Research Bulletin 2013 March 7, 2013 Five Trends in Leveraging Leadership Development to Drive a Competitive Advantage About the Author Kim Lamoureux, Lead Analyst Bersin by Deloitte Deloitte Consulting LLP The business case for leadership development in the workplace has generally been strong. Good leadership development can offer many benefits, including increased employee engagement and retention and, of course, improved business results. How to implement leadership development effectively, however, has been a challenge for many companies. Leadership development is not about developing one leader at a time or even one leader level at a time. Rather, it is about looking across all leader levels and creating a strategy to build leadership capabilities across that population and often across multiple geographies. This research bulletin details: Five leadership development trends How these leadership trends address business challenges How they are manifested and executed in the business world The Impact of Leadership Development BERSIN BY DELOITTE 180 GRAND AVENUE SUITE 320 OAKLAND, CA 94612 (510) 251-4400 According to Bersin research, there are four levels of organizational maturity as it relates to leadership development. 1 Briefly, the four levels of the Leadership Development Maturity Model are defined as follows: 1 For more information, High-Impact Leadership Development: Driving Organizational Maturity and Business Impact, Bersin & Associates/Laci Loew and Stacia Sherman Garr, August 2011. Available to research members at www.bersin.com/library. Copyright 2013 Deloitte Development LLC. All rights reserved. Not for Distribution Licensed Material This Material Is Licensed to Development Dimensions International for Distribution Only.
Level 1: Inconsistent Management Training. Little to no management support exists for leadership development at this level. The organization provides a catalog of courses that are not built around a strategic plan, are not progressive by level, and do not cultivate skills sets in specific areas. Managers are on their own for development they either sink or swim. Level 2: Structured Leadership Training. At this maturity level, organizations begin to focus on and address the development of leadership skills. The organization has defined a core set of competencies and built the program curriculum around building skills sets related to those core competencies. Senior executives begin to embrace leadership development as a strategic imperative. Level 3: Focused Leadership Development. We classify a company at this level when the enterprise intends to develop the organization rather than just individual leaders. Culture-changing events occur, and the focus is more on preparing for the future. The organization applies a blended-delivery approach, and senior executives promote and participate in leadership development activities. Level 4: Strategic Leadership Development. In organizations that reach this level, senior management support is exemplary, and senior leaders view leadership development as an integral part of the overall talent management system. Program content aligns with strategic priorities and is delivered using a broad learning format. Additional Bersin research illustrates the relationship between companies that carry out leadership development really well (Level 4 maturity) and a number of business metrics, as shown in Figure 1. 2 2 For more information, Leadership Development Factbook 2012: Benchmarks and Trends in U.S. Leadership Development, Bersin & Associates/Karen O Leonard and Laci Loew, July 2012. Available to research members at www.bersin.com/library. Kim Lamoureux Page 2
Figure 1: Business Impact of Leadership Development by Maturity Level Change and Business Growth 5% 17% 37% 59% 12x greater Performance-Based Culture 9% 24% 41% 76% 8x greater Overall Employee Retention 3% 20% 53% 62% 20x greater Engagement and Retention of Leaders 12% 34% 60% 76% 6x greater Bench Strength 8% 27% 66% 63% 8x greater Business Results 8% 25% 43% 59% 7x greater 0% 10% 20% 30% 40% 50% 60% 70% 80% Level 4 - Strategic Leadership Development Level 3 - Focused Leadershpi Development Level 2 - Structured Leadership Training Level 1 - Inconsistent Management Training Source: Bersin & Associates, 2011. KEY POINT Approximately 50 percent of organizations studied believe that their midlevel leaders are highly capable, and even fewer, 30 percent, trust that their first-line managers are capable. According to another Bersin study, only about one-half of participating organizations believe that most or all of their midlevel leaders are highly capable, down from a 66-percent confidence level three years ago. 3 This same study found that just 30 percent of the organizations surveyed trust that all or most of their first-line leaders are highly capable. The following research data further demonstrate the costs of poor leadership within organizations today: 3 For more information, Bersin & Associates TalentTrends: A Year of Guarded Optimism, Bersin & Associates/Josh Bersin, Karen O Leonard, and Kim Lamoureux, July 2012. Available to research members at www.bersin.com/library. Kim Lamoureux Page 3
