The ROI Of Leadership Is Actually ROE

The #1’s of leadership:

The #1 trait of a leader is self-awareness.

The #1 job of a leader is to build trust.


So what is the #1 measure of a leader?

How do we measure successful leadership?

What is the ROI (Return on Investment)?


I had this question asked of me recently from my nephew for his Miami University (Ohio) MBA thesis, and my answer needed more work, but I said, “Well, the ROI seems to be two-fold – #1 How you feel Sunday night before you go to work Monday morning, and #2 What do you see when you look into the eyes of your most important customer.”  As leaders, our most important customers are our employees. Bill Marriott and Herb Kelleher (former CEO Southwest Air) both famously said, “Customers are #2, Employees are #1.”

We spend so much effort and wasted time trying to measure training programs and efforts to build trust, emotional intelligence and employee engagement in exactly the same way we have historically measured producing cars per hour – ROI. Leadership development efforts, in ROI speak, sound like “So how much time away from our jobs (meaning sending e-mails, which is perceived as more productive because it looks like ‘work’) to learn these “soft skills” (I call them “real skills”) will be required, and how fast will we recoup that training time and money in future increases in revenue because of this leadership effort?”

ROE is not work done through people; it is people done through work.

We are in the year 2015, and yet we still measure our people, team and leadership efforts, like its 1930. We used to only manage absenteeism, time clocks and production schedules. ROE (Return on Expectations), says – “What behaviors do we want?” Specifically, do we want risk-taking, reduced ego, proper and powerful conflict with mutual trust – we need to know what that looks like, and whatever time it takes for everyone to get on the same page, is the ROE.

Ask yourself “what behaviors do we really want to support our brand and mission, and in what period of time?” Then hold your people accountable to that! Our brand and product revenues are being shaped currently with or without this knowledge. Branding doesn’t just happen because we are “nice” people. We need to clarify the expectations of our leaders, the organization and the industry.

The work world is hairy! – with money, power, prestige, and promotions at stake, we need to support the right behaviors for our brand and our lasting success. Ken Blanchard asks “Don’t we want a work-world where we believe in each other, trust is shared and integrity is common practice? We have to stop asking how much work can we get done through people (like we’re tools) and start asking how much can we get people done through work.” If we look at all our work, as simply an incubator to building rich human values, we begin to get ROE.

Our tombstones will hopefully not reflect all the binders, modules and meetings we collected as an ROI of our lives; rather I hope that our tombstones reflect our character – being a great friend, spouse, parent – the ROE of our lives. Companies holding expectations of leadership based on ROI is like parents demanding an ROI for raising children, wanting to know when their kids will take care of them.

Ideas for Dollars

Our vision and mission statements use words like trust, professionalism, customer focus and team building, all of which require new thinking, perspective, creativity and self-discovery in a new idea world, not a labor world. I love John Maxwell’s perspective, “If I share an idea with you, and you share one with me, we have 2 ideas. If I share a dollar with you and you share a dollar with me, we each only have 1.”

If time clocks and rigorous scheduling drive performance and loyalty – then do that, but the truth is that we are a society of highly connected new communication experts, we all need inspiration and motivation. We can further assess engagement surveys and in-depth customer surveys to check communication skills and behaviors associated with highly engaged people, and these results are productive.

As Marcus Buckingham points out in “First Break all the Rules” – 55% of American workers don’t care about what they are doing. What? Really – can you imagine being the CEO of your company and 55 out of 100 workers to whom you pay salary, expenses, bonuses and benefits simply don’t care? We can improve this ratio through clear ROE and less debate about ROI. ROE in Leadership is motivating through emotion and persuading through reason. So, leadership is measured not in ROI, rather in ROE. The Return on Expectations. The ROE of our leadership is in the eye of the employee.

Upon further analysis and thought to my answer to my nephew’s question – what is the #1 measure of a leader? The #1 measure of a leader is: What does the team stand for and what are they capable of doing two years after the leader is gone?

Have a great leadership day!


1 Comment
  1. Loved this one!

    “relate to employees as volunteers” & “what does the team stand for 2 years after the leaders gone” – fantastic insights.

    Thanks for sharing.

Leave a Reply