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ANNUAL LEADERSHIP DEVELOPMENT SURVEY

ARE YOUR NEXT-GEN


LEADERS ON TRACK?
And is your organization doing enough to develop them?
BY MICHAEL LEIMBACH, PH.D.

his year, the youngest of the Baby Boomer Deloitte and the U.S. Federal Reserve show that return on

T leaders will turn 61, and simple demo-


graphics assures that the need to replace
the exodus of these aging leaders will
accelerate rapidly over the next four to six years.
assets (ROA) and productivity growth—both key measures
of leadership success—have shown a steady decline since the
1960s. The data does not look good for the strength of our
leadership capabilities.
Clearly, effective leadership is critical to success, and develop-
ment of the next generation of leaders is at a critical stage. Now
But are organizations doing enough? Are current leader- is the time to take stock of where you are and what you need to
ship development practices setting organizations up for a do to effectively prepare the next generation of leaders.
successful transition?
Studies by McKinsey & Company and J.P. Donlon have ANNUAL LEADERSHIP SURVEY RESULTS
found a close correlation between the skills of a company’s For the second year, Training magazine and Wilson Learn-
leaders and market performance. However, research by ing Worldwide teamed up to conduct a survey of more than
500 respondents focused on creating effective
leaders and preparing the next generation. The
SURVEY METHODOLOGY
results of this survey indicate there is a strong
More than 500 Learning and Development professionals responded to the 2018 survey.
All were employees of companies that create and use leadership development services desire and great need to strengthen leadership
with their own employees; external providers of learning and development services were development efforts. In particular, efforts need
excluded from the results. to focus on meeting the needs and expectations
The survey responses consisted of a well-balanced representation of professionals of the next generation of leaders. This research
and decision-makers within the learning and development industry. The majority of points to specific actions organizations can
respondents (58 percent) had management responsibility, with the largest groups
take to improve the effectiveness of their lead-
having the title of manager (24 percent) or director (22 percent).
More than half of the respondents (62 percent) were from companies that only ership development efforts and strengthen
operate in the United States; the remaining were composed of global (22 percent) their organization’s future.
and multinational (16 percent) companies. Organizations were fairly evenly
distributed in company size, ranging from less than 100 employees to more than SHIFTING FOCUS
50,000, with the largest group (22 percent) having 1,000 to 5,000 employees. Based on the survey results from 2018 and 2017,
Individual organizations spent an average of $1.9 million annually on learning and
there are some interesting shifts in emphasis.
development—46 percent higher than the $1.3 million spent in 2017.

>> DETERMINING
Michael Leimbach, Ph.D., is a globally recognized expert in instructional design and DEVELOPMENT PRIORITIES
leadership development. As vice president of Global Research and Development for Results indicate a shift in how organizations de-
Wilson Learning Worldwide, he has worked with numerous Global 1000 organizations
termine development needs. As Graph 1 shows,
in Australia, England, Germany, Japan, South Korea, Taiwan, and the United States.
Over more than 30 years, Dr. Leimbach has developed Wilson Learning’s diagnostic, there is a sharp decline in the use of more self-
learning, and performance improvement capabilities. He is editor-in-chief for the ADHR directed methods—leaders identifying their
professional journal, and serves on the ISO Technical Committee (TC232) on Quality own development needs. In 2017, 60 percent
Standards for Learning Service Providers. Dr. Leimbach has coauthored six books, of organizations used this approach; in 2018,
published more than 100 professional articles, and is a frequent speaker at national only about 47 percent indicated that they let
and global conferences.
managers identify their own needs. Replacing
Tom Roth; Bob Lovler, Ph.D.; Nancy Frevert; and Jason Myers of Wilson
Learning also made significant contributions to this study. this approach is the use of interviews with leaders
For more information, contact Wilson Learning at 800.328.7937 or visit and their managers to determine development
WilsonLearning.com. needs and a more formal needs analysis process.

