The ROI of leadership development

As SMEs navigate tight margins and rapid change, investing in leadership development is proving to be one of the most reliable drivers of productivity, capability, and long-term growth. EMA’s Nick Sheppard explains how to measure the real return on training, and why upskilling is no longer optional.

For many SMEs, professional development has long been viewed as a discretionary expense.

Important, yes, but difficult to justify when budgets tighten and operational pressures mount – especially in the current economic climate. However, increasingly, training and leadership development are no longer being considered “nice-to-haves” but essential levers for business growth, productivity, and competitiveness.

That’s the message from both industry research and on-the-ground experience.

According to Nick Sheppard, Head of Learning and Development at the Employers and Manufacturers Association (EMA), the data is clear:
“Professional development isn’t a nice-tohave; it’s a growth lever for SMEs.”

Nick works with hundreds of EMA member businesses every year, and the pattern is consistent. “Companies that invest in structured training see measurable improvements in productivity and engagement. Our leadership programmes… give managers the confidence and tools to lead effectively, which translates directly into better team performance and business results.”

He says that as SMEs face rapid market shifts, regulatory changes, talent shortages, and new technologies, the return on investment (ROI) of leadership development has never been more crucial, or more measurable.

WHY TRAINING PAYS OFF

Leadership development is often associated with “soft skills,” but its business impact is hard-edged. Productivity, retention, safety, and capability-building all improve when training is done well.

Nick says that combining leadership capability with technical and compliance training amplifies the impact. “When businesses combine leadership capability with technical and compliance training… they not only meet regulatory requirements but also create safer, more efficient workplaces. These gains are real and immediate for SMEs that want to stay competitive.”

This aligns with findings from Upskills, a local workplace training provider, which highlights that direct productivity gains, fewer errors, and greater internal capability are among the most common measurable benefits of training. Its research indicates that even frontline training
leads to higher staff confidence and more efficient workflows.

In a climate where margins are tight, those improvements matter.

MEASURING ROI

One of the biggest hurdles for SMEs isn’t believing in the value of training, it’s measuring it. Nick says this often stems from a common misconception. “The biggest mistake SMEs make is treating training as an expense rather than an investment.”

Instead, EMA encourages leaders to linktraining outcomes directly to business goals. He points to courses like Train the Trainer, where businesses often report reduced reliance on external providers and strengthened in-house capability.

Similarly, EMA’s Employment Law Essentials and Employment Relations Advisor courses help businesses manage risk, an area with direct financial implications.

“Tracking ROI doesn’t have to be complicated,” he says. “Start with practical measures like productivity per employee, staff retention, and customer satisfaction.

These are the metrics our members use to demonstrate that training drives growth, not just costs.”

The ILX Group – a digital learning services provider – in its own analysis of training ROI, echoes this sentiment.

ILX argues that traditional metrics like attendance certificates or completion badges offer “little meaningful insight”, advocating instead for tracking behavioural change, productivity gains, adoption of new processes, and reduced rework or compliance issues, all areas SMEs can
quantify.

Together, the evidence points to a simple truth. Businesses must look beyond the classroom and into the workplace to understand training’s true impact.

A STRATEGIC IMPERATIVE

In the face of technological disruption, talent shortages, and regulatory complexity, upskilling is becoming a defining factor for an SME’s ability to innovate and remain competitive.

Nick is seeing the trend play out in real time. “Upskilling is now a strategic imperative. We’re seeing strong demand for future-focused courses. SMEs know that leadership capability and technical skills are the foundation for adapting to change, whether that’s new technology,
regulatory shifts, or market pressures,” he says.

EMA’s members span manufacturing, logistics, professional services, and more, but Nick says they share a common challenge, staying competitive. “Investing in training isn’t optional, it’s how you build resilience and innovation into your business and help lift engagement.”
In its research, Upskills reinforces this point, noting that capability-building drives innovation by enabling staff at all levels to contribute ideas, problem-solve, and improve processes. A critical advantage for SMEs that rely on agility rather than scale.

In short, upskilling unlocks innovation, and innovation drives growth.

For Nick, the message to business owners is straightforward: Investing in your people is one of the highest-value decisions you can make.
“EMA’s programmes are designed to deliver those outcomes,” he says.

“Training is how SMEs build resilience, competitiveness, and stronger workplaces. It’s how businesses grow.”