Your Strategy Investment is Profit
Executive Development

Your Strategy Investment is Profit

BH
Bonnie Hagemann • April 08 , 2022

Investment in strategy is bearing fruit in both the short term and the long term. They will pay for themselves while future-proofing your company.

As you consider which programs to implement and how much to spend, there is always a consideration of who is going to pay. Is it going to be paid for by corporate as overhead for the business or is it paid by the business unit and therefore impacting that leader’s profit and loss (P&L)? The data consistently shows through the years that corporate is most likely to pay. This is an important distinction for CEOs and executives to think through, because if the business unit is charged and the business unit leader is financially incentivized based on performance, the organization is inadvertently discouraging that leader from investing in his or her talent.

There are ways to address this such as equal required investments from the business units whether they participate or not thus encouraging them to develop talent or allowing the development investment to be categorized in a way that does not penalize the leader.

In private equity, we are seeing that development from a portfolio company can be categorized in a way that is not charged back as they show it as investment to help with the eventual sale of the company. Related, culture survey can be used in the same way, creating a baseline for what is needed to create a compelling culture and as a highlight of the positive parts of the culture when the company goes up on the block to sell.

Organizations want leaders who are willing to invest in their own development. We see this as a positive and champion the idea of corporate paying, since it is the organization that benefits the most when development is done as a systematic, thoughtful way that advances the strategy of the company. If the organization knows what it wants to measure for return on investment from the beginning, they can build it in.

The bottom line is that a well-designed program will create a positive return-on-investment for your organization.

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