5 Reasons Companies Need Leadership Development

Shohreh Abedi
4 min readJun 16, 2023

Research has continuously affirmed the importance of leadership development for organizations of all sizes. Investing in leadership is one of the best ways for companies to gain and maintain a competitive advantage in the modern marketplace. By investing in its leaders, companies empower their employees to develop new strategies and reposition their place in the market effectively. Moreover, top candidates look for places willing to invest in their skills and often prioritize development opportunities over a higher salary. All of this ultimately drives the bottom line. This means that leadership development is typically a straight path toward increasing profitability even if it involves an upfront investment of time and resources. Keep reading for some key benefits of leadership development.

1. Improved integration of strategy and culture

The success of a company depends on developing and refining a business strategy that moves the organization forward and aligns with its culture. Through leadership development, individuals gain the skills they need to shape culture and shift it as necessary to create a supportive work environment. This process involves listening closely to employees and responding to their feedback while also keeping an eye on consumer politics and feedback from customers.

Effective leadership is key to ensuring culture and strategy align. When these two factors do not align, productivity suffers, as both employees and customers will be confused about the company’s values and mission. Leadership development allows employees to gain the skills they need to manage these two key driving factors successfully.

2. Greater retention of top talent

Research has shown that employee engagement increases after development experiences. Employees feel more connected to a company that wants to invest in them. This is important in terms of driving employee satisfaction and maintaining an effective team.

Moreover, many people looking for jobs today put a premium on development opportunities. Some of the most talented candidates may not consider a company that doesn’t offer these opportunities. Organizations that don’t invest in leaders may have trouble attracting candidates and keeping current employees. The problem becomes even worse when an employee leaves and no one else on the team has the skills necessary to step up to that position, even if only temporarily. Investing in developing leadership skills at all levels ensures that there is always someone who can step in and keep the company afloat. Plus, remember that it is always cheaper to invest internally than to hire externally.

3. Stronger equanimity in times of change

Transitionary times are challenging for any organization. During this period, gray areas may force some members of the team to step up and take a leadership role. Companies that have already invested in leadership development tend to do very well during times of change because they have employees with diverse skill sets who are capable of divergent thinking and innovating.

In a business world that is driven by disruption, equanimity during transitional periods is more important than ever. Companies that invest in equanimity efforts will thrive. Again, the key here is investing in all members of the team, not just those in leadership positions. Doing this significantly increases a company’s agility so that times of upheaval are navigated smoothly.

4. Boosted creativity in approaching problems

Modern companies tend to value innovation very highly yet do not always understand how to develop innovative teams. One of the ways to do this is through leadership development. The skills developed during these opportunities become tools that can be used to think about old problems in a new way.

For leaders who are consistently listening to feedback from customers, this can lead to a disruptive idea that establishes the company as an industry leader. Companies that invest in their employees and equip them with these tools are much better positioned for success than those that rely on bringing in talented employees.

The market changes quickly, and people who don’t continue to learn and explore, will struggle to bring fresh ideas to the table. Empowering employees to explore their passions and interests diversifies the company, which can lead to surprising collaborations.

5. Higher bottom-line income

Research has shown that companies investing in their employees earn stock market returns that are five times higher than those that do not. While this may be surprising at first, it makes sense when you consider the value that leadership development provides.

People who can expand on their skills are better equipped to identify ways to reduce costs while also pulling on new lines of revenue. Furthermore, these skills can often help drive customer satisfaction, which in turn means more loyalty and higher spending from existing consumers. The investment in leadership development offers great returns with little more to do than provide opportunities and support employees as they pursue them. Employees will naturally use these leadership skills to save money and bring in more income.

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Shohreh Abedi
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Shohreh Abedi serves as executive vice president and chief operations and technology officer for The Auto Club Group.