How to Measure the Value of a Promotion Through Leadership Development

Leadership development programs do more than prepare employees for future roles—they also bring measurable value to the organization. When these programs are tied to succession planning, they can lead to better retention, stronger performance, and cost savings. But how do you measure that value?

Let us show you how.

1. Retention from Being in the Program
Individuals who are selected for leadership development programs often feel more committed to their organization. Simply being chosen tells them they're valued and have a future with the company. One way to measure this impact is to ask participants: To what extent has being included in this program influenced your decision to stay? Have them give a percentage between 0 and 100%. Then multiply that percentage by the cost of turnover to get the monetary value.

For example, if someone says the program influenced their decision to stay by 50%, and the cost of turnover is $100,000, the value is $50,000.

Not sure how to calculate turnover cost? A common estimate is 1.5 times the employee's annual salary, accounting for recruitment, onboarding, lost productivity, and institutional knowledge. If your organization tracks actual turnover costs, use those figures instead.

2. Value of the Promotion Itself
When a participant gets promoted, you may be saving the cost of recruiting and onboarding someone from the outside. Even if the promotion fills an internal vacancy, you’re still reducing the disruption of having an open position. To keep it simple, use half the cost of a turnover as the value of the promotion. If turnover costs 1.5 times the person's salary, then this value is 0.75 times their salary.

3. Performance After Promotion
Leadership programs should help individuals become better leaders. If a promoted employee performs better than their peers, that's added value. Ask their manager: How does their performance compare to others in the same role? If the manager says they're 10% more effective, that translates into 10% of their salary as added value from the program.

4. Retention After Promotion
Promotions often lead to longer retention. After someone is promoted, you can ask: How much did your promotion influence your decision to stay? Again, take the percentage and multiply it by the cost of turnover to get a dollar amount. This is separate from the retention value of being in the program before the promotion—both count.

In short:

• The program kept them from leaving early.
• The promotion kept them from leaving later.
• Together, that's two avoided turnovers.

5. Value of Project Work During the Program
Many programs include hands-on projects. These give participants a chance to apply what they're learning—and sometimes the projects lead to real savings or improvements. If so, try to have the participant assign a dollar value to that outcome. It's smart to build this concept into the leadership development program from the start, so participants are thinking about the value they're contributing.

In Summary
If you want to understand the full value of a promotion tied to a leadership development program, look at:

• Retention due to program participation
• The cost savings of internal promotion
• Performance improvements after promotion
• Retention after promotion
• Any value-added projects completed during the program

Each of these elements can be measured, and together, they tell a compelling story about the return on investing in your people. Promotions aren't just milestones—they're measurable markers of success for both the individual and the organization.

Are you ready to measure the value of what you do?

Get started at www.roiinstitute.net.