Why Building Leadership Capability Isn’t Optional—It’s a Business Imperative
Aug 06, 2025
“The best way to predict your business future is to invest in your leaders.”
Small Change: Know the importance of developing leadership capability
Many business owners and senior leaders ask: Is leadership development really worth the effort?
The answer is a resounding yes—and the data proves it.
Three Reasons Leadership Development Pays Off
1. It Directly Impacts Business Results
A major DDI study (Byham, 2017) spanning 18,000 leaders and 12,000 observers across 43 companies found that leadership development improved:
✅ Sales and cross-selling
✅ Customer satisfaction and referrals
✅ Productivity and operational efficiency
✅ Work quality
And helped reduce:
▼ Absenteeism and staff turnover
▼ Downtime, rework, and overtime
▼ Grievances, accidents, and production delays
Even a modest improvement can significantly benefit your bottom line.
2. It Transforms Leadership Behaviors
82% of trained leaders were rated as demonstrating more frequent positive leadership behaviors such as:
- Building trust
- Leading change
- Managing underperformance
- Influencing and resolving conflict
This boosts both personal effectiveness and team dynamics.
3. It Delivers High Return on Investment (ROI)
Of the 22 companies that measured ROI in the DDI study, returns ranged from 147% to 633%.
Even more powerful:
📈 81% of employees with trained leaders reported being more engaged.
This leads to:
✅ Improved customer and stakeholder satisfaction
✅ Better health, wellbeing, and safety
✅ Higher retention and team achievement
Three Small Changes That Deliver Big Impact
1. Embed Leadership Moments into Everyday Work
Encourage team leaders to integrate coaching, feedback, and recognition into regular interactions—not just formal reviews.
🟢 Small change: Ask, “What support do you need from me today?” at the start of your 1:1s.
📈 Big impact: Builds trust, accountability, and development in real time.
2. Prioritise Peer Learning Among Leaders
Leverage the knowledge already in your business. Facilitate short, monthly peer-led sessions where leaders share wins, challenges, and insights.
🟢 Small change: Block one hour per month for a “Leaders Learning from Leaders” session.
📈 Big impact: Increases shared capability, alignment, and collaboration.
3. Make Leadership Behaviours Visible and Intentional
Celebrate specific examples of great leadership. Share stories internally that highlight desired behaviours like resilience, empathy, or courageous conversations.
🟢 Small change: Add a “Leadership Spotlight” to your team newsletter or meetings.
📈 Big impact: Reinforces values and shapes a positive leadership culture.
Impact Perspective
Capability doesn’t grow by accident—it grows through intention, action, and reinforcement.
In SMEs, where leaders often wear multiple hats, the ripple effect of leadership is even more pronounced. Every small step you take to develop leadership capability contributes to stronger teams, better decisions, and a more resilient business.
The future of your business isn’t just shaped by strategy—it’s shaped by the strength of your leaders.
Start small. Stay consistent. Lead the change.
Reflection Questions for Leaders
- Are we actively investing in the growth of our people leaders?
- What leadership behaviors are we consistently role-modelling and rewarding?
Next Action
For more small changes with impact buy the book: An Entrepreneur’s Guide: 7 Focus Areas to Align and Transform the Business
Lead effectively and live fully
