Featured Articles

Leadership Development: Replacing Return on Investment with Return on Strategy

Finally, organizations — or at least a growing number of them — are realizing that “training” doesn’t work. There has been a dramatic shift. Now, organizations are focusing on “development” to build capability — both individual and organizational.

What’s more, firms are concentrating this development on the real work of the business. They’re also eschewing return-on-investment measures for what’s called return on strategy — an assessment of the organization’s capability to implement strategy as a return to the investment in leadership development.

This doesn’t mean training isn’t part of the development package. It’s just not the answer all the time, and it’s never the answer in isolation.

The factors making an impact on learning and leadership development in organizations aren’t new: increased pressure to demonstrate a return on investment, the competition for limited resources like money and time, and changes in global markets and technology. What is new, however, is how these drivers are changing the development of leaders.

In 2003 leadership development ranked in the top five areas of strategic focus for 65 per cent of the surveyed organizations. This represents a 20 per-cent increase over a similar study conducted eight years ago. Unfortunately, the investment in leadership development has in no way kept pace with its increased level of importance — primarily because of dissatisfaction with the minimal impact that development initiatives have had on the bottom line.

However, low satisfaction levels, combined with the increasing pressure to develop leadership capability, have led to some interesting trends and creativity related to the development of leaders.

During the last five years, there has been a shift away from training in the traditional sense to a more action-focused approach. In a 1998 study conducted for their book, Leadership by Design, Albert Vicere and Robert Fulmer found organizations have been making the following shifts in leadership development:

Format: from theoretical or standard, prescribed coursework to customized study programs based on real issues;

Time frame: from one-off events to a learning journey with ongoing support;

Methodology: from lectures and workshops to participatory, interactive learning sessions;

Focus: from individual learning to team-based learning; and

Supplier: from training vendors to partners, co-designers, facilitators and coaches.

These trends continue at an ever-increasing rate.

A key component of the shift identified by Vicere and Fulmer is the need to link learning and development to the organization’s business strategy. Organizations are moving away from individual-based learning to team-based learning, where teams of leaders learn together using the real work of the business. As a result, action learning, learning communities and longer-term, curricula-based learning teams are increasing in popularity.

A team that develops together…

One transnational energy company based in the United States created an 18-month corporate MBA-like program for leaders on the track to the executive suite. This program brings those leaders together from across the globe for four days every quarter. During that time the learning team learns key business concepts specific to their organization, draws upon the best practices in leadership development and works on actual projects and case studies based on the organization’s real challenges. In between sessions, teams are assigned work on action-learning projects and other learning assignments.

The return on strategy of this has been three-fold for the organization and the individuals. First, the individuals are learning processes and approaches that are specific to the organization and driven by the strategy. Second, the learning teams are solving real business problems and building skills to solve similar problems in the future. And finally, the individual participants are learning about cultural differences and building cross-functional relationships and networks that will serve them well as they take on more strategic roles within the organization.

Similar types of processes are cropping up all over the world, many of which are building in computer chat rooms, called learner space, to maintain connections between the formal sessions.

Enter technology

In some high-tech organizations, learning for high-potential leaders has gone completely virtual.

Leveraging the processes and technology that have given rise to the growth of online college and university programs, one organization has developed a program similar to the corporate MBA described earlier, but facilitates it almost completely via online media, course-specific chat rooms and occasional webinars. Some might rue the impersonal nature of this process, but participants and the managers of the participants are citing great success after the first pilot program.

Coaching, mentoring ups commitment

Obviously, not all development must be team-based. There is still room to focus on personalized and specific learning that is targeted to individuals and their very specific needs. Growing in popularity in this arena are mentoring and coaching. Mentoring programs can range from highly structured to very open, learner led mentoring relationships.

The Canadian division of a U.S.-based consumer goods company launched a mentoring program in early 2003 that matched new “high-potential” leaders with more seasoned and experienced leaders.

The program contained two structured sessions: one to cover some recent leadership trends and provide some external focus, and the second to investigate the key strategic choice made by the organization. While less structured than many formal mentoring programs, leaders in this organization appreciated the format. The return on investment was measured in increased commitment to the organization and increased readiness to take on new roles.

Putting succession planning into practice

At IFDS, a mutual fund service provider located in Toronto, coaching, mentoring and action learning are being combined to provide targeted learning and development for newly promoted managers or candidates for promotion.

In its executive succession process, the firm identifies potential successors for each of the key executives in the organization. To be accepted into the development program, participants are sponsored by an executive. They are given a business case based on the real work of the company and asked to present a recommendation to the executive advisory board.

Based on the result of that presentation, the selected individuals undergo an in-depth assessment to identify key development areas. The sponsoring executive is responsible for mentoring the individual and monitoring the development plan. The entire executive team, however, is accountable for overall development.

In addition to the sponsor, many participants are provided with a coach who is an executive within the organization possessing the specific skills and capabilities requiring development in the up-and-comer.

Assessment clinics

Another trend that is worthy of note is the resurgence of what’s sometimes called the assessment and development centre methodology. This is an approach where leaders or potential leaders are assessed on their performance in a series of case studies delivered through role-playing or computer simulations, designed to assess particular leadership competencies.

A recent example of this is a pharmaceutical company seeking to develop leadership and coaching skills in its sales leaders. Prior to coming to the training clinic, participants completed two online assessments designed to measure interest and aptitude related to coaching skills. They also participated in a 360-feedback process specifically on coaching and leadership. Clinics were scheduled to bring the sales leaders into a learning and simulation centre where they learned coaching skills and participated in live simulations evaluated by trained assessors. The participants were videotaped and given immediate feedback; they then used this feedback to re-do the simulation. At the end of the session, each participant was provided with a consolidated development report based on both the online and clinic assessments.

The important trend seen in the above examples is that leadership learning and development is getting out of the classroom. This trend is validated by increased satisfaction on the part of the leader, real behaviour change in the organization and a notable return on strategy that is making the development of leaders an easier sell.

A new generation: Leadership development trends

Component From To
The format Prescribed course
Standard
Theoretical
Study program and real issues
Customized
Theory in content
Time frame One-off event A learning journey with on-going support
Methodology Lecture/workshop Participatory, interactive and applied
The focus Individual Individuals within a group and for a purpose
The supplier A vendor of training A partner, co-designer, facilitator, coach

About the Author

Jane Hawkrigg

Jane has over twenty years of consulting experience working with clients to improve overall organizational performance and results through the creation of focused strategies

Learn more about Jane Hawkrigg