Nearly three-quarters of all leadership teams studied fail to achieve business goals. 4 According to the study, the average organization forfeits more than $1 million per year through less-than-optimal leadership practices. 5 Nearly 6 in 10 global leaders studied consider a lack of leadership to be a major cause of their company s inability to deal with business change. 6 KEY POINT As the world recovers from one of the worst economic crises since the Great Depression, good leadership will play an even more important role in corporate achievement of goals. As the world recovers from one of the worst economic crises since the Great Depression, good leadership will play an even more important role in corporate achievement. Organizations of various types face leadership challenges that include: Global matrix organizations that need to lead across cultures Gaps in leader capability, particularly in transition from one management level to the next Integration of new technologies Movement from a performance appraisal culture to a performance coaching culture 7 Greater use of assessments to identify leaders and reduce costly errors A transition toward more experiential and community-based approaches to learning 4 For more information, High-Impact Leadership Development: Driving Organizational Maturity and Business Impact, Bersin & Associates/Laci Loew and Stacia Sherman Garr, August 2011. Available to research members at www.bersin.com/library. 5 The High Cost of Doing Nothing: Quantifying the Impact of Leadership on the Bottom Line, The Ken Blanchard Companies, 2009, http://www.kenblanchard.com/img/pub/ Blanchard_The_High_Cost_of_Doing_Nothing.pdf. 6 http://www.egonzehnder.com/our-services/client-services/leadership-strategy-services. html. 7 For more information, High-Impact Performance Management: Maximizing Performance Coaching, Bersin & Associates/Stacia Sherman Garr, November 2011. Available to research members at www.bersin.com/library. Kim Lamoureux Page 4
The Five Trends and Their Implications Bersin collaborated with Development Dimensions International (DDI), 8 a global human resources consulting firm, to identify five leadership development trends that address these challenges (see Figure 2). In addition to exploring these trends, how they address business challenges, and how they are manifested and executed in the business world, this report offers specific examples of these trends in action. The information contained herein is important to a variety of audiences. First, talent management and leadership development practitioners will find that it provides benchmarks, tools, and insights into leading practices. Second, managers and executives participating in leadership development programs will better understand the relevance of developmental activities and be able to identify gaps that need to be filled. Finally, vendors of leadership development technology and services will gain an understanding of the direction in which their target market is moving and be able to create products that support this movement. Figure 2: Five Leadership Development Trends Leadership development: 1. Facilitates the global capabilities of leaders to lead effectively in complex, multicultural, and diverse environments 2. Allows for the sustainment of a pipeline of leaders 3. Extends learning and coaching via virtual connections 4. Leverages a coaching culture BERSIN 5. Requires & ASSOCIATES, use of assessments LLC to identify and grow many leader levels, as well as to predict 6114 leadership LA SALLE performance AVENUE Source: Bersin & Associates, 2012. 8 http://www.ddiworld.com/about-ddi. Kim Lamoureux Page 5
Trend 1: Leadership development can facilitate the global capabilities of leaders to lead effectively in complex, multicultural, and diverse environments. Although foreign direct investment 9 dropped after the worldwide recession, it appears to be on its way to recovery, especially in such countries as China, Turkey, Brazil, and Argentina. 10 The implication for global companies may be that they need leaders who are adept at managing teams, customers, and solution providers across multiple boundaries. One study by DDI found that the competency model of a global leader was very similar to the model for any good leader. 11 At the same time, local operations push for leadership development that is tailored to local needs and customs. Global companies often outsource consultants to deliver leadership development content worldwide. They choose to outsource for reasons that include a lack of internal expertise, the opportunity to save money, and the need to deploy such content in a timely manner. However, these companies tend to underestimate the degree to which support from local operations is needed for an effective implementation. For example, trainers should be fluent in the local language and customs, as well as in the training content, which can be costly and time consuming to implement. Also, buy-in from local HR and senior management is important. Solution providers should balance the desire from clients for rapid, low-cost implementation with the labor-intensive and expensive reality of developing training that is localized and delivered to business regions with consistent messaging and the same degree of quality. Mars, the $30-billion food manufactuer, uses action learning as an approach to building global leaders. The company encourages future leaders to manage business units that span functions and locations. The 9 Foreign direct investment is when a company from one country makes a direct investment in production or business in another country, either by buying a company or by expanding operations of an existing company. 10 Based on foreign direct investment figures from the Organisation for Economic Co-operation and Development (OECD), January 2013, http://www.oecd.org/daf/ internationalinvestment/fdi%20in%20figures.pdf. 11 DNA of a Global Leader, David Tessmann-Keys and Richard Wellins/Development Dimensions International (DDI), 2008. Kim Lamoureux Page 6
