Description
Strategic leadership provides the vision and direction for the growth and success of an organization. To successfully deal with change, all executives need the skills and tools for both strategy formulation and implementation.
Strategically Developing Strategic Leaders
Excerpted from Linkage Inc's, Best Practices in Leadership Development Handbook. 2nd Edition, San Francisco, Pfeiffer, 2009.
by Jared L. Bleak and Robert M. Fulmer
Perhaps the most critical change facing senior executives in global organizations is preparing a new generation of leaders who will continue and extend the strategic reach of the organizations they currently head. Being ‘built to last’ requires constant renewal, and this renewal is typically based on leaders continuing to develop themselves and their successors. Leadership and learning play a critical role in enabling organizational growth and transformation— and ultimately strategic success. Good strategy identifies an organization’s current reality as well as its desired destination—what it needs to develop and how it needs to change in order to successfully compete and achieve its business objectives. The gap between current reality and desired destination can be filled by increasing individual competency as well as building organizational capability. A complete and well-developed competitive strategy will include direction on the steps to be taken to develop leaders and the skills and behaviors these leaders need in order to fill the gap and propel the organization to its desired future destination. Figure 1. Strategy: Moving from Current Reality to Desired Destination
Realizing strategic direction requires organizational capability. It is increased capability ultimately that provides the bridge from current reality to the desired destination and is driven by individual competency. Focusing on increasing organizational capability requires developing the collective capabilities of various groups and teams in the organization.
© 2009 Duke Corporate Education
continued on next page u 1
Duke Corporate Education – Strategically Developing Strategic Leaders
Today’s (and tomorrow’s) leaders must be flexible, collaborative, able to leverage subject matter expertise, and willing to continue their learning. Learning organizations must be able to support leaders as they develop those characteristics. For an organization to be successful, its leaders must not only act as architects of the strategy, setting the best course for the company in the marketplace, but must also continually work to implement strategic directives while also acting as translators of the strategy to the rest of the organization – the leaders who will actually be the doers of the work (see Figure 2). Of course, this occurs at different leadership levels within the organization, but underscores the fact that leadership is needed throughout an organization for strategic and business success. Figure 2. Leaders as Strategic Achitects - Translators - Doers
Architects
Understand the issue and the message
Make the message work Provide feedback Support strategic behavior
Translators
Create meaning
Doers
Astute line executives use leadership development as a powerful tool to create, translate, and communicate strategy. Carefully crafted leadership and learning strategies can assist in providing help to leaders in their architect, translator, and implementer roles. This is done by effectively communicating the reasons for and implications of corporate strategy in learning programs to managers who will need to translate the strategy for employees throughout the organization so they understand their role in making it happen. Various studies have concluded that 60-70 percent of all strategies fail to be successfully implemented. Top leadership development companies seem to have discovered that one way to beat these odds is to ensure that everyone in the organization understands the strategy, the reasons for it, and their role in making it happen. These companies also understand that effective developmental activities can be an effective means of sharing the information and providing some of the tools for successful implementation. Research has shown that when leadership development is seen as a strategic objective, in and of itself, and when this development is tied closely to the strategy and needs of the business, excellent organizational results follow. We review this research below in laying out a set of strategic leadership development principles.
continued on next page u 2 © 2009 Duke Corporate Education
Duke Corporate Education – Strategically Developing Strategic Leaders
1. Tie Leadership Development to Business Strategy. Leadership development should begin and end with the business’s strategy and objectives in mind. Hewitt found that the top 20 companies in the U.S. in leader development closely linked development strategies with business strategies (Salob & Greenslade, 2005). This was done even over the temptation to build development practices that were composed of “best practices” from other companies or heralded in benchmark studies or training magazines. Indeed, alignment with business strategy and priorities was seen to win out over a hodgepodge of benchmark programs. The pressure and need to organize development activities and initiatives into an integrated strategy is perhaps the most important, overarching trend in leadership development. In a 2004 study, 69 percent of respondents noted that the “creation of an integrated strategy and system for all executive development” was the leading priority of their learning and development organizations (Bolt, 2004). These results replicated an earlier study as well (Bolt, 2000). Many corporate learning and development organizations see leadership development as a set of puzzle pieces representing initiatives and programs that should somehow fit together but don’t seem to ever come together in the right way. These pieces include competency models, 360°s and other assessments, developmental job rotations, experiential and action learning, talent management, succession planning, rewards and recognition, and coaching and mentoring. A leadership development architecture can bring these often disjointed elements together into a consummate whole that has a greater chance of delivering real results. This architecture must be integrated and linked to the strategy and needs of the business in order to increase the potential for real impact and then communicated widely to engender support (Bolt, 2004). The best companies for leaders consistently execute on the strategies that make for good leadership development. They create enterprise wide standards, practices, and metrics for leadership; cascade programs and processes down through the organization to improve impact and drive cultural change; include flexibility in centralized leader development programs in order to address specific business needs; and customize developmental solutions for business units in order to better ensure senior management support and engagement (Council, 2004; Fulmer, 2005; Salob & Greenslade, 2005; Saslow, 2004a). 2. Don’t Forget about High Potentials An important leverage point in leadership development efforts is the high-potential leader population within companies. Accelerating the development of high potentials was listed as a key objective by 62 percent of learning and development professionals (Bolt, 2004). However, even with this objective in mind, 46 percent of companies have no systemic process for identifying and developing candidates for key leadership positions, including high potentials (Bernthal & Wellins, 2004). And 37 percent of companies see their ability to identify leadership potential as a serious weakness (Bernthal & Wellins, 2004). Among the top companies in leader development, 95 percent identify high potentials as compared to 77 percent of other companies. Additionally, 68 percent then inform those high potentials of their status and 72 percent track their progress and turnover systematically (Salob & Greenslade, 2005). Even greater differentiation in the development of high potentials can be seen in the techniques and methods used. Ninety-five percent of top companies provided increased access to senior leaders for their high potentials as compared to 45 percent of other companies. Similarly, top companies provided internal training (90% vs. 51%), developmental assignments (89% vs. 43%) and mentoring and coaching (58% vs. 24%) at a much higher rate than did companies not considered benchmarks for leadership development (Salob & Greenslade, 2005).
continued on next page u © 2009 Duke Corporate Education 3
Duke Corporate Education – Strategically Developing Strategic Leaders
Even when a good high potential development program is in place, without an equally effective succession management strategy and process, these efforts can end in frustration. Overall, half of internal candidates selected for leadership positions fail when there is no succession management system in place (Bernthal & Wellins, 2004, p. 3). And if they had the opportunity, organizations would rehire only 62 percent of their executives (Rioux & Bernthal, 2006). To increase the odds of success, an effective succession management process should include visible support by senior management and line leaders who are involved in identifying and developing succession candidates, a time frame for achieving planned development actions, flexibility to change in response to strategic needs or competitive pressures, and the sharing of information with candidates (Fulmer & Conger, 2004). 3. Hold Leaders and the Organization Accountable for Results – both developmental and business Holding people and the organization accountable for the success of strategic leadership developmental efforts is a trend that continues to gain momentum, especially in an increasingly competitive environment where any investment or outlay is carefully considered and monitored for a return. In fact, 52 percent of learning and development professionals planned to use systematic measurement/ evaluation to measure the impact of their efforts (Bolt, 2004). Best practice firms anchor their leadership development efforts with lean competency models that are tied to performance and reward systems (Salob & Greenslade, 2005), and that ultimately address the skills, behaviors, and mindsets that are needed to meet strategic goals. A clear, lean set of competencies was heralded as top companies in leadership development integrate their competencies into succession planning (100% of top companies vs. 78% of others) and make the competencies a baseline for identifying and then developing high potentials as part of succession planning. In the top quartile of leadership development companies identified by Hewitt, metrics were integrated with succession planning 71% of the time, versus only 45% of the time in companies in the bottom quartile. These companies also more fully integrated competency measures into formulas for base pay (60% vs. 30%), annual incentives (60% vs. 31%), and long-term incentives (65% vs. 23%) (Salob & Greenslade, 2005).
