Fixing Leadership Development
Experts and practitioners offer a snapshot of approaches to leadership development that they say can help solve some of today's problems when it comes to developing leaders.
By Robert J. Grossman
At a time when dollars are scarce, one report shows companies in the United States spent $15.5 billion last year to keep their pipelines flowing with the right talent. That's a 14-percent increase from the previous year, according to the report by Oakland, Calif.-based Bersin by Deloitte. They also grew leadership staffing by 12 percent.
With resources flowing at such an enviable level, the payback should be evident. Yet, in a recent survey of more than 14,000 human resource leaders and line managers by Bridgeville, Pa.-based Development Dimensions International, only a third of respondents said they have sufficient up-and-coming talent in their leadership pipelines to meet current and future business needs.
Now, there are indications that CEOs may be getting the message and are willing to fund leadership-development programs, but they're looking more closely at what they're getting for their money.
"They are becoming increasingly demanding in their expectation that these programs demonstrate return-on-investment," says Pierre Gurdjian, director at McKinsey & Co.'s Brussels office.
Still, many programs are foundering. In The State of Human Capital 2012 -- False Summit: Why the Human Capital Function Still Has Far to Go, a joint report from The Conference Board and McKinsey, 65 percent of 517 human capital managers and senior executives said improving leadership development and succession management was their No. 1 priority for the next three years. Fifty-eight percent said HR was "taking no action against the priority areas" in their organizations.
Experts, consultants and academicians are now speaking out, frustrated with the poor performance. Sparked by a recent report written by McKinsey principals in Europe -- "Why Leadership-Development Programs Fail," published earlier this year in The McKinsey Quarterly.), they are involved in a vigorous discussion about mistakes employers are making and how to correct them. At first blush, employers may believe they are already avoiding these pitfalls. But Gurdjian says "not really." Here is a listing that encompasses the leadership-development failures HR executives, consultants and academics interviewed for this article say are most damaging and what can be done to fix them.
* Failure to link to strategic objectives. Programs that develop aspects of talent that are not necessary to carry out company strategy are a costly diversion. For example, depending on strategy, developing team leadership skills may be less of a priority than acquiring skills needed to lead in ambiguous and diverse environments. Most impactful leadership-development initiatives link to company strategy, culture and CEO mandates, and the specific behaviors they require. "We look very closely at the overall context in our planning," says Shiela Vinczeller, vice president of talent management and HR corporate staff groups at International Paper in Memphis, Tenn. "Within that framework, we ask, 'Why do we need this program? Where do we want to get to with it?' "
At Pfizer, the New York-based global pharmaceutical company with more than 75,000 employees, HR initiated the 18-month-long Leadership Investment for Tomorrow initiative (LIFT) after Ian Read, Pfizer's CEO, set forth a new strategic goal to see more diversity in the pipeline. The program's mandate is to help female and minority high-potentials master executive-leadership skills.
* Failure to customize. Programs that squeeze development needs into generic, off-the shelf solutions may save money, but outcomes are not optimal. Don't assume one size fits all. "The more you tailor programs to your strategy and culture, the better they'll be," Gurdjian says. At Stryker Corp., a Kalamazoo, Mich.-based medical-technology company with 25,000 employees, managers receive individual assessments, specific training and action-learning assignments, all customized to help them develop their strengths and cope with their weaker competencies. The company supplements its offerings with off-the-shelf modules, such as a two-week standardized program for executives at Harvard University.
* Failure to focus. Many employers devise a way-too-long laundry list of desired competencies. Developing two or three competencies should be the limit. They should differ depending on the individual. "In line leaders, you may be working on ability to hold people accountable in executing their assignments or on team leadership," says Ruth Malloy, global managing director for Hay Group's leadership and talent practice in Boston. "In advisory roles, you might focus on more complex influencing skills like empathy or ability to manage relations."
Gurdjian adds that employers should not "rely on the alphabet-soup list of traits or competencies. Leadership is about succeeding in specific situations," he says. "If you don't require innovation, why would you train for it?"
* Failure to settle on a philosophical approach. Companies that haven't established their position and explained it persuasively are less likely to have buy-in within the ranks. Though experts agree talents can be developed, there is a debate over how best to go about it. Strength-based development, for example, helps people identify their talents and limitations, and then focus on leveraging their talents. "The big 'aha' is that that everyone is not the same," says Jim Harter, Gallup Inc.'s chief scientist of workplace management and well-being. "It's a waste of time to expect people to be something they're not."
Steven Benscoter, vice president of HR for Stryker Corp., concurs. "If we have a great sales person who can close deals better than anyone, but can't service accounts, we would probably try to put a service rep beneath him," he says. "He could do it himself, but is it a good use of his talent? If we can get people to be self-aware of their gaps, they can probably manage them. Our method makes people aware of everything, but positions them to succeed at what they are really good at."
In contrast, some are less willing to concede that character can't be shaped and competencies can't be taught, even if they're not a person's strong suit. A motivated individual who aspires to a role that requires a particular competency might be able to acquire it, and the company's investment in helping to make it happen can be worth the effort.
"All people can learn and improve," Gurdjian says. "But there's a tendency to avoid working on behavioral changes because it makes participants uncomfortable. Shaking people up, making them see themselves in a different light, may merit the stress it causes.
For example, says Jennell Jones, senior director of colleague development and high-potential strategy at New York-based Pfizer, many components of its LIFT program are disruptive. "The purpose for this is rooted in the belief that unexpected disruptions can lead to meaningful growth and development for leaders in areas like adaptability and ability to thrive in change," she says.