LEADING PRACTICE Formal leadership training, as a precursor to action or experiential learning, can provide leaders with foundational knowledge and tested approaches that can be applied in the actual environment. result is often a leader who knows how to manage cross functionally and multiculturally. 12 (See Case in Point: Mars Creates Asia Leadership Forum. 13 ) That said, formal leadership training is a recommended precursor to such action learning because it can provide leaders with foundational knowledge and tested approaches that can be applied in the actual environment. Leaders take this knowledge with them into the field, where they often produce improved results in a timely manner. Case in Point: Large Cement Manufacturer Develops Leaders Around the Globe With a presence on every continent, a leading supplier of cement and aggregates (crushed stone, sand, and gravel), as well as ready-mix concrete and asphalt, is focused on meeting the needs of individual business markets while maintaining its global standards of excellence. With approximately 80,000 employees and production sites in around 70 countries, the company recognized the need to empower its leaders to grow their local markets while keeping them integrated in the organization s global network and culture. Such an initiative could enable them to consistently set high standards of customer satisfaction in the industry. Holcim partnered with DDI to design the Leading for Accelerated Performance and Growth (LEAP) program. Capable of being administered worldwide, this training provides leaders with the opportunity to develop skills that can have a direct 12 For more information, Leadership Strategy: The Link between Business Goals and Leadership Development Solutions, Bersin & Associates/Laci Loew, July 2012. Available to research members at www.bersin.com/library. 13 Global Leadership: Developing Tomorrow s Leaders around the World, Bersin & Associates/Katherine Jones, Karen O Leonard, and Josh Bersin, September 2012. Available to research members at www.bersin.com/library. Kim Lamoureux Page 7
Case in Point: Large Cement Manufacturer Develops Leaders (cont d) impact on their job performance, as well as that of their direct reports. The solution was developed to improve leadership potential while maintaining global consistency. A study of more than 700 Holcim global leaders in more than 20 locations found: Sixty-seven percent more Holcim leaders practiced effective leadership behaviors after attending the LEAP program. There was a significant increase in effective leadership behaviors across all global regions in the study. Increases in effective leadership were directly related to improvements in employee productivity, operational efficiency, employee engagement, teamwork, and overall business performance. The skills and concepts taught in the program are applicable not only across a wide variety of leadership roles at Holcim, but also around the world. e Trend 2: Leadership development allows for the sustainment of a pipeline of leaders. KEY POINT Developing a leadership pipeline can allow organizations to retain institutional knowledge and demonstrates the value OAKLAND, it places on CA 94611 employee career development. Developing a leadership pipeline can provide a number of advantages to organizations in the current war for talent. First, it may allow organizations to retain institutional knowledge by promoting capable managers internally. This is often a huge benefit in building an agile workforce. Second, a leadership pipeline can prevent the organization from having to search externally for high-quality talent, which can be both timely and costly. Finally, it demonstrates the value the company places on career development, thereby enhancing engagement and retention. Kim Lamoureux Page 8
The following practices are important for sustaining a pipeline of leaders: 1. Transitions between leader levels. A DDI study 14 of more than 600 managers worldwide found that a leadership transition at work was rated as being more stressful than going through a divorce or bereavement. That same study disclosed that only 28 percent of the U.S. leaders surveyed believed that their organizations had done a good job of providing support for a new transition. This research demonstrates the gap in preparation of leaders to effectively transition to the next level. For example, a leader moving into a strategic role should shift his or her attention on detail toward big-picture, strategic thinking. Similarly, a leader moving into an operational position may need to acquire skills in retaining employees or influencing other managers. The need for acquiring such critical skills is particularly acute for high-potential (HiPo) leaders, 15 who could rapidly advance through new leadership levels. 