______________________
Thirty-eight percent of executives would not be re-hired by their organizations.
______________________
Even with these results, many companies do not measure results in learning & development as they should. In a study that looked specifically at European based multi-nationals, 63 percent reported never measuring return on investment in learning & development (Saslow, 2004b), even though these same firms reported that the importance of learning & development was higher than ever before. There is clearly more work to be done in holding people and organizations accountable for learning & development results, even when strategy depends on these results. Strategically moving forward With these three principles in mind, we can now take a closer look at best practices as well as explore some of the practical implications and methods for both developing leaders strategically and developing strategic leaders. The following lessons were taken both from our own experience in working with many different corporations over the years and as part of the work of Duke Corporate Education, but also from a recent study where we looked closely at five best practice leadership development companies – Caterpillar, Cisco Systems, PepsiCo, PricewaterhouseCoopers and Washington Group International. These companies were selected because of their success in:
4
continued on next page u
© 2009 Duke Corporate Education
Duke Corporate Education – Strategically Developing Strategic Leaders
• tying leadership culture, values, practices, and development to business strategy; • creating strategically relevant collective learning opportunities; • integrating a leadership development architecture with various development initiatives for maximum impact; and • using leadership development to support the execution of business strategy and long-term needs to develop individual competencies while also building immediately needed organizational capability to address business challenges. We discuss below four broad themes in strategic leadership development: 1. Developing Leadership Strategy; 2. Creating an Integrated Architecture for Strategic Leadership Development; 3. Implementing Strategic Leadership Development; and 4. Evaluating Success. Under the umbrella of these themes, we have articulated several key concepts in more specific messages. 1. Developing Leadership Strategy When Developing Leadership Strategy, Look for the Organization’s “Teachable Moment” ______________________ Much has been written about the importance of providing developmental opportunities for individuals at the appropriate “teachable moment.” There is ample evidence that managers benefit more from educational experiences that are ‘just in time’ for them to use them rather than ‘just in case’ they eventually need a new set of skills. These moments often occur when individuals have just been asked to change their identities—i.e., become managers rather than individual contributors, managers of managers or general managers with overall operational responsibility for a business unit. Similarly, organizations seem to have moments when the development and articulation of a leadership strategy are especially appropriate. In our research, it appears that these opportunities generally occur when there is a new CEO who wishes to align the organization around a new strategy, when two organizations have merged or when there is a significant organizational crisis.
Managers benefit more from ‘just in time’ than ‘just in case’ education.
______________________
For example, when Jim Owens became CEO of Caterpillar in 2004, one of his early decisions was to empower the Leadership College of Caterpillar University to create a “Leadership Quest” program for the firm’s high potentials. This program built on an earlier initiative that created the firm’s ‘leadership framework’ or competency model and was intended, according to Owens, to “give our next generation of leaders an infusion of ‘yellow blood’.” After the merger of Pricewaterhouse and Coopers & Lybrand, a significant teachable moment occurred. Differing cultures needed to be reconciled and leader behaviors and mindsets needed to shift. This event was used as the starting point for PricewaterhouseCoopers leadership development and overall firm strategy. In 2002, Washington Group International (Washington Group) an engineering, construction, and management solutions firm, emerged from Chapter 11 with a four person “Office of the Chairman” headed by Stephen Hanks as CEO and a new three-fold mission statement that identified People and their development, as well as Profitability and Performance, as top priorities. According to Hanks, “The company that develops talent the fastest will take the hill.”
© 2009 Duke Corporate Education
continued on next page u 5
Duke Corporate Education – Strategically Developing Strategic Leaders
Each benchmark company used a key organizational transition—the “teachable moment”—to develop, articulate, and align a new leadership strategy with the strategic direction of the firm and formed crucial starting points for achieving excellence in leader development. Tying Leadership Development to Corporate Strategy Creates Alignment and Leverage Having a direct link between a leadership development strategy and corporate strategy provides great benefit to an organization and its employees, and is a key concept for successful leadership development. Organizations that realize this establish a leader development philosophy that permeates all levels of the organization and is meaningful to all employees, tying leadership development to corporate planning as well as the business strategy. At Caterpillar, alignment is achieved by receiving input from the executive office, business units, and process owners of the critical success factors. To further embed leadership development into the business strategy, metrics were established to connect leadership to the business. PwC links development activities to its strategy to become the “distinctive firm.” Leadership development programs are designed to reinforce corporate strategy, thus ensuring linkage and success. PepsiCo’s leadership development strategy is grounded in the belief that strong leaders are needed for success in the marketplace. The foundations of strategic leadership development are lean competency models and values. A simple leadership model with a concise statement of values serves as an important point of focus in leadership development. The benchmark companies in our research kept their values and competencies simple and straightforward, understanding that competencies should be observable, managers should be able to give real time feedback on them, and they should apply at all levels within an organization – directly leading to better performance. 2. Building an Integrated Architecture for Strategic Leadership Development A partnership between senior executives and multiple human resource systems is essential for strategic leadership development. ______________________ Support from senior executives, usually starting with the CEO, is critical for successful leadership development. Yet, even the most effective CEO cannot assure success without the involvement of the entire human resource system. Conversely, training and education professionals will not be successful unless they reach out and collaborate with their colleagues in line positions and in other human resource specialties. For example, within Cisco’s HR function, the organization’s Worldwide Leadership Education group works with leaders to identify candidates for its leadership development programs. Executives then help to design the programs, ensuring that they meet business needs and align with strategy.
L&D professionals will not be successful unless they reach out to colleagues
______________________
in line positions.
Each Cisco program has an established cross-functional steering committee that ensures linkage between the program and the business. The business leaders on the steering committees help drive the design of the programs and recruit appropriate executives into the classrooms. During the design phase of the program, the steering committees meet often, approximately once a month. In addition, the programs employ the role of “executive faculty,” people who bring participants a strategic perspective.
continued on next page u
6
© 2009 Duke Corporate Education
Duke Corporate Education – Strategically Developing Strategic Leaders
A Board of Governors for Caterpillar University includes the CEO and senior executives who approve learning budgets and priorities as well as determine policy. An Advisory Board for each college includes senior leaders from business or ‘user’ groups. This group has geographic and subject matter mix and membership from most of CAT’s business units. At Washington Group International, corporate leadership and the business units share responsibility for leadership development. The development and strategy office is responsible for the design, development, implementation, and maintenance of the programs while the office of the chairman reviews, approves, and provides feedback on moving forward with development. The 14-member senior executive leadership team meets regularly to discuss leadership development. Similarly, organizations committed to leadership development understand its relationship with other talent management systems and practices, such as performance reviews, management development, and succession planning. ______________________ Washington Group International integrates leadership development with every aspect of talent management. This process begins with establishing a vision of what positions will need to be filled and then forecasting, identifying, and preparing candidates. Subsequently, employee development plans are carefully crafted for each employee. An overall employee development strategic plan is then created and fed into the succession planning process, which in turn is used in the leadership development program. Cisco uses executive coaches to accelerate development as part of its highpotential program. In this program, high potentials are paired with an external executive coach for a year, and even though the coach is an external resource, he or she is fully trained in “the Cisco way” prior to the assignment.
