A study sponsored by UNICON measured and found an exceptional return on investment for an accelerated leadership program designed for Home Depot.
by David Vance
July 3, 2008
A study sponsored by the International University Consortium for Executive Education (UNICON) measured and found an exceptional return on investment (ROI) for a custom executive education program developed by the faculty at Emory University’s Goizueta Business School. The results of the study were published in April 2005.
The custom program studied was an accelerated leadership program (ALP) designed for Home Depot. The stated purpose of the program was to:
• Prepare director-level managers for promotion to
officer positions in the company within three years.
• Enhance participants’ business acumen and
leadership capabilities.
• Provide an environment in which participants can develop relationships with peers from across the company.
• Provide a forum for senior executives to articulate
the company’s vision and strategic priorities.
In 2002, Goizueta conducted two of these ALP programs, each with 30 officer candidates selected by Home Depot. Each course consisted of two five-day classroom experiences, separated by a gap of four to six weeks. The cost of the course was $10,000 per student, for a $600,000 total tuition investment.
In 2004, when Peter A. Topping, Ph.D., of the Goizueta Business School began his research on the ROI of the program, 55 of the 60 participants from the 2002 classes were still employed at Home Depot. Those 55 employees became his “experimental group.” He then chose 33 Home Depot employees with similar profiles for his “control group.”
Based on his research, Topping’s study produced a four-block analysis of financial, operational, strategic and leadership results that could be attributed directly to the ALP programs.
Block 1: Financial
• $80 million in sales growth.
• 20 percent growth in operating profits.
• 29 percent increase in profits.
• Saved $2.1 million in search fees.
• 20 percent decrease in workers’ compensation expenses.
Block 2: Operational
• Saved 77,000 workdays.
• Accident-related transports down 44 percent.
• Impacted whole division’s forecasting, scheduling,
stock basics, etc.
Block 3: Strategic
• Using strategic framework and return on invested capital, made decision on merchandising a new store that
generated a $5 million increase in profits.
• Spent much more time in strategic issues and
permeated all levels of organization.
Block 4: Leadership
• Added item on horizontal thinking to performance
review for managers.
• Directors now dedicate 70 percent of time
to developing people.
• 84 percent increase in bonuses attributable to cascaded
“critical thinking” among direct reports.
Topping wrote that Home Depot “absolutely” got a good return on its direct investment of $600,000.
The study found the payoff of the program to be longer term and subject to a range of externalities that made it hard to isolate the effects of this single developmental activity on business performance.
However, Topping concluded that “adding up the self-reported financial gains resulting from the participants’ experiences gives a figure easily in the tens of millions.” He concluded that “even if the ALP were responsible for just 10 percent of those financial gains, it would provide an exceptional ROI — in excess of 100 percent.”