advice and insights.

3. People managers

People managers are in a unique position. Whether they’re managing a team for the first time or struggling to build high-performing teams, leadership development programs can help people managers lead effectively in this new world of work.

With people manager leadership development programs, employees are matched with senior leaders. By matching people managers with senior leaders, they benefit from:

• Leadership learning opportunities. 
• Advice and guidance for navigating the world of team leadership.
• Expand networks and relationships within the organization to foster resiliency and belonging.

4. Leading change

Between layoffs, restructures, and the AI revolution, the world of work is changing constantly. Keeping up, let alone leading through this whirlwind, is becoming a tall order for leaders everywhere. It’s becoming essential to equip leaders with the skills & mindsets to lead change and thrive in constant organizational transformation.

In programs for change leadership, leaders are prepared with critical skills to lead change, build engagement, and drive performance. This can be helpful to: 

• Ensure smooth transitions and stability during organizational change or restructures.
• Boost leadership expertise and development in guiding successful business transformations, emerging stronger in competitive landscapes.
• Foster constant innovation, equipping leaders with the skills to drive creative solutions. 
• Create a high-performance culture, focusing on productivity, employee engagement, and continuous development. 

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Leadership development FAQs

1. What is leadership development? 

Leadership development includes any activity that helps an employee become a better leader. It can take place informally when leaders learn from their work experience or consume educational resources, such as books or webinars. But leadership development can also be part of a formal program in the workplace.

2. What's the importance of leadership development at an organization?

Leadership development is important to organizations for many reasons. Some of the benefits include:

• Improving business performance and profitability
• Increasing employee retention and talent acquisition
• Building internal talent pipelines and succession planning
• Elevating employee engagement
• Fostering diversity, equity and inclusion

3. What is a leadership development program?

A leadership development program is a formal strategy implemented within a company to help elevate the leadership skills of existing and potential leaders. Leadership development programs can include anything from mentorship opportunities to structured development curriculums. 

These programs often target senior leaders, current people managers, or high-performers with leadership potential. The goal of a leadership development program is to address any current or future gaps in leadership within the organization. 

4. What is a leadership development plan? 

A leadership development plan is a roadmap or strategy put in place by an organization to prepare employees for leadership roles within the company. Some leadership development plans are specific to the individual. Similar to a career path, it’s a set of steps an employee needs to take to advance in their career as a leader. 

On the other hand, some leadership development plans are broader and are designed to help the organization reach its leadership and management needs. 

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