Help a leader act differently and a change in her
______________________
beliefs will follow.
Strategic high potential programs can have a multiplier effect throughout the organization Substantial organizational impact can be gained by involving small numbers of people with high potential who will return to their regular jobs and translate their learning for others. These “translators,” both of strategy and learning, serve a valuable place in any organization. While PricewaterhouseCoopers designed its PwC University experience for 2000 U.S. partners, and Caterpillar involved all managers in their 2005 strategy rollout, most key corporate initiatives, in our experience, are focused on high potentials. For example, Caterpillar’s Leadership Quest involves approximately 50 key mid-level leaders per year. PepsiCo’s CEO program involves approximately 40 high potentials each year. Washington Group International’s Leadership Excellence and Performance (LEAP) project began in 2002 and had graduated 48 participants by mid-2006. Cisco’s Executive Leader Program focuses on the company’s strategic intent and serves approximately 40 top leaders annually. This program was designed for employees who are newly promoted to the vice-presidential level, or who are filling a vice-presidential role. 3. Implementing Successful Development Strategies When developing leaders who will both create and implement strategy, the central question is how to maximize their strategic capabilities—how to get them as thinkers and doers to be more strategic. This question is at the heart of leadership development and is one that every company should consider carefully as success often depends on a leader’s ability to not only envision the future strategically, but also to act on a daily basis in order to make this vision a reality.
continued on next page u © 2009 Duke Corporate Education 7
Duke Corporate Education – Strategically Developing Strategic Leaders
The connection between thought and behavior is important. Though it seems logical that behavior follows thought, the direction of this connection often works in the other direction. In fact, at Duke Corporate Education, where we have developed many successful programs focusing on changing both behavior and thought or mindset, we believe that leaders often must change behavior first in order to later change their thinking. In other words, we can’t ask leaders to think their way to acting differently—we have to ask them to act first and then they will start thinking differently. In this way, leadership development, especially to develop more strategic thinkers, is more about helping a leader see herself acting differently and then a change in her beliefs will follow. What follows is a set of practices to consider when working to develop a leader’s ability to think and act strategically. Use metaphor Duke Corporate Education has pioneered the use of metaphor in helping leaders learn to think and act strategically and in changing a leader’s mindset and behavior for increased success. Its Metaphoric Experience™ learning method takes a leader out of her familiar environment, forcing her to experiment with new behaviors, skills, and perspectives in an unfamiliar but compelling context. For example, auditors at a public accountancy have become doctors engaged in medical diagnosis, marketers at a software company have become political consultants conducting polling, and executives at a global energy company have become tobacco executives facing a congressional sub-committee. The power of using metaphor in development is found in the ability to reach leaders at a deeper level, with more impact. They put leaders in a context and position to think very differently about their work while still allowing them to draw important lessons. Metaphoric experiences are memorable, change the frame on problems leaders face so they can be seen in a new way, and lead to consideration of new behaviors and mindsets that would have never been possible through a traditional classroom experience. However, these experiences will just be fun diversions if they are not carefully designed to meet the hoped for business outcomes of the company and learning needs of the ______________________ participants. After the experience it is essential that the metaphor and experience be tied back to the business and learning outcomes. Multi-player games give A rigorous debrief, exploring implications, challenges and insights is crucial to this method. leaders the chance to
make mistakes where consequences are easier to recover from. But safety is not the
Play games Playing games at work is now becoming more accepted as a serious developmental activity. Learning through “gaming,” particularly multi-player video games, is now seen as a real avenue for leadership development and is becoming part of many organization’s leadership development strategies.
These games, both multi-player and individual, provide leaders and learners a “practice field” where risk taking is encouraged and goal. Development is. different behaviors and strategies can be employed. Multi-player ______________________ games can help prepare leaders to better function in a modern day corporate world of virtual teams where influence and authority operate differently. Games provide a venue where leaders are forced to make decisions more quickly and operate at a different speed – an environment more akin to the increasingly faced paced, competitive environment of most industries. In addition, games
continued on next page u 8 © 2009 Duke Corporate Education
Duke Corporate Education – Strategically Developing Strategic Leaders
provide leaders the chance to gain experience more quickly and in a different time frame—to finish whole projects and live an entire life in the game environment. They give leaders the chance to experience leadership and make mistakes in a place where the consequences are much milder and easier to recover from. Will games work to develop better leadership skills in everyone? The answer has to be no, but for many, gaming is the new frontier for leadership development breakthroughs. Make it ongoing Learning and development should be seen and constructed as a process rather than a set of isolated events. The best organizations for leadership development strive to cultivate and maintain a legacy of teaching and learning throughout the organization, supported by both formal education (programs) and informal learning (team-based learning, on-the-job teaching, and coaching). These organizations see learning and knowledge development as central to their competitive advantage and business strategy. To remain successful, these companies employ a wide range of learning methods driven by a clear focus on intended business outcomes. Informal learning opportunities are more highly developed in these firms. Most have deliberate routines that bring learning closer to work (e.g. After-Action Reviews, rounds), create opportunities for practice that are oriented to the needs of individuals, and employ techniques such as shadowing as an investment in staff development. Change the nature of the classroom Stretching leaders in the classroom is essential to any development strategy and especially if the goal is to make leaders more strategic thinkers and doers. Changing the traditional lecture to an environment that involves, stretches, and challenges will develop faster and change leaders from passive bystanders in learning to active participants. Using debates, simulations, group activities and projects, facilitated discussions, and other pedagogical techniques expands the impact of the classroom and increases the challenge for real developmental impact and learning. We have had firefighters and ballerinas in the classroom to help participants feel and experience leadership in a new way and from a new perspective. We have used natural occurring problems and challenges leaders face in their everyday work as the teaching material in the classroom in order to create appropriate context and make the learning real and helpful, real-time. These methods then stretch and engage to a greater extent, demanding participants to think and behave differently. Of course, using these techniques and those mentioned previously may move learning away from the “safe” environment that is often spoken of, but safety is not in fact the goal, rather it is development. Changing the nature of the classroom and using different teaching methods will help learning move from being safe to being developmental. Make leaders teachers A growing trend among senior executives is the practice of “leading by teaching.” There are real opportunities for synergies between the current generation of top executives and the leaders who will succeed them. While leveraging development programs to achieve their own objectives, leaders can also contribute to the development of the next generation. By serving as teachers and role models, top executives provide direction and insights into their strategic intent and help to ensure that the firm’s leadership strategy and developmental programs support the strategic needs of the business, today and tomorrow.
