Leadership Development – Return on Investment

Echelon Front worked with a technology lab over the past four years to help develop their leaders. The main reason this lab brought Echelon Front in was that out of the 10 divisions across the U.S., they were ranked last for 5 years running. One leader within this lab was tired of losing and reached out to a few other peers, and they decided to bring in Echelon Front for some leadership development training. We’ve been working with them for the past four years, and they’ve ranked number one for the past three years in a row.

From last to first, how did they do this? The first thing they did was take action. They identified what they were not doing great as leaders and started to look at what they could do to become better. From that analysis, they identified that they needed leadership development training to provide their leaders with additional skillsets to become more effective. Areas Echelon Front focused on were teamwork and building relationships, communication, and alignment, setting priorities and staying detached from emotions while making decisions, and setting up everyone to lead and explaining the why behind tasks and projects. Lastly, this leadership development training focused on ownership. Leaders are responsible for everything in their world, their people, every project, and every task. When something isn’t going correctly, leaders have to pull the thread back to themselves and take a hard look in the mirror to see what they can do better.

Taking action was the first step in the process. The next thing this organization did was carve out time to conduct leadership development training and identify how much training they would need. This helped them build out a budget for a 12-month leadership development and alignment training program. In collaboration with the client, we developed a program focused on mid to high-level leaders to gain initial traction. This included a series of workshops to baseline the entire organization. From that training, they received more buy-in from different levels of leadership and decided to conduct a train-the-trainer program where they would identify key people within their organization that would help facilitate implementing the Echelon Front leadership principles throughout their lab. This came in the form of monthly touchpoints with their leadership team, onsite visits, and virtual training sessions to train their trainers.

This tiered approach, along with the action by their team members and leadership team, allowed them to slowly change and gain alignment within their organization, which overall has contributed to better teamwork, better communication, alignment, and a training program that is in place to set their people up for long-term success.

From last to first, based on one person who was willing to take ownership of creating more effective leaders in their organization.

Oil Exploration Company – $18 Million Revenue Increase

At Echelon Front, we know that leadership impacts every industry, and one field that we have consistently worked in is Oil and Gas.  One particular oil exploration and production company was facing a few major challenges when we began working with them.  They were 20% over budget and 4 weeks behind schedule. Machine downtime was at a staggering 12% for 3 quarters in a row, and there was a culture of casting blame and making excuses both internally and externally with vendors.

We conducted a 9-month leadership training program with the goal of instilling the Extreme Ownership mindset and reducing downtime by 30%. During this leadership development training, we provided initial introductory training, quarterly on-site workshops, and monthly phone calls.  These sessions focused on building relationships to create better teamwork between the vendors and the organization.  They also emphasized empowering the team by explaining the why and pushing decision-making down to allow individual team members more ownership over finding solutions to the problems they faced at their level. To wrap up the leadership training program, we conducted a [corporate field training exercise] to further reinforce the Extreme Ownership principles in a hands-on, risk-free environment and to develop trust between department leaders.

As a result, this company was able to cut machine downtime in half – from 12% to 6%. Far exceeding the goal of a 30% reduction.  The production team was also able to execute projects within 14 days of receiving the request instead of the 4 to 6 weeks that were previously required.  This resulted in increased revenue of $50 to $60 thousand per day, which is roughly $18 million annually.

The transformation within this organization was impressive, but it only occurred because the team recognized the leadership gap they had and took action to correct it through a leadership development program.  Their CEO stated: “When Echelon Front showed up, my people were broken, didn’t care, missing maintenance, and taking their time. When they left, 9 months later, my people were happy, upbeat, and excited to work here.”