2. Evolution of performance management from evaluative to developmental. To prepare leaders for the functional demands of their new roles, many organizations are moving from evaluative to developmental performance management. At the lower levels, performance management tends to focus on tactical, day-to-day leadership and coaching. At the higher levels, the goal is to develop leaders who think more broadly and strategically, which requires a clear line of sight of corporate goals. 3. Succession management as a vital consideration for implementing leadership development. Benchmark organizations rely on their succession management programs to identify HiPos and rely on leadership development to prepare them for placement into strategic roles. Bersin research shows the disproportionate spend on 14 Leaders in Transition: Stepping Up, Not Off, Matt Paese and Richard S. Wellins/ Development Dimensions International (DDI), 2007, http://www.ddiworld.com/ddiworld/ media/trend-research/leaders-in-transition-stepping-up-not-off_mis_ddi.pdf. 15 A high-potential employee is an employee who has been identified as having the potential, ability, and aspiration for successive leadership positions within the company. Often, these employees are provided with focused development as part of a succession plan and are referred to as HiPos. Kim Lamoureux Page 9
Figure 3: Leadership Development Spending per Participant U.S. Total (2012) First-level leaders $1,671 Midlevel leaders $2,700 Senior leaders $6,016 High potentials $7,116 Source: Bersin & Associates, 2012. development of this group of managers, an average of $7,100 per HiPo versus $6,000 per senior leader in Figure 3. 16 Organizations should develop objective measures of leadership potential before selecting leaders for the succession process, or they risk wasting training funds and incurring costly errors later when a leader is placed inappropriately in a role. 17 (See Trend 5, which discusses the use of assessments.) 4. Identification of leaders talents and aspirations for career development. Our research shows that organizations that build talent capabilities from within often yield lower costs, less turnover, 16 For more information, Leadership Development Factbook 2012: Benchmarks and Trends in U.S. Leadership Development, Bersin & Associates/Karen O Leonard and Laci Loew, July 2012. Available to research members at www.bersin.com/library. 17 For more information, The Art and Science of Building a High-Potential Strategy: Key Practices to Maximize the Performance of Top Talent, Bersin & Associates/Laci Loew, November 2011. Available to research members at www.bersin.com/library. Kim Lamoureux Page 10
KEY POINT Organizations that build talent capabilities from within often yield lower costs, less turnover, and improved business results than those seeking managers externally. and improved business results than those seeking managers externally. 18 As a result, creation of the pipeline for leaders should include a self-selection component on the part of the aspiring leader. Many managers have neither the talent nor the interest in rising to high-level, strategic roles. An effective leadership development program works with managers to enable them to identify their aspirations within the organizations and to fill the gaps required to reach their goals. 5. Development of foundational elements for establishing continuity between levels. Companies are creating programs to inculcate leaders at all levels with the same information essential to corporate achievement (e.g., corporate culture, proprietary skills, mission). Embedding these types of fundamental messages consistently across leadership programs can help address critical commonalities, regardless of managerial level, and can ease transition between levels. Case in Point: Large Bank Builds Leadership Bench Strength With more than 600 local branches, a bank s 11,000 employees provide personal banking for individuals and families, small business banking, banking for middle-market businesses and nonprofit organizations, and specialty financial services. The 2008 recession brought many challenges to the banking industry, and this banking organization was not exempt from them. After returning to profitability in 2010, the bank became more focused on expanding its business and future growth. To execute this approach effectively, it needed a strategic plan and 18 For more information, see High-Impact Leadership Development, Key Findings, Trends and Analytics, Bersin & Associates/Laci Loew, July 2011. Available to research members at www.bersin.com/library. Kim Lamoureux Page 11
Case in Point: Large Bank Builds Leadership Bench Strength (cont d) a strong group of leaders at all organizational levels. Although the organization spent considerable attention and resources developing the skills of its executives and frontline leaders, it also needed a way to strengthen its midlevel leadership. The banking organization recognized that the skills needed for midlevel leaders to be effective were markedly different from those of frontline leaders or executives. Through survey analyses and focus groups, a clear model of the skills and abilities that its midlevel leaders require was created. The organization partnered with DDI to design a leadership development program that would provide its midlevel leaders with the skills and resources to drive the new business strategy. At its core was a curriculum of customized courses from DDI s Business Impact Leadership (BIL) Mid-Level Series training suite (see Figure 4). This curriculum mapped to the competency model that the banking organization designed for its midlevel leaders. By leveraging this DDI solution, the organization was able to build a leadership pipeline with sufficient talent to provide for both near-term and long-term business needs. Figure 4: Business Impact Leadership Courses Making Change Happen Translating Strategy into Results Coaching for High Performance Influencing for Organizational Impact Mastering Emotional Intelligence Developing Organizational Talent BERSIN Handling & ASSOCIATES, Challenging LLC Situations with Courage Cultivating Networks and Partnerships Source: Development Dimensions International, 2012. Kim Lamoureux Page 12