continued on next page u © 2009 Duke Corporate Education 9
Duke Corporate Education – Strategically Developing Strategic Leaders
For example, at PepsiCo, senior leaders speak of “the magic of leaders developing leaders.” According to one executive, the missing adult learning principle is that “people learn best when they get to learn from someone they really want to learn from! At PepsiCo, the ‘teachers’ our executives want to learn from are our own senior leaders. They are world class, widely respected and have proven that they can do it HERE!” Senior executives are asked to share their personal perspectives, build participant confidence and skills while demonstrating support for their growth. Of equal importance, senior leaders get greater teamwork from participants and get to know key young leaders, while developing more loyalty, motivation, productivity and better alignment around vision and key strategic initiatives. PepsiCo leaders are encouraged to think of learning as an important “arrow in their quiver” for helping to drive strategic change. At PepsiCo, leadership development and learning become something to live, not just another thing to “endorse.” 4. Evaluating Success Developing people is a growing measure of executive success Best-in-class learning organizations take the development of their people very seriously. They believe that financial results are a ‘lagging indicator’ of organizational success, while people development is a ‘leading indicator.’ Consequently, people development is becoming an important part of the assessment of executive performance. PepsiCo has historically allocated one-third of incentive compensation for developing people with the remainder for results. In 2007, the company is moving to an equal allocation of incentive compensation for people development and results. Pepsi also utilizes the results from its semi-annual climate survey and 360 degree feedback as part of the performance review process. Caterpillar found that their managers were superb at the ‘execution’ portion of their leadership framework, satisfactorily in the ‘vision’ category but needed more attention to the ‘legacy’ (developmental) set of behaviors. Consequently, they have begun to focus on this theme in learning programs and in performance assessment. Corporate success is the ultimate measure of success in leadership development All five companies we studied in depth were familiar with the Kirkpatrick and Phillips models of evaluation (Kirkpatrick, 2005; Phillips, 2003). However, Caterpillar was, perhaps, the most rigorous in attempting to measure the return on its learning investment. Since Caterpillar University was established during a recession, this may have forced them to establish the value proposition for learning early in their history. As part of this, Caterpillar University created a document called the “Business of Learning” where each college developed a value proposition for key initiatives based on net benefits, ROI, and other standards. This later evolved into the enterprise learning plan, a 161-page document that discussed the state of learning at Caterpillar, articulated the value proposition for learning, and estimated the ROI for Caterpillar University at 50% for 2003. This was then followed by seven detailed ROI studies. These leveraged focus groups, surveys, and in-depth discussion with participants. It identified the benefits, dollar benefits, costs, net benefits, and ROI. Having established the value proposition, Caterpillar doesn’t repeat this process for all subsequent iterations of a program and are beginning to speak about “Return on Learning” (ROL) rather than the more formalized process for ROI.
continued on next page u 10 © 2009 Duke Corporate Education
______________________
Financial results are a ‘lagging indicator’ of success, while people development is a ‘leading indicator.’
______________________
Duke Corporate Education – Strategically Developing Strategic Leaders
PepsiCo doesn’t attempt to measure the value created by a program, but the CEO attends each of the major high potential programs and is the primary facilitator. Since she is intensely involved with program design and delivery, ratings are less of an issue. At the end of each program, each participant is asked to send the CEO an e-mail indicating what he or she will be doing differently as a result of attending the session. Six months afterwards, they are also asked to send the CEO another e-mail reporting on how well they have done in meeting their commitment. Cisco collects both quantitative and qualitative measures. Worldwide Leadership Education has a formal system for measuring the outcomes of leadership development strategy. Examples of metrics include “price range for a one week course,” “customer satisfaction scores,” “percentage of class graduates who have used learnings in their jobs and had a positive impact,” and “percentage of learners who stay with the company.” The team concentrates on metrics showing the application of learning to jobs and changes in business results. An example is the retention percentage for employees going through the programs compared to the general employee population, which has turned out to be quite favorable for Cisco—approximately 93 percent across the organization. The best firms in leadership development have moved from events to process In the past, corporate educational programs were a disconnected series of independent events. Today, they are typically part of an integrated career development plan that is tied to strategic objectives with specific, actionable objectives. They are seldom one week discrete events and often include team or individual applications. The Cisco Leadership Series operates in a 3-phase structure that facilitates the employee’s ability to put learning into action. It is an “events to process” model. Employees involved in the various programs progress through each phase: preparation, program, and application on the job. While the face-to-face portion of Cisco’s programs may only be five days, the participant is involved in the process for 8-10 months. Caterpillar’s core leadership programs leverage key transition points in its leaders’ careers and build on one another in a building-block fashion. Underlying all of its programs is its foundational Making Great Leaders program. These transitions take place as individuals move from supervisor (i.e., frontline leader), to manager (leader of leaders), to department head, and finally to executive. A person’s movement through these programs and transitions is all part of her developmental journey at Caterpillar. Summary No business or strategy is good enough to succeed without strong leadership. And this strong leadership has been shown to be at the essence of exceptional organizational performance. Leadership development and learning can play a critical role in helping move a company from its current reality to its to a desired future destination. Part of closing the gap between these two places is developing leaders who are flexible, collaborative, able to learn and adapt to changing circumstances, and willing to continue their learning journey to becoming better strategic thinkers and doers. When leadership development is seen as a strategic imperative, in and of itself, and then tied closely to the strategy and needs of the business, excellent organizational results follow. Best-in-class strategic leadership development companies have understood these principles well and created best in class leadership development strategies, practices, and measures that in turn have contributed to their overall financial and strategic success. They know that great leaders develop great strategies and then deliver on these visions as architects, implementers, and doers.
© 2009 Duke Corporate Education
11
Duke Corporate Education – Strategically Developing Strategic Leaders
References
Bernthal, P., & Wellins, R. S. (2004). Leadership Forecast: 2003-2004. Bridgeville, PA: Development Dimensions International, Inc. Bolt, J. (2000). Executive Development Trends 2000. Kansas City, MO: Executive Development Associates, Inc. Bolt, J. (2004). Executive Development Trends 2004: Filling the Talent Gap. Kansas City, MO: Executive Development Associates, Inc. Council, C. L. (2004). Driving Performance and Retention through Employee Engagement. Washington, D.C.: Corporate Leadership Council / Corporate Executive Board. Fulmer, R. M. (2005). Next Generation HR Practices. Houston, TX: APQC. Fulmer, R. M., & Conger, J. A. (2004). Growing Your Company's Leaders: How Great Organizations Use Succession Management to Sustain Competitive Advantage. New York: AMACOM. Kirkpatrick, D. L. (2005). Evaluating Training Programs: The Four Levels (3rd ed.). San Francisco: Berrett-Koehler. Phillips, J. J. (2003). Return on Investment in Training and Performance Improvement Programs (2nd ed.). Burlington, MA: Butterworth-Heinemann. Rioux, S. M., & Bernthal, P. (2006). Succession Management Practices. Bridgeville, PA: Development Dimensions International. Salob, M., & Greenslade, S. (2005). "How the Top 20 Companies Grow Great Leaders". Hewitt Associates. Saslow, S. (2004a). Current Challenges in Leadership Development. Palo Alto, CA: Institute of Executive Development. Saslow, S. (2004b). Leadership Development in European Organisations: Challenges and Best Practices. Palo Alto, CA: The Danish Leadership Institute and Institute of Executive Development.