Healthcare Services – 40% Reduction in Cost

The healthcare industry is extremely chaotic, stressful, and impactful. Each person who works in this field cares deeply about their patients, and when death does occur, they do everything they can to ensure that those left behind to deal with the tragedy have the best experience possible. The healthcare services provider we worked with is specifically focused on providing alternative choices for families dealing with a death.  And as a business, they still had to worry about being profitable in order to continue to provide excellent care for these families.  Unfortunately, they were not doing well. They were at a -8% net operating loss after two years under their new leadership.  The sales force was fully reliant on leads generated by the company and did not execute quickly enough.  When they brought us in, they asked us to focus on breaking down silos across the organization, building an Extreme Ownership mindset at every level of the organization, and helping the team reach a 3% net operating profit.  With these goals in mind, we created a 12-month leadership training program consisting of a 2-day kick-off, quarterly on-sites, and weekly check-ins. During these sessions, we focused on helping the primary management team work through how they could apply each Extreme Ownership concept to their specific challenges. We also supported them in simplifying their organizational chart and compensation bonus plans and then communicating this new information with the reasoning to help everyone on the team understand how the new organization and plan would benefit them.

This allowed the team to better understand how they could all take ownership of their piece of the mission. So, they began generating their own sales leads, which dropped the cost of sales by 40% and increased their revenue by 25%. This meant that their net operating profit was up to 15%, which was 5x their original goal of 3%.

Engineering Solutions Incorporated (ESi) – Resilience through Tragedy

Why is leadership development important? In 2019 Echelon Front was brought in for a keynote speaking event for an engineering business. The CEO of that business liked what he heard and decided to bring Echelon Front into his business for a Leadership Development training program for 6 months. During the course of this training, the leaders within the business had stated that they were seeing their CEO change because he started utilizing the Echelon Front leadership principles: Teamwork, building relationships, simple-clear-concise communications to create alignment, stacking priorities effectively and staying detached from emotions while making decisions, everyone leads and how to set our people up to lead, explaining the why and taking ownership of everything in your world, seeing what you can do better, not casting blame and not making excuses.

Throughout this leadership development engagement, the people within this organization showed incredible initiative, follow-through, and professionalism at every level of the organization. They were in the game! This CEO was setting his business up not just for the next 9-12 months but for long-term success.

In March 2021, this CEO unexpectedly passed away. Because this leader was investing in his team and his people, that business took an emotional hit, but they were ready to step up, lead, and make things happen in this tumultuous time due to his foresight and his investment in the team.

That leadership team came together and navigated, over the next 11 months without a CEO in position, to make key decisions and to maintain the course that he had set for them. How did they do this? They utilized the principles of Extreme Ownership and worked together as a team, maintained alignment, made good decisions, and continued to invest in their people with leadership development training.

Who’s taking your position if something happens to you? Are you properly training them? Do they know everything you know? Are you giving that person feedback on their performance? Are you investing in their improvement?

Design A Leadership Training Program That Maximizes ROI

When designing a leadership training program, there are three important considerations.

1. 1. Iterative Steps

1. 1. Repetition

1. 1. Sustainment

Iterative Steps

Some companies don’t have any formal leadership training, some companies have obligatory box-checking training, and some companies have robust leadership training programs. No matter what category you fall into, when you want to introduce new leadership training at your organization, iterative decision-making is key. Iterative decision-making is a concept we teach at Echelon Front that absolutely applies to training as well. The goal is to make a series of small decisions instead of one massive decision. This allows you to work towards a solution without overcommitting so that you can gather feedback, create buy-in, and adjust as necessary. Rather than immediately creating a detailed, long-term training plan around a leadership methodology and rolling it out, the first step could be something more iterative:

• • Read the book [link to EO book]

• • Explore online training content on the topic [Free EOA Account]

• • Attend an event [EF Events Page]

• • Setup a one-time engagement for just your organization [Standard Engagements]

Once you’ve completed one or all of these steps, you’ll have a better sense of the usefulness and applicability of this training within your organization. Then, you can begin to create a more long-term, customized plan for increasing leadership and leadership capacity within your organization.