Case in Point: Large Bank Builds Leadership Bench Strength (cont d) The courses are delivered over a period of six months so as to manage the learning and application of new concepts and skills. Leaders go through the training with their counterparts from different parts of the organization to promote networking and to break down organizational silos. Following the training, leaders meet with each other and their managers to discuss the issues that they are confronting. A study of the banking organization s leaders who participated in the leadership development program showed: The number of leaders in the study who frequently and consistently engaged in effective leadership behaviors on the job increased by 55 percent. Individuals they work closely with rated their performance as more effective and reported improvements in employee productivity, engagement, adaptability, individual development, and communication within and across teams. Less than a year after completing the program, studied leaders attributed financial gains ranging between $25,000 and $600,000 and related to risk management, cross-selling, and colleague retention to the knowledge and skills gained in the program. e Trend 3: Leadership development can extend learning and coaching via virtual connections. The 70-20-10 19 model states that 70 percent of learning is through practice and on-the-job experiences; 20 percent is through other people by exposure to coaching, feedback, and networking; and 10 percent is through formal education-based learning interventions. 19 For more information, High-Impact Leadership Development, Bersin & Associates/Laci Loew and Stacia Sherman Garr, October 2011. Available to research members at www. bersin.com/library. Kim Lamoureux Page 13
The use of virtual connections reveals itself in the following ways in each segment of the learning model: Seventy percent through practice and on-the-job experiences. On a day-to-day basis, managers use virtual connections in a variety of ways to practice their leadership skills. For example, the proliferation of online meeting software and conference calling programs enables leaders to engage in virtual meetings to lead and guide projects and staff members. Similarly, leaders often convene face-to-face meetings of their global teams using telepresence technology. Action learning teams are also leveraging technology to facilitate cross-functional, cross-regional team meetings; house project materials on a portal; and develop internal employee networks. Tools in the market today have allowed ease of use at a small cost for embracing virtual collaboration. KEY POINT The 70-20-10 model is a guide and not an exact science; the amount of learning across each category can vary based on the skills and leadership needs of the targeted population. Twenty percent through other people. As employee locations become more dispersed and technology becomes integrated into everyday work life, leaders should become adept at asynchronous coaching. Using short bursts of communication facilitated by technology, leaders and their direct reports can hold coaching sessions that span continents and time zones. A manager might provide initial feedback through an IM conversation that was initiated by the direct report. He or she might follow up this interaction with a brief phone call, and then clarify the next steps via email. Such asynchronous communication takes advantage of small windows of time by using technology to complete a coaching session. Ten percent through formal education. Companies start leadership development training by bringing together a cohort of leaders to meet and train in person. After such a meeting, technology can be used to provide virtual coaching and networking opportunities. See Figure 5 as an example of a learning portal created by DDI that supports continuous learning beyond a formal learning event. Kim Lamoureux Page 14
Figure 5: Learning Portal Created by DDI for a Client Source: Development Dimensions International, 2012. Case in Point: A Specialty Chemical Provider s Future Relies on the Development of Essential Leadership Capabilities A worldwide provider of specialty chemicals has undergone a significant transformation in recent years, moving from highly commoditized product lines to a more market-oriented business model built on customer relationships. This transition required a change in culture and leadership behaviors embracing risks, managing ambiguity, and defining new market opportunities in both well-defined and undefined spaces. Kim Lamoureux Page 15
