Here’s a pattern I see, over and over again, in the companies I coach into:
They will spend six figures on a marketing agency without blinking. They will renew a software contract at a 20% price hike because “we’re locked in.” They will pay a management consultant to tell them what everyone in the building already knew. And then, when it comes to actually developing the humans who run the place, someone in finance will ask, with a straight face, whether we can “wait until next fiscal year.”
Leadership development is treated as the discretionary line item. The one you cut first when things get tight. The nice-to-have.
The data says this is one of the most expensive decisions a company can make.
The accidental manager problem
Let’s start with a number that should keep executives up at night. According to the Center for Creative Leadership, 60% of new managers report receiving no training when they transitioned into their first leadership role. Gartner, in the same reporting, found that 60% of new managers fail within their first 24 months, largely because of that same lack of training.
The Chartered Management Institute puts the untrained figure even higher: 82% of new managers step into their first role with no formal training at all. CMI calls them “accidental managers”: people who were good at their old jobs, got promoted as a reward, and were handed responsibility for other human beings with no meaningful preparation.
Even seasoned managers aren’t faring much better. Gallup’s 2026 State of the Global Workplace report found that only 44% of managers worldwide say they’ve received any management training. Fewer than half. Of the people running your teams.
We would not send someone into surgery without training. We would not send someone up in a plane without training. But we routinely put people in charge of other people’s careers, wellbeing, mortgages, and mental health with a promotion email and a pat on the back.
What that decision actually costs
The bill comes due, and it is enormous.
Gallup’s most recent research pegs the global cost of disengaged employees at roughly $10 trillion annually, or about 9% of global GDP. Global employee engagement has fallen to 20%. Manager engagement, which used to run higher than the rest of the workforce, has dropped to 22%, down nine points since 2022.
Here’s the number I want you to sit with, though, because it does the most work: Gallup finds that 70% of the variance in team engagement is attributable to the manager. Not the CEO’s vision statement. Not the ping-pong table. Not the mission-and-values poster in the break room. The manager. The person the company didn’t train.
The downstream numbers follow the same shape. A Harris Poll of 2,066 employees, reported by SHRM, found that 41% of workers with a poor manager reported feeling stressed or anxious about coming to work. CMI’s research found 28% of employees had left a company specifically because of a bad manager, and 33% said they were less motivated because of ineffective management.
Turnover, disengagement, stress leave, quiet quitting, the productivity tax of a team that’s watching the clock. These aren’t soft costs. They show up on the P&L. They just don’t show up in a line item labeled “we didn’t train our people.”
The ROI is not subtle
Now here is what makes the underinvestment particularly maddening: the return on leadership development is not a mystery. It has been studied. Repeatedly. In peer-reviewed journals.
The most rigorous synthesis is a 2017 meta-analysis by Lacerenza and colleagues, published in the Journal of Applied Psychology, which examined 335 leadership training evaluation studies. The finding, in the researchers’ own restrained academic language, is that leadership training works. It improves reactions, learning, transfer to the job, and organizational results. An earlier meta-analysis by Collins and Holton (2004) reviewing 83 intervention studies found effect sizes ranging from moderate to strong (d = 0.35 to 1.37), which in behavioral science is a very loud “yes, this matters.”
On the executive coaching side, the industry-reported numbers are eye-watering, and I’ll flag them honestly. The two most-cited studies, MetrixGlobal’s 529 to 788% ROI figure and the ICF/PwC Global Coaching Study’s median 7x return, both rely on self-report data from organizations that chose to invest in coaching. The numbers skew positive because the people answering the survey are the ones who bought the thing.
But even discounting the industry numbers, 86% of organizations that tracked coaching ROI reported at least breaking even on the investment, and the peer-reviewed literature (including a 2023 meta-analysis in Frontiers in Psychology) continues to find meaningful effects on behavior change, goal attainment, and wellbeing. The direction of the arrow is not in dispute.
The emotional intelligence piece
I want to name something that most executives will not say out loud but frequently think: leadership development is fine, but emotional intelligence training is fluffy.
I understand the reflex. But the research is now decades deep. Daniel Goleman and Cary Cherniss, in a 2024 article in Leader to Leader, note that when they co-founded the Consortium for Research on Emotional Intelligence in Organizations 25 years ago, the evidence base was sparse. That is no longer true. Data from hundreds of organizations now converges on the same finding: leaders, teams, and employees with higher EI show measurably better performance, engagement, retention, and wellbeing.
Goleman’s original 1998 HBR piece on “primal leadership”, along with the twenty-five years of follow-up research since, makes a case that shouldn’t be controversial anymore: how a leader manages themselves and their relationships is not decoration on top of their “real” work. It is the work. The leader who cannot regulate their own reactivity produces a team that spends its cognitive energy managing the leader instead of the customer.
That is a real, measurable, expensive productivity drain. It just doesn’t come with a line item.
What I want leaders to understand
If you are running a company, or a division, or a team, and you are looking at your L&D budget and wondering whether you can cut the leadership development line another 15%, I want you to consider the actual trade you’re making.
You are not saving money. You are shifting the cost. You are shifting it onto the people your untrained managers will bruise. You are shifting it onto the customers whose experience will suffer. You are shifting it onto the recruiters who will need to backfill the turnover. You are shifting it onto the medical claims from stress-related illness. You are shifting it onto your engagement scores, and eventually onto your Glassdoor page, and eventually onto your ability to hire the next round of talent at all.
The math is not complicated. It is just uncomfortable.
Companies that invest in developing their leaders (with actual training, actual coaching, actual attention to emotional intelligence and self-awareness) get more back than they put in. The research says so. The financials say so. The engagement data says so. Even the coaching industry’s own softer numbers say so.
The only remaining question is whether your organization is willing to do it before the bill for not doing it lands on your desk.
And it will land. It always does.
Love,
Certified Professional Coach and Psychologist
____________________________________________________________________________________________________________________________________________________________________
How often have you wished for that person in your life who listens deeply, doesn’t judge you, and doesn’t try to fix you? That person who holds space for you to talk through your struggles, your hopes, and dreams so that you can live the personal and professional life that you truly want? I’m that person. Yes, I’m a psychologist and a professional life and leadership coach but my superpower is listening, deep, empathic, compassionate listening. If you’ve been seeking a professional listener who will help you live the life you truly desire, let’s set up a time to talk. My email is Lisa@LisaKaplin.com.