12
© 2009 Duke Corporate Education
doc_278027643.pdf
Strategic leadership provides the vision and direction for the growth and success of an organization. To successfully deal with change, all executives need the skills and tools for both strategy formulation and implementation.
Strategically Developing Strategic Leaders
Excerpted from Linkage Inc's, Best Practices in Leadership Development Handbook. 2nd Edition, San Francisco, Pfeiffer, 2009.
by Jared L. Bleak and Robert M. Fulmer
Perhaps the most critical change facing senior executives in global organizations is preparing a new generation of leaders who will continue and extend the strategic reach of the organizations they currently head. Being ‘built to last’ requires constant renewal, and this renewal is typically based on leaders continuing to develop themselves and their successors. Leadership and learning play a critical role in enabling organizational growth and transformation— and ultimately strategic success. Good strategy identifies an organization’s current reality as well as its desired destination—what it needs to develop and how it needs to change in order to successfully compete and achieve its business objectives. The gap between current reality and desired destination can be filled by increasing individual competency as well as building organizational capability. A complete and well-developed competitive strategy will include direction on the steps to be taken to develop leaders and the skills and behaviors these leaders need in order to fill the gap and propel the organization to its desired future destination. Figure 1. Strategy: Moving from Current Reality to Desired Destination
Realizing strategic direction requires organizational capability. It is increased capability ultimately that provides the bridge from current reality to the desired destination and is driven by individual competency. Focusing on increasing organizational capability requires developing the collective capabilities of various groups and teams in the organization.
© 2009 Duke Corporate Education
continued on next page u 1
Duke Corporate Education – Strategically Developing Strategic Leaders
Today’s (and tomorrow’s) leaders must be flexible, collaborative, able to leverage subject matter expertise, and willing to continue their learning. Learning organizations must be able to support leaders as they develop those characteristics. For an organization to be successful, its leaders must not only act as architects of the strategy, setting the best course for the company in the marketplace, but must also continually work to implement strategic directives while also acting as translators of the strategy to the rest of the organization – the leaders who will actually be the doers of the work (see Figure 2). Of course, this occurs at different leadership levels within the organization, but underscores the fact that leadership is needed throughout an organization for strategic and business success. Figure 2. Leaders as Strategic Achitects - Translators - Doers
Architects
Understand the issue and the message
Make the message work Provide feedback Support strategic behavior
Translators
Create meaning
Doers
Astute line executives use leadership development as a powerful tool to create, translate, and communicate strategy. Carefully crafted leadership and learning strategies can assist in providing help to leaders in their architect, translator, and implementer roles. This is done by effectively communicating the reasons for and implications of corporate strategy in learning programs to managers who will need to translate the strategy for employees throughout the organization so they understand their role in making it happen. Various studies have concluded that 60-70 percent of all strategies fail to be successfully implemented. Top leadership development companies seem to have discovered that one way to beat these odds is to ensure that everyone in the organization understands the strategy, the reasons for it, and their role in making it happen. These companies also understand that effective developmental activities can be an effective means of sharing the information and providing some of the tools for successful implementation. Research has shown that when leadership development is seen as a strategic objective, in and of itself, and when this development is tied closely to the strategy and needs of the business, excellent organizational results follow. We review this research below in laying out a set of strategic leadership development principles.
continued on next page u 2 © 2009 Duke Corporate Education
Duke Corporate Education – Strategically Developing Strategic Leaders
1. Tie Leadership Development to Business Strategy. Leadership development should begin and end with the business’s strategy and objectives in mind. Hewitt found that the top 20 companies in the U.S. in leader development closely linked development strategies with business strategies (Salob & Greenslade, 2005). This was done even over the temptation to build development practices that were composed of “best practices” from other companies or heralded in benchmark studies or training magazines. Indeed, alignment with business strategy and priorities was seen to win out over a hodgepodge of benchmark programs. The pressure and need to organize development activities and initiatives into an integrated strategy is perhaps the most important, overarching trend in leadership development. In a 2004 study, 69 percent of respondents noted that the “creation of an integrated strategy and system for all executive development” was the leading priority of their learning and development organizations (Bolt, 2004). These results replicated an earlier study as well (Bolt, 2000). Many corporate learning and development organizations see leadership development as a set of puzzle pieces representing initiatives and programs that should somehow fit together but don’t seem to ever come together in the right way. These pieces include competency models, 360°s and other assessments, developmental job rotations, experiential and action learning, talent management, succession planning, rewards and recognition, and coaching and mentoring. A leadership development architecture can bring these often disjointed elements together into a consummate whole that has a greater chance of delivering real results. This architecture must be integrated and linked to the strategy and needs of the business in order to increase the potential for real impact and then communicated widely to engender support (Bolt, 2004). The best companies for leaders consistently execute on the strategies that make for good leadership development. They create enterprise wide standards, practices, and metrics for leadership; cascade programs and processes down through the organization to improve impact and drive cultural change; include flexibility in centralized leader development programs in order to address specific business needs; and customize developmental solutions for business units in order to better ensure senior management support and engagement (Council, 2004; Fulmer, 2005; Salob & Greenslade, 2005; Saslow, 2004a). 2. Don’t Forget about High Potentials An important leverage point in leadership development efforts is the high-potential leader population within companies. Accelerating the development of high potentials was listed as a key objective by 62 percent of learning and development professionals (Bolt, 2004). However, even with this objective in mind, 46 percent of companies have no systemic process for identifying and developing candidates for key leadership positions, including high potentials (Bernthal & Wellins, 2004). And 37 percent of companies see their ability to identify leadership potential as a serious weakness (Bernthal & Wellins, 2004). Among the top companies in leader development, 95 percent identify high potentials as compared to 77 percent of other companies. Additionally, 68 percent then inform those high potentials of their status and 72 percent track their progress and turnover systematically (Salob & Greenslade, 2005). Even greater differentiation in the development of high potentials can be seen in the techniques and methods used. Ninety-five percent of top companies provided increased access to senior leaders for their high potentials as compared to 45 percent of other companies. Similarly, top companies provided internal training (90% vs. 51%), developmental assignments (89% vs. 43%) and mentoring and coaching (58% vs. 24%) at a much higher rate than did companies not considered benchmarks for leadership development (Salob & Greenslade, 2005).
continued on next page u © 2009 Duke Corporate Education 3
Duke Corporate Education – Strategically Developing Strategic Leaders
Even when a good high potential development program is in place, without an equally effective succession management strategy and process, these efforts can end in frustration. Overall, half of internal candidates selected for leadership positions fail when there is no succession management system in place (Bernthal & Wellins, 2004, p. 3). And if they had the opportunity, organizations would rehire only 62 percent of their executives (Rioux & Bernthal, 2006). To increase the odds of success, an effective succession management process should include visible support by senior management and line leaders who are involved in identifying and developing succession candidates, a time frame for achieving planned development actions, flexibility to change in response to strategic needs or competitive pressures, and the sharing of information with candidates (Fulmer & Conger, 2004). 3. Hold Leaders and the Organization Accountable for Results – both developmental and business Holding people and the organization accountable for the success of strategic leadership developmental efforts is a trend that continues to gain momentum, especially in an increasingly competitive environment where any investment or outlay is carefully considered and monitored for a return. In fact, 52 percent of learning and development professionals planned to use systematic measurement/ evaluation to measure the impact of their efforts (Bolt, 2004). Best practice firms anchor their leadership development efforts with lean competency models that are tied to performance and reward systems (Salob & Greenslade, 2005), and that ultimately address the skills, behaviors, and mindsets that are needed to meet strategic goals. A clear, lean set of competencies was heralded as top companies in leadership development integrate their competencies into succession planning (100% of top companies vs. 78% of others) and make the competencies a baseline for identifying and then developing high potentials as part of succession planning. In the top quartile of leadership development companies identified by Hewitt, metrics were integrated with succession planning 71% of the time, versus only 45% of the time in companies in the bottom quartile. These companies also more fully integrated competency measures into formulas for base pay (60% vs. 30%), annual incentives (60% vs. 31%), and long-term incentives (65% vs. 23%) (Salob & Greenslade, 2005).