Case in Point: A Specialty Chemical Provider (cont d) To build these capabilities, the company s leadership development strategy centers on its high-potential program. The program uses a customized blend of coaching, on-the-job experience, and formal classroom learning commensurate with the individual s career stage. High-potential leaders may take on cross-functional immersion roles and stretch assignments as rich sources of on-the-job development. Social media, such as the company s Yammer site, provide opportunities for networking and sharing ideas mimicking familiar technology that is well adopted by this audience. The program has served to both develop individuals and channel talent into diverse opportunities resulting in new ideas and creativity improving the organization s ability to achieve business goals. e Trend 4: Leadership development leverages a coaching culture. KEY POINT The leader s goal is to build trust that facilitates a strong relationship and leads to the direct report feeling a sense of ownership surrounding his or BERSIN her performance. & ASSOCIATES, LLC Coaching is an important and pervasive competency, regardless of the leader s level within the organization, and takes different forms, depending on the job level of the person on the receiving end. At the front line, coaching and performance management are interchangeable. Leaders at this level deal with day-to-day, tactical issues surrounding a direct report s punctuality, work quality, and productivity. The leader s goal is to build trust that facilitates a strong relationship and leads to the direct report feeling a sense of ownership surrounding his or her performance. At the middle and senior levels, coaching is about general behaviors and decisions, not specific activities. It is more about asking questions and listening to spur the coached leader to think differently and more broadly. For example, coaching at this level might inspire the leader to think ahead or consider ways to show true appreciation to direct reports for specific behaviors or accomplishments. Trust continues to play an important part in the coaching relationship because each party Kim Lamoureux Page 16
KEY POINT If senior leaders do not continue to practice and receive coaching on basic skills such as listening, empathy, and other interpersonal behaviors, they can lose their expertise in these areas. should be comfortable disclosing and acting on information received from the other. It allows for reflection on the part of the leader and consideration of alternatives within a supported environment. Interestingly, if senior leaders do not continue to practice and receive coaching on basic skills such as listening, empathy, and other interpersonal behaviors, they can lose their expertise in these areas. Many organizations assume that lengthy tenure implies possession of basic coaching skills, but they do not provide senior leaders with ongoing opportunities to support the retention of these skills. At top-performing organizations, coaching is coupled with assessments to identify gaps in skills necessary for current and future roles. For example, an assessment might identify that project management skills are poorly developed in a leader. This manager may then receive both a project management assignment and coaching to improve the development of his or her skills in this area. By the end of the project, the manager should have a much smaller gap in his or her project management skills set. Case in Point: Coaching Drives Performance at VF Corporation Operating more than 780 stores worldwide and with more than 47,000 employees, VF Corporation is a leading apparel company boasting an incredibly diverse, international portfolio of brands and products that includes Lee, Wrangler, The North Face, Nautica, and Vans, among others. VF brands are sold in more than 150 countries through 47,000 retailers. Continuing to expand its business and new brands, VF aims to add another $5 billion in organic revenue growth and $5 billion in earnings per share over the next five years, while also increasing its international revenues by 15 percent annually. VF has recognized that providing its leaders with the tools and abilities to effectively manage the performance of its employees Kim Lamoureux Page 17
Case in Point: Coaching Drives Performance at VF Corporation (cont d) will assist in driving this vision. These employees operate an efficient and complex supply chain, spanning multiple geographies, product categories, and distribution channels. Providing its leaders with the skills and abilities to effectively manage their teams may enable VF Corporation to improve its focus on innovation, collaboration, and congeniality. VF teamed with DDI to design a training curriculum for its team leaders that provided the necessary skills for achieving its business objectives. The program used their talent and abilities through consistent coaching and feedback while they progressed to achieve mutually owned performance and development objectives. The real benefit of DDI s solution emerged when leaders were able to take ownership for their own individual learning. The results are as follows: Eighty-five percent of leaders at VF indicated that they were personally motivated to apply the skills or concepts they learned in training when back on the job. After the training, the percent of leaders who reported frequently engaging in effective leadership behaviors rose from 56 percent to 87 percent. Observers of participating leaders reported that the percent of leaders who frequently displayed effective behaviors regarding employee development increased from 54 percent to 77 percent after the training. e Trend 5: Leadership development often requires use of assessments to identify and grow all leader levels, as well as to predict leadership performance. Bersin research shows the widespread use of assessments at all leader levels (see Figure 6). Such widespread adoption continues for two reasons. The first is that many companies recognize the cost of Kim Lamoureux Page 18
