As a CEO, you’re constantly asked to make investment decisions. But when it comes to investments involving people – talent development, wellbeing and culture – the risk feels higher.

Why? Because the data available to you, such as participation rates, satisfaction scores and even indicators of behavior change when you have them only offer reassurance; they don’t answer the questions you actually need answered: ‘Which talent efforts generate the greatest return?’ ‘Which investments justify continued or increased funding?’ or even ‘What programs should we refine or let go?’

As a result, a measurement problem cascades into a decision-making problem.

Why traditional ROI approaches haven’t worked

On paper, measuring the ROI of investments in your people should be straightforward. Define the desired outcomes, collect the data and do the math. But in practice, lack of data and the cost of conducting rigorous impact studies compete with the cost of programs themselves, causing many organizations to sacrifice ROI measurement altogether.

The result is a familiar pattern: Programs that are often the hardest to defend are the easiest to cut.

What if the problem isn’t that people programs are too soft to measure, but that we’ve been stubbornly insisting we must measure their impact in a way that is more complicated than it needs to be?

From guesswork to grounded decisions

In a recent white paper, ‘Show Your Impact: A New Way to Measure ROI’, it is demonstrated that ROI can be estimated far more simply than most organizations expect – without in-house experts and with less than 10 minutes of a participant’s time – when measurement is grounded in impacts leaders can meaningfully report on.

For example, as Don Rheem explains in the book Thrive by Design, levels of employee engagement are associated with meaningful differences in performance: Employees who are actively engaged are significantly more productive than those who are merely engaged. Thus, when a talent initiative measurably shifts engagement, that change can be translated, using conservative assumptions tied to compensation, into a reasonable estimate of financial impact.

As reported in ‘Show Your Impact’, when the ROI of executive coaching – often one of the most scrutinized talent investments – was measured in this way, the largest financial returns were generated when coaching impacted five areas: business revenue, retention, strategic thinking, engagement and stress and wellbeing.

Four additional domains – overall capability, communication, skill development and work efficiency – also demonstrated measurable impact, though their financial effects were more moderate.

Notably, the largest financial effects emerged where leadership behavior created ripple effects by shaping decisions, influencing others and affecting performance beyond the individual leader.

Taken together, the findings point to a critical insight: Leadership development creates value in many ways, but the largest returns emerge when leadership growth intersects with organizational leverage.

What this changes for executive decision-making

When the financial impact of people programs becomes visible, leaders can evaluate them alongside other value-creating investments – technology, infrastructure, market expansion – rather than treating them as discretionary spend.

As a result, people initiatives move from ‘as budget allows’ to a central part of budget conversations and negotiations. Specifically, we see three practical ways ROI data can be used.

1. Align investments with business and market realities: From 2018–19 and again in 2023, organizations found themselves in the middle of a full-scale war for talent with sustained unemployment below four percent. Voluntary turnover surged, hiring costs spiked and retention moved from a people priority to a business imperative.

At times like this, the question isn’t whether to invest in people, but where investment will most directly stabilize the business. With ROI data in hand, the C-suite can see where each initiative is moving the needle and therefore move beyond intuition to make data-driven decisions.

2. Protect the highest-impact investments: When economic or business realities force budget reductions, organizations often fall back on a familiar pattern: The programs hardest to tie to the bottom line are the first to be cut.

Leadership development, wellbeing initiatives and culture efforts frequently top that list, not because they lack value, but because their impact is harder to quantify and defend financially. That dynamic changes when ROI data is available across people programs.

Rather than making broad cuts or defending initiatives on belief alone, the C-suite can evaluate the financial impact of people programs alongside the impact of R&D initiatives, technology upgrades and market expansions.

Decisions shift from being perceived as subjective or tied to ‘pet projects’ to being grounded in evidence, allowing leaders to protect the investments that deliver the greatest business value when scrutiny is highest.

3. Drive continuous improvement: The greatest impact from people programs rarely comes from wholesale reinvention. More often, it comes from disciplined evolution, refining what works rather than chasing the latest management trend in search of a breakthrough.

When ROI data is available, talent teams can track how impact shifts as programs are adjusted over time. This makes it possible to distinguish between changes that genuinely improve outcomes and those that may look promising on paper but fail to justify their cost.

Instead of relying on intuition or enthusiasm alone, organizations gain a feedback loop that supports smarter program design and sustained improvement. These insights also strengthen how people programs are communicated.

Internally, leaders can articulate, not just assert, the specific value of different initiatives, improving credibility and participation. Externally, the same evidence can reinforce the employer brand by demonstrating a thoughtful, evidence-based approach to investing in people.

Making people investments legible

For many leaders, the real challenge has never been believing that people matter. It has been making those investments legible in the same decision-making language used for every other material investment in the business.

When the impact of leadership development, wellbeing and culture remains invisible – or visible only through proxies like participation and sentiment – those investments are forced to compete at a disadvantage.

What’s changing is not executive appetite for rigor but the feasibility of applying it. When ROI can be estimated credibly, efficiently and at scale, people programs stop living on the margins of strategy. They become assets that can be prioritized, protected and improved with the same discipline applied elsewhere in the organization.

In an environment where scrutiny is high and trade-offs are unavoidable, the ability to show how leadership investments create value is no longer a ‘nice to have’. It’s a leadership advantage – one that enables clearer decisions, better stewardship of resources and greater confidence that investing in people is not only the right thing to do but also a smart decision.

Opinions expressed by The CEO Magazine contributors are their own.