Before You Trim the Development Budget

by | Oct 30, 2026 | Coaching, Leadership, Team Development, Vistage Peer Advisory | 0 comments

Budget planning

I recently started working with a group of leaders intent on reducing organizational silos to improve operational effectiveness and communication. The engagement reflects their leadership’s commitment to keep investing in their leadership teams, despite the economic headwinds. Alongside developing solutions, we are actively working on decision-making, collaboration, and priority setting. The work also includes building critical “softer” skills, such as understanding ourselves and each other’s work behaviors, having healthy debate, achieving agreement, and holding each other accountable. 

That choice stands out because the opposite pressure is real right now.  Wages, insurance, fuel, materials, and interest costs are all up. When a CEO looks for something to trim, development is an easy target, mostly because its payoff isn’t immediate.

However, I challenge you to rethink this impulse. A fellow Vistage Chair recently shared a comment from one of their CEO members. After reading the research on what professional development returns, the CEO decided not to touch the development budget. The ROI, he said, was simply too high to give up.

I understand the instinct to pull back, but trimming development without a strategy often costs more than it saves. The tangible savings show up right away. The costs show up later and run higher: weaker leaders, slower decisions, and good people who leave for companies that keep investing in them.

 

The squeeze is real, and so is the talent problem

The latest Vistage CEO Confidence Index makes the pressure plain. In September 2026, more than 1,100 small and midsize business CEOs pushed the Index down for a third straight quarter. Three-quarters expect healthcare costs to rise at least 6% next year, and many are tightening investment criteria and delaying selected spending.

Yet when those same CEOs were asked to name their biggest challenge, talent topped the list, ahead of costs, growth, and the economy. Specifically, they named hiring, retaining, and developing skilled employees. Half plan to grow their workforce in the coming year. 

While bigger companies have cut their development budgets by nearly 40% over the last three years, CEOs of small and midsize businesses realize they can’t simply follow suit. Their companies don’t have the same depth of talent to fall back on. Every leader matters more, and so does every development dollar.

That means small and midsize companies have to be resourceful and intentional with their development investments. The question isn’t whether to develop people. It’s where development will do the most good: With the leaders who multiply their impact, on the skills tied to real business needs, and in formats that build capability over time rather than a one-day event.

Your leaders are the multiplier

When CEOs picture a development budget, they often picture frontline training. The dollars with the greatest reach, though, are those spent on the people who lead others.

Gallup estimates that managers account for at least 70% of the variance in employee engagement across business units. That finding draws on two decades of data and more than 27 million employees. Put plainly, whatever you invest in a leader reaches every person that leader manages. Cut it, and you weaken the single biggest driver of how everyone else shows up.

I know this from experience.  As a young leader at UnitedHealthcare, I recall two development experiences that had direct influence. The first was a 360 review. Honest feedback from the people around me taught me more about myself than I could have learned on my own. The second was role-playing hard conversations, like giving difficult performance feedback, before I had to have them for real.

Both did the same thing for me. I learned how I came across, adjusted my approach, and began to lean into my team’s performance rather than just my own. That shift is exactly what leadership development is supposed to produce.

Years later, as a CEO, I built those lessons into the way I led my own team. We created intentional moments for development, such as debrief sessions and role-playing. The investment that had been made in me became an investment I could make in others.

The return is real, and it comes in many forms

The research is clear that development works. A meta-analysis of more than 300 studies found that the average leadership program moves a leader from the 50th percentile to the 78th. Randomized trials of executive coaching show significant gains as well. Furthermore, Harvard Business School research found that nearly half the value of training came from freeing up managers’ time, a benefit most ROI calculations miss.

I’ve seen that last point firsthand. One leadership team I worked with set a number-one goal of getting four hours a week of their time back. In many cases, the answer was better delegation: Training others to take on more of the work and then holding them accountable for it.

Development comes in many forms, and the right mix depends on your people and your goals:

  • Individual coaching: One-on-one work on a leader’s specific challenges and blind spots
  • Assessments and 360 feedback: Honest data on how a leader shows up and where to grow
  • Team development: Helping a team build trust, debate productively, and hold each other accountable
  • Workshops and skills training: Focused sessions on skills like delegation, feedback, and decision-making
  • Peer advisory groups: CEOs and executives learning from peers outside their own company
  • On-the-job practice: Debriefs, role-playing, and stretch assignments built into everyday work

After more than 1,000 hours of executive coaching, I’ve seen what makes any of these work: Tangible tools leaders can use right away, practice before the stakes are real, and time to reflect on their own behavior.

If you trim, trim strategically

Not every development dollar is well spent, and I won’t pretend otherwise. The same meta-analysis that showed leadership training works also showed what separates programs that pay off from those that don’t. The most effective ones start with a clear needs analysis, run across multiple sessions rather than a single event, and use a skilled trainer or facilitator. Self-directed programs were much less effective.

So before you reach for the red pen, ask yourself:

  1. Which of our development investments are tied to a real business need, and which are habit?
  2. Are we developing leaders through ongoing, facilitated work, or through one-off events that fade by Monday?
  3. If I cut this, how much more of my own time, and my leaders’ time, will go to solving problems our people could have solved themselves?
  4. Who on my team would I most hate to lose to a competitor that kept investing?

Trim what isn’t working. Protect what is.

The real question

The leadership team that chose to keep investing wasn’t being sentimental. It was doing the math, and the math includes things a spreadsheet usually misses: the leader who stays, the manager who finally has time to think, the team that solves its own problems.

Rising costs are real, but the question isn’t whether you can afford to develop your people. It’s whether you can afford the leaders and teams you’ll have if you stop.

Disclosure: I’m a Vistage Chair.

Sources

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