errors in leader selection. The second driver is improved diagnosis for development. Such cost considerations are particularly important to firms operating in China and India, where growth is high, but Western pricing is prohibitive. Scalability of online assessments allows companies to administer them to frontline employees, assessing which of these people are management ready. Figure 6: Percent of Companies Using Assessments by Leader Level U.S. Total 20 First-level 68% Midlevel 77% Senior-level 78% High Potentials 84% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Bersin & Associates, 2012. KEY POINT Companies can pool and analyze aggregate assessment data to BERSIN make predictions & ASSOCIATES, LLC about 6114 leader LA SALLE AVENUE performance. Companies can use analytics to predict leadership quality based on assessment scores. In addition, they can use the data to gain insights about leaders. The statistical tools for such analytics are readily available. Organizations may use regression analysis to model the impact of various skills and behaviors on employee retention, engagement, and even profitability. Such capability can be a boon to leadership development proponents because it offers direct lines of sight to specific company metrics, thereby drawing support from C-level executives. 20 For more information, Leadership Development Factbook 2012: Benchmarks and Trends in U.S. Leadership Development, Bersin & Associates/Karen O Leonard and Laci Loew, July 2012. Available to research members at www.bersin.com/library. Kim Lamoureux Page 19
Case in Point: U.S. Cellular Uses Assessments for Talent Mobility U.S. Cellular is a large, full-service, wireless carrier in the United States that competes with its larger rivals by maintaining an intense focus on its more than 6 million customers. Although quality products and a reliable wireless network play significant roles in forming a high-quality customer experience, U.S. Cellular s 470 retail stores are particularly important. Because associates in these stores are its primary touch points with customers, store managers and sales managers within the stores need to facilitate that customers get the service and experience required for them to remain satisfied and loyal. To identify those with the potential to be effective as store managers and sales managers, U.S. Cellular developed a broad selection process. One of the main components of this process was a DDI day-in-the-life assessment center designed around the competencies required for achievement in the target jobs (see Figure 7). Although the assessment added an important dimension to the selection process for store managers and sales managers, the pass rate of those who went through it was a concern just 57 percent of frontline associates passed. This was especially troubling because passing the assessment was a requirement for promotion to a store manager or sales manager role. Kim Lamoureux Page 20
Figure 7: Example of DDI s Manager-Ready Simulation Assessment Source: Development Dimensions International, 2012. Case in Point: U.S. Cellular Uses Assessments for Talent Mobility (cont d) In 2008, U.S. Cellular launched a new program, called Leader of the Future, which represented a new approach to giving frontline associates the opportunity, training, and support to advance into a store manager or sales manager role. Frontline associates enter into Leader of the Future through a multistep nomination process. Those accepted then go through a series of workshops where they are introduced to the specific Kim Lamoureux Page 21
Case in Point: U.S. Cellular Uses Assessments for Talent Mobility (cont d) competencies on which the selection decisions are made for the store manager and sales manager positions, and complete a curriculum of courses from two of DDI s flagship programs, Interaction Management: Exceptional Leaders... Extraordinary Results and Techniques for a High-Performance Workforce. Participants are given suggestions for various application opportunities, such as leading a task force or mentoring a new associate to practice in real time, for what they learned in the courses. In addition, associates complete a Leader Career Battery, which identifies both individual strengths and development opportunities, as well as draws on the results to build personal development action plans for these associates. One month prior to going through the assessment center, the associates attend a session during which they are presented with a realistic preview of the assessment. This preview shows them what to expect so they can enter into the assessment with a greater comfort level. Two days before the assessment, they have check-in meetings with their leaders in final preparation for the assessment. DDI s solution provides frontline associates with a straightforward approach to transcend their individual learning and development. The results of the program have been very positive: The percentage of associates in the study passing the leadership assessment has increased from 57 percent to 89 percent. Senior leadership in the study views those who have gone through the Leader of the Future program as being more prepared and as being a closer fit with the store and sales manager positions. According to the study, the time to fill a store manager position has decreased from two to three months to less than 30 days. The selection process, which incorporates both assessment and development, costs less to execute than did the previous assessment process. e Kim Lamoureux Page 22