Repetition

Leadership is not an inoculation. You can’t attend one event, read one book, take one course, or sit through one workshop and become a great leader. Leadership is just like any other skill – it can atrophy from disuse, it often doesn’t come naturally, but it can absolutely be learned. However, to truly learn and retain your leadership skills, repetition is key. When creating a program and in order to maximize ROI, you have to ensure ample opportunity for continued learning and repetition throughout the program. The consistent exposure, application, and learning will allow your leaders to establish the basics and continually iterate on their effectiveness as a leader.

Sustainment

Finally, if you truly want to embed this leadership model into your culture, you need a plan for sustainment. At Echelon Front, our ultimate goal for sustainment training is that you no longer need to rely on us for training. Our long-term training programs focus on supporting you in creating mass adoption of Extreme Ownership concepts across the organization and then partnering with you to identify team members that can continue to provide baseline training as needed. Through our [internal trainer program], [online academy], and [other resources], we can provide a variety of sustainment options. We also support your team in creating a training program that helps ensure new hires are exposed to the concepts immediately, all employees continuously maintain their skills, and that any other unique training needs within your organization can be met.

No matter what industry you are in, what budget you have, or the number of leaders you want to train, we can help you customize, develop, and implement a formal training program that will meet the needs and objectives of your organization.

ROI Calculation

Every company wants to ensure that their investments are solid, and many companies are starting to recognize the impact of leadership training. However, quantifying the return on investment of leadership training can be difficult. There are many notional improvements that can be observed following leadership training, but actual attribution to the training and associating a dollar amount to that can be done in many different ways.

A recent study for a retail organization reported an annualized ROI of 415% when they trained 2,000 new leaders within the first three months of being in their new position.  This was based on five specific metrics they tracked for those who were trained. One of our clients reported that the engagement scores for the 200 leaders that went through our training went from the 60th percentile to the 96th percentile after one year of training with us.  While another client attributed cost decreases, improved delivery, and an $18M bump in revenue to the Echelon Front training program they went through.

Let’s take a look at an ROI example. As you know, there are many factors that go into calculating the return on investment of training, and training costs are not as straightforward as simply the cost of the program. Often, training requires travel, hotel stays, time away from work, materials, and other administrative costs (room reservations, etc.) for the participants. These costs all need to be included in the calculation.

The other part of the equation for an ROI calculation is the monetary benefit to the business. This can be calculated in several ways. Some examples include cost savings areas like improved attrition, lower absenteeism, fewer injuries on the job, and other associated cost savings. You can also calculate this by looking at the profit side of the business with higher margins on products, additional sales, increased productivity, and more.

ROI = ((Monetary Benefits – Training Costs) / Training Costs) x 100

Below is an example of an ROI calculation based on an improved attrition rate due to a leadership training program. The leadership development program example is a 12-month program with 50 participants from a medium-sized business. The averages used were based on a quick Google search and Department of Labor numbers.

Training Costs: $552,138.50

Monetary Benefits (Attrition Example): $990,145.10

ROI

ROI = ((Monetary Benefits – Training Costs) / Training Costs) x 100

ROI = ((990,145.10 - 552,138.50) / 552,138.50) x 100 = 79%

In this example, an improved attrition rate from 20% down to 16% indicates that of the 50 trained participants, an estimated 10 effectively implemented the principles of Extreme Ownership. Let’s assume those leaders retain 1, just 1 additional employee, and they save the company nearly a million dollars.

The value of investing in leadership development programs for employees cannot be understated, and we have options that range from individual opportunities to fully customized programs for large businesses and everything in between. We have a breadth of services that lend themselves to different modalities of learning, implementation, and evaluation of success and impact. Through the various services, leaders and organizations find what works best for them and their teams, given the various factors that go into these decisions.

The return on investment for leadership training has ripple effects that go far beyond one person, one year, and the retention of ten employees. Ownership breeds ownership, and when leaders utilize the principles of Extreme Ownership, good things happen. Others see this, so they start using the principles, and now the culture starts to shift towards ownership and leadership, and the team is on the path to WIN. So, if your team has specific metrics they are interested in improving, tailored leadership training may be the piece you’re missing.