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GRAPH 1: HOW DEVELOPMENT NEEDS ARE DETERMINED

The leaders themselves identify their own development needs

The executive leadership team decides

Informal interviews with leaders are conducted

A formal needs analysis is conducted

We use tools from outside experts/vendors

We look to outside experts

0% 10% 20% 30% 40% 50% 60%

J 2017 J 2018

>>PRIORITY SKILLS show marked increases in priority. Motivating Others


The skill focus of organizations also shows some interesting increased four slots, from 12th to eighth, while Strategy De-
changes. Organizations were asked to identify the top five velopment went up three slots, from seventh to fourth.
priority skills that are the focus of leadership development
efforts. Graph 2 shows the rank order of priority skills for >>LEARNING METHODS
2018 and the rank order change from 2017. While most of Most of the 24 learning methods used for leadership develop-
the skill priorities remain roughly the same, there are four ment did not change meaningfully from 2017 to 2018, with
notable exceptions. First, Performance Management and four interesting exceptions. As Graph 3 shows, use of simula-
Self-Development skills show a marked decrease in prior- tions and role-plays shows a marked increase of more than
ity. Performance Management dropped six slots, from third 11 percent, with approximately 82 percent of organizations
to ninth, while Self-Development dropped three slots, from using simulations in 2018, compared to 71 percent in 2017.
10th to 13th. What did simulations replace? Results suggest three
In contrast, Motivating Others and Strategy Development methods show the greatest decline in usage: Open-Source

GRAPH 2: PRIORITY SKILLS FOR LEADERSHIP DEVELOPMENT


Numbers inside the arrows indicate the number of spaces up or down a skill has moved

5(68/76 &+$1*()520 5(68/76 &+$1*()520

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 #'%#9&!<$(#%(!%9($(# 3  '<!(9Z!%-? 1

 D%(9%!' 1 
 Z!<$(# 3

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I Y$#(%(#9(-? 1  O%?(9%--(#%#& ----


 ,#<%#(9#' 4 S >%!'-%'%-#' ----

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ANNUAL LEADERSHIP DEVELOPMENT SURVEY

GRAPH 3: PERCENT USING DIFFERENT LEARNING METHODS

Game-like components (leader


boards, competition, etc.)

Open-source programs
(MOOCS, YouTube.com, etc.)

Learning portals

Simulations and role-plays

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

J 2017 J 2018

Programs (down 7 percent), Learning Portals (down 5 per- on leadership development. The results also show that the ma-
cent), and Gamification Methods (down 4 percent). While jority of organizations (57 percent) anticipate an increase in
not dramatic decreases, this suggests a move away from leadership development investment, as in 2017.
more learner-selected methods and games for motivation to-
ward the more sophisticated application-focused, game-like >>WHO RECEIVES LEADERSHIP
activities of simulations and role-plays. DEVELOPMENT?
One of the most dramatic shifts from 2017 involves who is
>>INVESTMENT IN LEADERSHIP participating in leadership development programs, as shown
DEVELOPMENT in Graph 5. Organizations are directing more of their leader-
There has been only a slight change in how much organi- ship efforts toward middle managers, supervisors, and high
zations invest in leadership development. Graph 4 shows an potentials.
increase in the percentage of the training budget going to lead- Comments indicate organizations are realizing that large
ership development. This means there was a decrease in the numbers of middle managers and supervisors will be retiring
number of organizations spending 10 percent or less of their soon—and if they don’t begin to prepare the next genera-
budget and an increase in the number of organizations spend- tion for these roles now, they will have difficulty filling them
ing 20 to 30 percent and 60 to 100 percent of their budgets moving forward.

GRAPH 4: PERCENT OF BUDGET FOR LEADERSHIP DEVELOPMENT

40%

35%

30%

25%

20%

15%

10%

5%

0%
0-10% 11-20% 21-30% 31-40% 41-60% 61-100%
J 2017 J 2018

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GRAPH 5: WHO PARTICIPATED IN LEADERSHIP DEVELOPMENT PROGRAMS
80%

70%

60%

50%

40%

30%

20%

10%

0%
C-level, VP, Middle Supervisors Employees “High Anyone
and Above Managers with Influence Potentials”

J 2017 J 2018

SUPPORT IN DEVELOPING resources to effectively develop their leaders?