Conclusion ANALYSIS Organizations that position themselves at the forefront of highimpact leadership development will likely be more able to take advantage of recovery in their markets. Companies are facing a number of leadership development challenges as the global economy begins its slow climb out of recession. These challenges include the need to lead across cultures, gaps in leader capability, integration of new technologies, movement to a performance coaching culture, and the need to leverage assessments to identify leaders and reduce costly errors. This bulletin details five leadership development trends to help companies address these challenges. It also provides examples of tools available to support these trends. Managers at all levels may find this information helpful in navigating the changes in leadership development as technology advances and the world economy recovers. Those organizations that position themselves at the forefront of these trends may be more able to take advantage of recovery in their markets. Kim Lamoureux Page 23
KEY TAKEAWAY Global leadership solutions require local support. Companies tend to underestimate the degree to which support from local operations is needed to effectively implement a leadership development solution. For example, trainers should be fluent in the local language and customs, as well as in the training content, which can be costly and time consuming. Also, buy-in from local HR and senior management is important. Leadership pipelines and promoting from within offer many benefits. Developing a leadership pipeline can provide organizations the ability to retain institutional knowledge by promoting capable managers internally. This can also prevent the organization from having to conduct a potentially timely and costly external search for high-quality talent. Five leading practices exist for sustaining a leadership pipeline. They are as follows: Develop effective transitions between leader levels. Evolve performance management from evaluative to developmental. Consider succession management as a vital consideration for implementing leadership development. Identify leaders talents and aspirations for career development. Develop foundational elements for establishing continuity between levels. Kim Lamoureux Page 24
Key Takeaway (cont d) Today s technology offers effective opportunities for virtual collaboration. Examples include the following: Online meeting software and conference calling programs enable leaders to engage in virtual meetings to lead and guide projects and staff members. Leaders often convene face-to-face meetings of their global teams using telepresence technology. Action learning teams are also leveraging technology to facilitate cross-functional, cross-regional team meetings; house project materials on a portal; and develop internal employee networks. Using short bursts of communication facilitated by technology, leaders and their direct reports can execute coaching sessions that span continents and time zones. Leaders at varying levels use coaching differently. Leaders at the front line use coaching to address day-to-day, tactical issues such as punctuality, work quality, and productivity. At the middle and senior levels, coaching is about general behaviors and decisions, not specific activities. The skills of listening, empathy, and other interpersonal behaviors are important at all leader levels. Assessments provide insight into leadership capabilities and company metrics. Companies can use analytics to predict leadership quality based on assessment scores. In addition, they can use the data to gain insights about leaders. Organizations may use regression analysis to model the impact of various skills and behaviors on employee retention, engagement, and even profitability. Kim Lamoureux Page 25
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About Us Bersin by Deloitte delivers research-based people strategies designed to help leaders and their organizations in their efforts to deliver exceptional business performance. Our WhatWorks membership gives Fortune 1000 and Global 2000 HR professionals the information and tools they need to design and implement leading practice solutions, benchmark against others, develop their staff, and select and implement systems. A piece of Bersin by Deloitte research is downloaded on average approximately every minute during the business day. More than 5,000 organizations worldwide use our research and consulting to guide their HR, talent, and learning strategies. As used in this document, Deloitte means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. Copyright 2013 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited. Kim Lamoureux Page 27