Leadership spend still shows limited return on investment

The world’s largest ever human capital survey has revealed that companies across Europe are spending vast sums on leadership development, but are getting few tangible benefits in return.

Key Trends in Human Capital: A Global Perspective, by Saratoga, the human capital arm of PricewaterhouseCoopers, is based on data collected between 2001 and the first quarter of 2004 from more than 10,000 organisations across Europe and the US.

The research found that investment in leadership training and development continued to be high, broadly estimated at  £1.03bn in 2003 across Europe.

However, Saratoga said it could find little evidence that this investment was currently demonstrating any major return. This echoes criticism from Henley Management College professor, John Burgoyne, in Personnel Today (12 October 2004).

After the BBC came in for criticism over a  £35m leadership management course, Burgoyne said: “Some [leadership training] pays off, much of it is waste.”

In Europe, the Saratoga report found evidence of a consistent decline in formal training investment since 2001. The figure stands at 23.9 hours in 2003, compared with 25.8 hours in 2001.

Diversity also took a hit, with results showing that between 2001 and 2003, the number of women in managerial posts declined by 1.9 per cent to 24.6 per cent. In professional posts, the figures fell from 33.6 per cent in 2001 to 29.3 per cent in 2003.

The report shows large variations in gender diversity across industries in Europe, with women making up 44 per cent of managerial posts in banking, while holding only 14 per cent of senior posts in the chemicals industry and 10 per cent in utilities.

The survey also showed that businesses were increasingly moving to measure human capital.

Richard Phelps, a partner at Saratoga, said HR practitioners must ensure that they are ready to respond, with systems and thinking in place.

“People in organisations cannot be regarded as human capital until and unless their contribution to value can be measured with the same confidence as any other organisational asset,” he said.

Go to personneltoday.com/26034.article  for more on the debate on leadership.

Go to www.ukmediacentre.pwc.com to download a copy of Key Trends in Human Capital: A Global Perspective

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