NEXT-GENERATION LEADERS 5. Sufficient leadership bench strength: How satisfied is the
Given the need to prepare the next generation of leaders, we company with its ability to replace departing leaders?
decided to explore what is and isn’t working in their develop- Graph 6 shows the percentage of companies that indicated
ment. How seamlessly the next generation of leaders takes effective performance on these outcome measures in both
on this responsibility will depend greatly on how well their 2017 and 2018. The vast majority of respondents in both years
development is supported. agrees that top management acknowledges leadership is a
In order to do this, we need a measure of leadership develop- source of advantage (67 percent), and a small majority agrees
ment impact. Everyone has a somewhat different perspective it has best-in-class leaders (55 percent). However, for the other
on what constitutes success; therefore, we reviewed the litera- outcome indicators, the majority is not so optimistic. Results
ture and identified five outcomes most experts agree provide went down from last year on the critical issues of having suf-
a good indication of leadership development performance. ficient resources and closing leadership gaps.
1. Leadership is a source of competitive advantage: Do senior This combination of insufficient resources and increasing
executives acknowledge the importance of leadership de- leadership gaps is a dangerous one. With the retirement of
velopment to the organization’s success? the Baby Boom generation, this gap in leadership capability
2. Best-in-class leaders: Are other companies trying to re- will only grow, and if there are limited resources to prepare
cruit their leaders away? the next generation of leaders now, many organizations will
3. No leadership gaps: Does the organization have signifi- be ill prepared for the future.
cant gaps in leadership capacity? To determine the actions that more effective organizations
4. Sufficient resources: Do organizations have the necessary are taking to successfully develop the next generation of

GRAPH 6: IMPACT OF LEADERSHIP DEVELOPMENT

Sufficient resources for leadership development

No leadership gaps

Leadership a source of competitive advantage

Best-in-class leaders

Sufficient leadership bench strength

0% 10% 20% 30% 40% 50% 60% 70% 80%

J 2017 J 2018

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ANNUAL LEADERSHIP DEVELOPMENT SURVEY

GRAPH 7: NEXT GENERATION OF LEADERS IS A PRIORITY


Executives prioritize developing
the next generation of leaders

Organization has a clear focus on


developing the next generation of leaders

Organization has sufficient resources


to develop the next generation of leaders

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

J High J Moderate J Low

leaders, we combined (averaged) these five measures into an generation of leaders a priority. As Graph 7 shows, high-
overall score of leadership development performance. We then performing organizations are significantly more likely to
divided averages into three groups based upon the scores. indicate that executives prioritize the development of the
t)JHI 1FSGPSNFS Organizations that received the highest next generation, the organization has a clear focus on the
scores across these five items, indicating they are achieving next generation, and sufficient resources are directed toward
the highest level of leadership development outcomes developing the next generation of leaders.
t.PEFSBUF 1FSGPSNFS Organizations that received scores
in the middle range, indicating they are partly achieving DEVELOPMENT APPROACH
their desired leadership development outcomes but have High-performing organizations approach leadership devel-
not achieved full success opment differently than lower-performing organizations.
t-PX 1FSGPSNFS Organizations that received the lowest Graph 8 shows that high-performing organizations are more
scores, indicating their leadership development efforts have likely to leverage the knowledge of mature leaders, take steps
not achieved much value to capture organizational knowledge, have a succession plan,
By categorizing organizations in this way, we can ask the key maintain stronger bench strength, actively seek to attract
question: What are high-performing leadership development younger leaders with leadership potential, and tailor their
organizations doing that low- or moderate-performing organi- leadership development approach to younger learners.
zations are not? In other words, what are some of the actions you
can take to improve your leadership development outcomes? NEED FOR DEVELOPMENT SPEED
A clear difference between high-, moderate-, and low-
HIGH PRIORITY performing organizations is the perceived need to increase the
One potential cause of greater effectiveness is that high- speed of development. As shown in Graph 9, low-performing
er-performing organizations make developing the next organizations perceive a greater need to increase the speed of