______________________
Thirty-eight percent of executives would not be re-hired by their organizations.
______________________
Even with these results, many companies do not measure results in learning & development as they should. In a study that looked specifically at European based multi-nationals, 63 percent reported never measuring return on investment in learning & development (Saslow, 2004b), even though these same firms reported that the importance of learning & development was higher than ever before. There is clearly more work to be done in holding people and organizations accountable for learning & development results, even when strategy depends on these results. Strategically moving forward With these three principles in mind, we can now take a closer look at best practices as well as explore some of the practical implications and methods for both developing leaders strategically and developing strategic leaders. The following lessons were taken both from our own experience in working with many different corporations over the years and as part of the work of Duke Corporate Education, but also from a recent study where we looked closely at five best practice leadership development companies – Caterpillar, Cisco Systems, PepsiCo, PricewaterhouseCoopers and Washington Group International. These companies were selected because of their success in:
4
continued on next page u
© 2009 Duke Corporate Education
Duke Corporate Education – Strategically Developing Strategic Leaders
• tying leadership culture, values, practices, and development to business strategy; • creating strategically relevant collective learning opportunities; • integrating a leadership development architecture with various development initiatives for maximum impact; and • using leadership development to support the execution of business strategy and long-term needs to develop individual competencies while also building immediately needed organizational capability to address business challenges. We discuss below four broad themes in strategic leadership development: 1. Developing Leadership Strategy; 2. Creating an Integrated Architecture for Strategic Leadership Development; 3. Implementing Strategic Leadership Development; and 4. Evaluating Success. Under the umbrella of these themes, we have articulated several key concepts in more specific messages. 1. Developing Leadership Strategy When Developing Leadership Strategy, Look for the Organization’s “Teachable Moment” ______________________ Much has been written about the importance of providing developmental opportunities for individuals at the appropriate “teachable moment.” There is ample evidence that managers benefit more from educational experiences that are ‘just in time’ for them to use them rather than ‘just in case’ they eventually need a new set of skills. These moments often occur when individuals have just been asked to change their identities—i.e., become managers rather than individual contributors, managers of managers or general managers with overall operational responsibility for a business unit. Similarly, organizations seem to have moments when the development and articulation of a leadership strategy are especially appropriate. In our research, it appears that these opportunities generally occur when there is a new CEO who wishes to align the organization around a new strategy, when two organizations have merged or when there is a significant organizational crisis.
Managers benefit more from ‘just in time’ than ‘just in case’ education.
______________________
For example, when Jim Owens became CEO of Caterpillar in 2004, one of his early decisions was to empower the Leadership College of Caterpillar University to create a “Leadership Quest” program for the firm’s high potentials. This program built on an earlier initiative that created the firm’s ‘leadership framework’ or competency model and was intended, according to Owens, to “give our next generation of leaders an infusion of ‘yellow blood’.” After the merger of Pricewaterhouse and Coopers & Lybrand, a significant teachable moment occurred. Differing cultures needed to be reconciled and leader behaviors and mindsets needed to shift. This event was used as the starting point for PricewaterhouseCoopers leadership development and overall firm strategy. In 2002, Washington Group International (Washington Group) an engineering, construction, and management solutions firm, emerged from Chapter 11 with a four person “Office of the Chairman” headed by Stephen Hanks as CEO and a new three-fold mission statement that identified People and their development, as well as Profitability and Performance, as top priorities. According to Hanks, “The company that develops talent the fastest will take the hill.”
© 2009 Duke Corporate Education
continued on next page u 5
Duke Corporate Education – Strategically Developing Strategic Leaders
Each benchmark company used a key organizational transition—the “teachable moment”—to develop, articulate, and align a new leadership strategy with the strategic direction of the firm and formed crucial starting points for achieving excellence in leader development. Tying Leadership Development to Corporate Strategy Creates Alignment and Leverage Having a direct link between a leadership development strategy and corporate strategy provides great benefit to an organization and its employees, and is a key concept for successful leadership development. Organizations that realize this establish a leader development philosophy that permeates all levels of the organization and is meaningful to all employees, tying leadership development to corporate planning as well as the business strategy. At Caterpillar, alignment is achieved by receiving input from the executive office, business units, and process owners of the critical success factors. To further embed leadership development into the business strategy, metrics were established to connect leadership to the business. PwC links development activities to its strategy to become the “distinctive firm.” Leadership development programs are designed to reinforce corporate strategy, thus ensuring linkage and success. PepsiCo’s leadership development strategy is grounded in the belief that strong leaders are needed for success in the marketplace. The foundations of strategic leadership development are lean competency models and values. A simple leadership model with a concise statement of values serves as an important point of focus in leadership development. The benchmark companies in our research kept their values and competencies simple and straightforward, understanding that competencies should be observable, managers should be able to give real time feedback on them, and they should apply at all levels within an organization – directly leading to better performance. 2. Building an Integrated Architecture for Strategic Leadership Development A partnership between senior executives and multiple human resource systems is essential for strategic leadership development. ______________________ Support from senior executives, usually starting with the CEO, is critical for successful leadership development. Yet, even the most effective CEO cannot assure success without the involvement of the entire human resource system. Conversely, training and education professionals will not be successful unless they reach out and collaborate with their colleagues in line positions and in other human resource specialties. For example, within Cisco’s HR function, the organization’s Worldwide Leadership Education group works with leaders to identify candidates for its leadership development programs. Executives then help to design the programs, ensuring that they meet business needs and align with strategy.
L&D professionals will not be successful unless they reach out to colleagues
______________________
in line positions.
Each Cisco program has an established cross-functional steering committee that ensures linkage between the program and the business. The business leaders on the steering committees help drive the design of the programs and recruit appropriate executives into the classrooms. During the design phase of the program, the steering committees meet often, approximately once a month. In addition, the programs employ the role of “executive faculty,” people who bring participants a strategic perspective.
continued on next page u
6
© 2009 Duke Corporate Education
Duke Corporate Education – Strategically Developing Strategic Leaders
A Board of Governors for Caterpillar University includes the CEO and senior executives who approve learning budgets and priorities as well as determine policy. An Advisory Board for each college includes senior leaders from business or ‘user’ groups. This group has geographic and subject matter mix and membership from most of CAT’s business units. At Washington Group International, corporate leadership and the business units share responsibility for leadership development. The development and strategy office is responsible for the design, development, implementation, and maintenance of the programs while the office of the chairman reviews, approves, and provides feedback on moving forward with development. The 14-member senior executive leadership team meets regularly to discuss leadership development. Similarly, organizations committed to leadership development understand its relationship with other talent management systems and practices, such as performance reviews, management development, and succession planning. ______________________ Washington Group International integrates leadership development with every aspect of talent management. This process begins with establishing a vision of what positions will need to be filled and then forecasting, identifying, and preparing candidates. Subsequently, employee development plans are carefully crafted for each employee. An overall employee development strategic plan is then created and fed into the succession planning process, which in turn is used in the leadership development program. Cisco uses executive coaches to accelerate development as part of its highpotential program. In this program, high potentials are paired with an external executive coach for a year, and even though the coach is an external resource, he or she is fully trained in “the Cisco way” prior to the assignment.
