Even with a soft year in 2023, merger and acquisition activity still exceeded $3 trillion.  In the many costly transactions that occurred, few of these were expected to produce immediate financial gains for the parties involved. In fact, many businesses likely took a hit on their financials in the near-term because a merger is usually part of a longer-term strategy, with the benefits sometimes several quarters (or even years) in the making.

I use this data to underscore a critical point about measuring the impact of learning: Organizations make some of their biggest bets on actions that don’t produce immediate results. But when we consider how to measure the impact of learning, we often feel that we must show tangible benefit in 90 days or less. In some cases, a near-term impact measure makes sense, but in others, we need to look at metrics the way the business looks at investments – not everything has to pay off quickly to be worth doing.

Near-Term vs. Long-Term Impact

In an earlier post on leadership development strategy, I talked about two different but complementary strategies – near-term and long-term. A near-term strategy is broad, like functional management training, newly promoted manager onboarding, or leadership development tied to a current initiative. The long-term strategy, on the other hand, is implemented through leadership pipeline programs, like high-potential and bench development programs.

Because leadership pipeline programs are highly visible, and often with a significant cost-per-head, learning leaders may feel pressure to use a business/ROI metric to show the expense is worth it. Action learning projects are sometimes used in leadership pipeline programs as proxies for showing a fast return on the learning investment, but they don’t really measure the longer-term intent of a bench development effort.

Measuring Your Leadership Pipeline

I’ve seen several organizations who have tightly integrated talent management and leadership development, and they approach the measurement of bench development differently: They measure what these programs are actually meant to do – fill the leadership pipeline. The metrics they use not only align better to the outcomes they are trying to achieve; they also put their work at the center of a very different discussion with executives about talent in the organization.

Aligning programs to metrics like leadership talent pool hot spots, internal fill rates for key leadership roles, availability of ready-now successors, and diversity of candidate slates for leadership positions, show bench programs in a very different light – as longer-term investments that will yield a significant payout over time. It also creates more clarity for us as learning leaders about what we’re trying to accomplish for the business, which could even change the way we approach bench development overall.

Treat Executives Stakeholders Like Investors

While it varies from place to place, most executives understand quite clearly the mid- to long-term implications of a weak leadership pipeline. If we can present them data to support good decisions around the health of the talent pipeline and align our programs to address those metrics, we may be surprised at how their interest grows in the talent pipeline and the programs supporting its health.

So, let’s treat our executive stakeholders as investors, and let talent metrics be our business impact metrics. It may take a bit longer to show the result, but if our stakeholders know from the beginning that we are focused on the future, we might be surprised how engaged they are with us on the journey.

Originally posted here by Larry Clark for Harvard Business School Publishing