Organizations will spend over $13 billion this year on leadership development. Most of that money won't be used wisely, if you ask the executives who responded to i4cp's annual Critical Human Capital Issues study. Most--67%--said their organizations' leadership development programs don't work. And that percentage has increased since 2010.
Why do so many organizations fail at leadership development? It's mostly because many leadership development programs are based solely on competencies rather than behaviors, and don't effectively make the connection between the two.
Leadership competencies are attributes, knowledge, skills, or abilities that contribute to successful performance. Leadership behaviors, on the other hand, describe what is required to be successful. For example, "communication" is often listed as a competency of effective leadership. However, the behaviors leaders need to exhibit to effectively communicate vary greatly at each level in the organization. Whereas a leader at the executive level must be able to clearly communicate the corporate strategy, a leader at the individual contributor level (such as a top-producing field application engineer) must be able to clearly communicate complex and technical information to a valued client.
Identifying leadership behaviors at various levels in the organization helps employees--especially those with formal leadership responsibilities--gain greater clarity of what is expected of them in their individual roles, which has a powerful effect on the organization's ability to execute strategy. Furthermore, behaviors can more easily be observed and measured at each level than competencies; they can be used for all types of individual assessments, including performance appraisals, training needs analysis and selection.
The critical change needed to fix leadership development
In many cases, organizations build leadership competency models based on what another company is doing or what an external leadership guru recommends. Others build their models based solely on interviews with successful leaders in their organization. These approaches lack something critical: empirical data that shows a relationship between leadership effectiveness and market performance.
If your organization's approach to leadership development isn't based on data-driven behaviors, now is the time to get started. The use of and communication about objective data for leadership development provides transparency, which in turn leads to greater consistency in delivery and development, instilling trust in the process among top talent.
The importance and impact of leadership behavior being consistent with strategy is well documented in i4cp research (see the People-Profit Chain). Combining leadership behavior data with specific subjective information can greatly enhance an organization's effectiveness in leadership development. Here are a few recommendations:
1. Provide a seamless link between leadership selection, development, and promotion
Know which behaviors matter most at all levels of leadership and use those in selection, development and promotion decisions.
2. Focus on developing leaders who can effectively manage cross-cultural teams
Managing cross-cultural teams is the only behavior that is predictive of leadership effectiveness. Two of the most effective competencies for developing global leaders speak directly to this behavior:
- Having the ability to teach and/or coach to individuals with diverse learning styles.
- Being able to address and resolve performance issues of virtual/remote team members.
3. Incorporate the right type of subjective information
Emphasize the future-focused needs of the organization and have honest conversations about who has potential to move up within the organization and what potential looks like.
4. Develop a consistent set of measurement tools.
None of this matters if you can't ensure that the time, effort and budget devoted to leadership development programs actually have impact on organizational effectiveness. A few ways to measure:
- Business unit and talent dashboards: Contains objective data structured around the KPIs and performance outcomes of each business unit. This dashboard also should include subjective information on local customs and cultures.
- Leadership health scorecard: Know how well the organization is developing a diverse pool of talent is essential for business performance
- Quality of movement scorecard: It is essential for senior management to monitor the movement of top talent. But more important than quantity is what happens after they move. How do they perform? Has the move benefited the organization?
- Quality of attrition scorecard: Since the investment in developing future leaders is significant, it is important to understand which top talent is leaving the organization and why (this is commonly called "regrettable loss"). In addition to knowing who is leaving or staying, it is important to know why they leave or stay.
Earlier this year, i4cp--in partnership with the American Management Association (AMA)--conducted a comprehensive global research project that revealed several leadership behaviors that are highly correlated with leadership effectiveness and market performance. This study also determined the behaviors are needed depending on a person's level of leadership. For example, an individual contributor needs to model hard work and exude ambition, whereas more senior-level leaders need to be able to lead cross-cultural teams and demonstrate clear writing and speaking skills in order to articulate strategic objectives.
By applying these findings to the key performance indicators (KPIs) in i4cp's People-Profit Chain, we have developed an organizational leadership assessment that can be used to identify leadership needs while benchmarking against other high-performance organizations. The results of this assessment provide a specific set of behavior recommendations for each of the 18 KPIs it measures. Download more information about i4cp's leadership assessment here.