Help a leader act differently and a change in her
______________________
beliefs will follow.
Strategic high potential programs can have a multiplier effect throughout the organization Substantial organizational impact can be gained by involving small numbers of people with high potential who will return to their regular jobs and translate their learning for others. These “translators,” both of strategy and learning, serve a valuable place in any organization. While PricewaterhouseCoopers designed its PwC University experience for 2000 U.S. partners, and Caterpillar involved all managers in their 2005 strategy rollout, most key corporate initiatives, in our experience, are focused on high potentials. For example, Caterpillar’s Leadership Quest involves approximately 50 key mid-level leaders per year. PepsiCo’s CEO program involves approximately 40 high potentials each year. Washington Group International’s Leadership Excellence and Performance (LEAP) project began in 2002 and had graduated 48 participants by mid-2006. Cisco’s Executive Leader Program focuses on the company’s strategic intent and serves approximately 40 top leaders annually. This program was designed for employees who are newly promoted to the vice-presidential level, or who are filling a vice-presidential role. 3. Implementing Successful Development Strategies When developing leaders who will both create and implement strategy, the central question is how to maximize their strategic capabilities—how to get them as thinkers and doers to be more strategic. This question is at the heart of leadership development and is one that every company should consider carefully as success often depends on a leader’s ability to not only envision the future strategically, but also to act on a daily basis in order to make this vision a reality.
continued on next page u © 2009 Duke Corporate Education 7
Duke Corporate Education – Strategically Developing Strategic Leaders
The connection between thought and behavior is important. Though it seems logical that behavior follows thought, the direction of this connection often works in the other direction. In fact, at Duke Corporate Education, where we have developed many successful programs focusing on changing both behavior and thought or mindset, we believe that leaders often must change behavior first in order to later change their thinking. In other words, we can’t ask leaders to think their way to acting differently—we have to ask them to act first and then they will start thinking differently. In this way, leadership development, especially to develop more strategic thinkers, is more about helping a leader see herself acting differently and then a change in her beliefs will follow. What follows is a set of practices to consider when working to develop a leader’s ability to think and act strategically. Use metaphor Duke Corporate Education has pioneered the use of metaphor in helping leaders learn to think and act strategically and in changing a leader’s mindset and behavior for increased success. Its Metaphoric Experience™ learning method takes a leader out of her familiar environment, forcing her to experiment with new behaviors, skills, and perspectives in an unfamiliar but compelling context. For example, auditors at a public accountancy have become doctors engaged in medical diagnosis, marketers at a software company have become political consultants conducting polling, and executives at a global energy company have become tobacco executives facing a congressional sub-committee. The power of using metaphor in development is found in the ability to reach leaders at a deeper level, with more impact. They put leaders in a context and position to think very differently about their work while still allowing them to draw important lessons. Metaphoric experiences are memorable, change the frame on problems leaders face so they can be seen in a new way, and lead to consideration of new behaviors and mindsets that would have never been possible through a traditional classroom experience. However, these experiences will just be fun diversions if they are not carefully designed to meet the hoped for business outcomes of the company and learning needs of the ______________________ participants. After the experience it is essential that the metaphor and experience be tied back to the business and learning outcomes. Multi-player games give A rigorous debrief, exploring implications, challenges and insights is crucial to this method. leaders the chance to
make mistakes where consequences are easier to recover from. But safety is not the
Play games Playing games at work is now becoming more accepted as a serious developmental activity. Learning through “gaming,” particularly multi-player video games, is now seen as a real avenue for leadership development and is becoming part of many organization’s leadership development strategies.
These games, both multi-player and individual, provide leaders and learners a “practice field” where risk taking is encouraged and goal. Development is. different behaviors and strategies can be employed. Multi-player ______________________ games can help prepare leaders to better function in a modern day corporate world of virtual teams where influence and authority operate differently. Games provide a venue where leaders are forced to make decisions more quickly and operate at a different speed – an environment more akin to the increasingly faced paced, competitive environment of most industries. In addition, games
continued on next page u 8 © 2009 Duke Corporate Education
Duke Corporate Education – Strategically Developing Strategic Leaders
provide leaders the chance to gain experience more quickly and in a different time frame—to finish whole projects and live an entire life in the game environment. They give leaders the chance to experience leadership and make mistakes in a place where the consequences are much milder and easier to recover from. Will games work to develop better leadership skills in everyone? The answer has to be no, but for many, gaming is the new frontier for leadership development breakthroughs. Make it ongoing Learning and development should be seen and constructed as a process rather than a set of isolated events. The best organizations for leadership development strive to cultivate and maintain a legacy of teaching and learning throughout the organization, supported by both formal education (programs) and informal learning (team-based learning, on-the-job teaching, and coaching). These organizations see learning and knowledge development as central to their competitive advantage and business strategy. To remain successful, these companies employ a wide range of learning methods driven by a clear focus on intended business outcomes. Informal learning opportunities are more highly developed in these firms. Most have deliberate routines that bring learning closer to work (e.g. After-Action Reviews, rounds), create opportunities for practice that are oriented to the needs of individuals, and employ techniques such as shadowing as an investment in staff development. Change the nature of the classroom Stretching leaders in the classroom is essential to any development strategy and especially if the goal is to make leaders more strategic thinkers and doers. Changing the traditional lecture to an environment that involves, stretches, and challenges will develop faster and change leaders from passive bystanders in learning to active participants. Using debates, simulations, group activities and projects, facilitated discussions, and other pedagogical techniques expands the impact of the classroom and increases the challenge for real developmental impact and learning. We have had firefighters and ballerinas in the classroom to help participants feel and experience leadership in a new way and from a new perspective. We have used natural occurring problems and challenges leaders face in their everyday work as the teaching material in the classroom in order to create appropriate context and make the learning real and helpful, real-time. These methods then stretch and engage to a greater extent, demanding participants to think and behave differently. Of course, using these techniques and those mentioned previously may move learning away from the “safe” environment that is often spoken of, but safety is not in fact the goal, rather it is development. Changing the nature of the classroom and using different teaching methods will help learning move from being safe to being developmental. Make leaders teachers A growing trend among senior executives is the practice of “leading by teaching.” There are real opportunities for synergies between the current generation of top executives and the leaders who will succeed them. While leveraging development programs to achieve their own objectives, leaders can also contribute to the development of the next generation. By serving as teachers and role models, top executives provide direction and insights into their strategic intent and help to ensure that the firm’s leadership strategy and developmental programs support the strategic needs of the business, today and tomorrow.