* Failure to mesh business needs with meaningful action learning. The No. 1 complaint of employees and candidates polled by CCL, McKinsey, Hay and others is that they are not provided with real opportunities to learn on the job and demonstrate their value. The challenge is to find enough stimulating stretch assignments for individuals that will benefit, or at least not jeopardize, business performance. Until recently, these projects mostly have been team or cohort-based, with individuals working on them in addition to their regular job assignments. At Catholic Health Partners in Denver, for example, teams receive action-learning assignments that can run as long as 15 months and take up about 25 percent of their time.
But separate action-learning projects are in decline, primarily because of costs. "The ability to take somebody, often top executives, off their real jobs and assign them to a project requires significant outlays in time and money," says Raoul Buron, principal at Ocean Grove, N.J.-based Ingenuim Leadership Consulting and former chief learning officer at Prudential Financial in Newark, N.J.
* Failure to make training a journey, not an isolated episode. When learning is not an ongoing process, retention and integration of information is poor. Also, participants may feel a rush of excitement during and after the episode, but the euphoria soon fades. "Without ongoing follow-through, participants who return from off-site experiences feel lost because no common experience or dialogue carries over," International Paper's Vinczeller says.
Programs spanning six months to two years that feature a combination of action learning, coaching, mentoring and instruction are most successful, she says. Programs at International Paper run about eight months and feature a mix of self-paced online learning, face-to-face classroom instruction, workshops and on-the-job experiential learning. "For us, learning is an all-the-time thing," Vinczeller says. "It's tied to our integrated approach to the whole people process."
* Failure to hold line managers accountable for developing talent. Though supervisors are expected to coach and increasingly to help create and supervise action-learning assignments, in the main, their performance at these tasks has been underwhelming. "They consistently score lowest on their [360-degree assessments] regarding their ability to develop people," Pasmore says.
Direct supervisors have to be held accountable for coaching, creating and supervising action-learning assignments. "They need to be involved throughout, know the program and be at the front door when the person comes back from the instructional phases," Buron says. "They have to understand what happened there and ask, 'How are we going to apply what just happened to your job and develop a plan for doing it?' "
To draw managers into the process, the first-line-leaders program at International Paper targets both participants and their bosses. Participants' action learning is incorporated into regular work assignments. "The supervisor goes through a workshop before the program begins to help with the journey and to learn or brush up on coaching skills," Vinczeller says.
* Failure to develop the pipeline at all levels. Many times, programs aren't comprehensive, extending throughout managerial levels from entry-level to C-suite. "The best approach is to include all managers so you have a measure of talent for the entire organization," says Rich Wellins, senior vice president of DDI. "Frequently, middle managers are neglected, leaving gaps. When that happens, it places the entire pipeline in jeopardy."
* Failure to produce meaningful metrics. Many program assessments are limited to written or online participant surveys. Known as "smile sheets," participants are asked if they enjoyed the program and gained knowledge they can use and apply. Self-reported, the data is informative, but not sufficient. Additional measures should dig deeper into whether and how much individuals have benefited. Examples include: pre- and post-program diagnostics and 360-degree assessments to measure behavioral change, and pre- and post-comparisons of performance assessments and engagement.
Before beginning the LIFT program at Pfizer, chosen high-potentials weather eight hours of competency assessments against a senior-management model. During the final session, 18 months later, the assessment is repeated and analyzed.
"We want to establish that they've closed the gap," Jones says. "We keep track of all lateral moves and promotions, and know that they are outpacing the people not in the program. We also track retention and how it aligns with their peers outside the program."
Tying leadership to business outcomes is perhaps the biggest challenge. Some program impacts may not be quantifiable. Others are indirect or not measurable in short time frames. Even when generated, C-suite or board members may dismiss metrics such as job-satisfaction indexes, believing them to be fuzzy or soft. Metrics can be generated, however, that measure the impact of programs on bench strength, profits, savings, retention and engagement.
"An ideal situation occurs when development activities are embedded within business activities that already are being measured," Gurdjian says. "A business unit with a predetermined goal or target should be able to demonstrate that training and development activities led to superior results at the end of the quarter or year."
Getting it Right
Of course, some organizations have been getting leadership development right all along. For example, The Hay Group, based in Philadelphia, ranks the leading 20 performers annually. "Top companies are more likely than other companies to make development opportunities available to every employee, and to recognize that many of the skills once required solely for senior-leadership roles -- high levels of emotional intelligence, commitment to continuous learning, analytical thinking -- are now critical at every level of the organization," Malloy says. Top companies are also more likely than others to offer new and mid-level managers classroom training, web-based leadership modules, 360-degree assessments and mentoring. IBM, Procter & Gamble, Microsoft and GE have earned recognition on every Hay list since 2005 for doing these things. Overall, however, companies like these are in the minority.
The mystery is why so many organizations are lagging, especially since HR professionals in general -- and specialists in leadership and succession planning, more specifically -- know how to avoid what experts characterize as "common-sense" failures noted above.
"There may be lack of skills in the organization, no buy-in from management or a legacy of doing what we did in the past," says Thomas Halbeisen, associate principal in McKinsey's Zurich office. Whatever the reasons, he and others say, it would be prudent for HR leaders to critically examine their leadership-development operations and, if they haven't already done so, put in place comprehensive metrics to assess quality and return-on-investment.