continued on next page u © 2009 Duke Corporate Education 9
Duke Corporate Education – Strategically Developing Strategic Leaders
For example, at PepsiCo, senior leaders speak of “the magic of leaders developing leaders.” According to one executive, the missing adult learning principle is that “people learn best when they get to learn from someone they really want to learn from! At PepsiCo, the ‘teachers’ our executives want to learn from are our own senior leaders. They are world class, widely respected and have proven that they can do it HERE!” Senior executives are asked to share their personal perspectives, build participant confidence and skills while demonstrating support for their growth. Of equal importance, senior leaders get greater teamwork from participants and get to know key young leaders, while developing more loyalty, motivation, productivity and better alignment around vision and key strategic initiatives. PepsiCo leaders are encouraged to think of learning as an important “arrow in their quiver” for helping to drive strategic change. At PepsiCo, leadership development and learning become something to live, not just another thing to “endorse.” 4. Evaluating Success Developing people is a growing measure of executive success Best-in-class learning organizations take the development of their people very seriously. They believe that financial results are a ‘lagging indicator’ of organizational success, while people development is a ‘leading indicator.’ Consequently, people development is becoming an important part of the assessment of executive performance. PepsiCo has historically allocated one-third of incentive compensation for developing people with the remainder for results. In 2007, the company is moving to an equal allocation of incentive compensation for people development and results. Pepsi also utilizes the results from its semi-annual climate survey and 360 degree feedback as part of the performance review process. Caterpillar found that their managers were superb at the ‘execution’ portion of their leadership framework, satisfactorily in the ‘vision’ category but needed more attention to the ‘legacy’ (developmental) set of behaviors. Consequently, they have begun to focus on this theme in learning programs and in performance assessment. Corporate success is the ultimate measure of success in leadership development All five companies we studied in depth were familiar with the Kirkpatrick and Phillips models of evaluation (Kirkpatrick, 2005; Phillips, 2003). However, Caterpillar was, perhaps, the most rigorous in attempting to measure the return on its learning investment. Since Caterpillar University was established during a recession, this may have forced them to establish the value proposition for learning early in their history. As part of this, Caterpillar University created a document called the “Business of Learning” where each college developed a value proposition for key initiatives based on net benefits, ROI, and other standards. This later evolved into the enterprise learning plan, a 161-page document that discussed the state of learning at Caterpillar, articulated the value proposition for learning, and estimated the ROI for Caterpillar University at 50% for 2003. This was then followed by seven detailed ROI studies. These leveraged focus groups, surveys, and in-depth discussion with participants. It identified the benefits, dollar benefits, costs, net benefits, and ROI. Having established the value proposition, Caterpillar doesn’t repeat this process for all subsequent iterations of a program and are beginning to speak about “Return on Learning” (ROL) rather than the more formalized process for ROI.
continued on next page u 10 © 2009 Duke Corporate Education
______________________
Financial results are a ‘lagging indicator’ of success, while people development is a ‘leading indicator.’
______________________
Duke Corporate Education – Strategically Developing Strategic Leaders
PepsiCo doesn’t attempt to measure the value created by a program, but the CEO attends each of the major high potential programs and is the primary facilitator. Since she is intensely involved with program design and delivery, ratings are less of an issue. At the end of each program, each participant is asked to send the CEO an e-mail indicating what he or she will be doing differently as a result of attending the session. Six months afterwards, they are also asked to send the CEO another e-mail reporting on how well they have done in meeting their commitment. Cisco collects both quantitative and qualitative measures. Worldwide Leadership Education has a formal system for measuring the outcomes of leadership development strategy. Examples of metrics include “price range for a one week course,” “customer satisfaction scores,” “percentage of class graduates who have used learnings in their jobs and had a positive impact,” and “percentage of learners who stay with the company.” The team concentrates on metrics showing the application of learning to jobs and changes in business results. An example is the retention percentage for employees going through the programs compared to the general employee population, which has turned out to be quite favorable for Cisco—approximately 93 percent across the organization. The best firms in leadership development have moved from events to process In the past, corporate educational programs were a disconnected series of independent events. Today, they are typically part of an integrated career development plan that is tied to strategic objectives with specific, actionable objectives. They are seldom one week discrete events and often include team or individual applications. The Cisco Leadership Series operates in a 3-phase structure that facilitates the employee’s ability to put learning into action. It is an “events to process” model. Employees involved in the various programs progress through each phase: preparation, program, and application on the job. While the face-to-face portion of Cisco’s programs may only be five days, the participant is involved in the process for 8-10 months. Caterpillar’s core leadership programs leverage key transition points in its leaders’ careers and build on one another in a building-block fashion. Underlying all of its programs is its foundational Making Great Leaders program. These transitions take place as individuals move from supervisor (i.e., frontline leader), to manager (leader of leaders), to department head, and finally to executive. A person’s movement through these programs and transitions is all part of her developmental journey at Caterpillar. Summary No business or strategy is good enough to succeed without strong leadership. And this strong leadership has been shown to be at the essence of exceptional organizational performance. Leadership development and learning can play a critical role in helping move a company from its current reality to its to a desired future destination. Part of closing the gap between these two places is developing leaders who are flexible, collaborative, able to learn and adapt to changing circumstances, and willing to continue their learning journey to becoming better strategic thinkers and doers. When leadership development is seen as a strategic imperative, in and of itself, and then tied closely to the strategy and needs of the business, excellent organizational results follow. Best-in-class strategic leadership development companies have understood these principles well and created best in class leadership development strategies, practices, and measures that in turn have contributed to their overall financial and strategic success. They know that great leaders develop great strategies and then deliver on these visions as architects, implementers, and doers.
© 2009 Duke Corporate Education
11
Duke Corporate Education – Strategically Developing Strategic Leaders
References
Bernthal, P., & Wellins, R. S. (2004). Leadership Forecast: 2003-2004. Bridgeville, PA: Development Dimensions International, Inc. Bolt, J. (2000). Executive Development Trends 2000. Kansas City, MO: Executive Development Associates, Inc. Bolt, J. (2004). Executive Development Trends 2004: Filling the Talent Gap. Kansas City, MO: Executive Development Associates, Inc. Council, C. L. (2004). Driving Performance and Retention through Employee Engagement. Washington, D.C.: Corporate Leadership Council / Corporate Executive Board. Fulmer, R. M. (2005). Next Generation HR Practices. Houston, TX: APQC. Fulmer, R. M., & Conger, J. A. (2004). Growing Your Company's Leaders: How Great Organizations Use Succession Management to Sustain Competitive Advantage. New York: AMACOM. Kirkpatrick, D. L. (2005). Evaluating Training Programs: The Four Levels (3rd ed.). San Francisco: Berrett-Koehler. Phillips, J. J. (2003). Return on Investment in Training and Performance Improvement Programs (2nd ed.). Burlington, MA: Butterworth-Heinemann. Rioux, S. M., & Bernthal, P. (2006). Succession Management Practices. Bridgeville, PA: Development Dimensions International. Salob, M., & Greenslade, S. (2005). "How the Top 20 Companies Grow Great Leaders". Hewitt Associates. Saslow, S. (2004a). Current Challenges in Leadership Development. Palo Alto, CA: Institute of Executive Development. Saslow, S. (2004b). Leadership Development in European Organisations: Challenges and Best Practices. Palo Alto, CA: The Danish Leadership Institute and Institute of Executive Development.
12
© 2009 Duke Corporate Education
doc_278027643.pdf