GRAPH 8: APPROACH TO DEVELOPING NEW LEADERS


Leverage the talents and knowledge of mature leaders

Effectively capture organizational knowledge from current leaders

Identify a succession plan for all key positions

Create a strong bench strength of new potential leaders

Effectively attract younger employees into leadership positions

Development approach matches expectations of the next generation

Search for qualified candidates to fill future leadership positions

0% 10% 20% 30% 40% 50% 60% 70% 80%

J High J Moderate J Low

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development, with more than 30 percent indicating it GRAPH 9: WE NEED TO INCREASE THE SPEED
is a critical need. Only 15 percent of high-performing OF LEADERSHIP DEVELOPMENT
organizations perceive the same need. 35%
The reason for this is made clear in these organiza-
30%
tions’ responses to how long it takes to bring a new
25%
leader to a high level of proficiency. As shown in Graph
20%
10, 75 percent of high-performing organizations indi-
15%
cate it takes less than 18 months to bring a new leader
to a high level of proficiency, whereas only 58 percent 10%

of low-performing organizations share that view. 5%

Thus, lower-performing organizations have a longer 0%


way to go to have an efficient leadership development J High J Moderate J Low
process.
GRAPH 10: TIME TO PROFICIENCY
TRANSITIONING NEW LEADERS
FOR NEW LEADERS
One of the greatest areas of difference between high-,
low-, and moderate-performing organizations is the 40%
degree to which organizations support new leaders
in the transition to a leadership position. As Graph 35%
11 shows, high-performing organizations are much
30%
more likely to help new managers through the tran-
sition by helping them manage priorities, develop 25%
relationships, overlap with the existing manager, and
advance their leadership skills. 20%

15%
CROSS-GENERATIONAL SUPPORT
Much has been made of the need for support across 10%
the generations for making the transition from one
generation of leaders to the next. As is evident in 5%

Graph 12, there are meaningful differences between


0%
high- and low-performing organizations in the Less than 6-12 13-18 19-24 More than
degree of cross-generational support. Most organiza- 6 months months months months 24 months
tions see the next generation as recognizing the need J High J Moderate J Low

GRAPH 11: SUPPORT FOR TRANSITION TO NEW LEADERSHIP POSITION


In managing time and priorities in new leadership positions

Developing relationships with new peers and direct reports

By helping leaders manage their personal expectations

Through overlap with the previous leader to ease the transition

Through coaching/mentoring during the transition

Adopting new/more advanced leadership skills

By helping leaders manage their own performance expectations

In completing old assignments/tasks

0% 5% 10% 15% 20% 25% 30%


J High J Moderate J Low

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ANNUAL LEADERSHIP DEVELOPMENT SURVEY

GRAPH 12: CROSS-GENERATIONAL SUPPORT

The next generation recognizes the need to


develop additional leadership skills

The next generation of leaders has the drive


needed for leadership responsibilities

The next generation of leaders has reasonable


expectations for career development

The current generation of leaders is willing


to let go of responsibilities

The current generation of leaders provides


support, coaching, and mentoring

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

J High J Moderate J Low

for new leadership skills and being committed and driven to support for leadership development, and expectations of
take on these responsibilities. But low-performing organiza- rapid advancement from younger leaders as barriers to pre-
tions see the current generation as much less likely to hand paring the next generation.
over responsibilities to the next generation or to provide
them with coaching. All organizations also feel that many in SOCIAL MEDIA AND LEADERSHIP
the next generation may have unreasonable expectations for The growth of social media has been tremendous. The use
career development and promotions. of LinkedIn, Facebook, Twitter, Instagram, and other social
media has become common in the workplace. This raises the
GREATEST DEVELOPMENT BARRIERS question of how social media affects leadership.
When asked to name their greatest challenge to developing Graph 13 shows the results of the question: Has social me-
the next generation of leaders, respondents offered a wide dia made leading easier or more difficult? The largest group,
range of answers. The most frequent response is a variation 48 percent, says it makes leading both easier and more diffi-
of lacking sufficient leadership development resources. For cult, while 28 percent indicate it has no effect (neither easier
example: nor more difficult). While not surprising, the vast majority,
“The speed at which we need to continue to promote and 72 percent, agrees it has a meaningful impact on leadership,
develop new leaders is tremendous. We are ramping up our for the positive and negative. The results clearly point to a
organization at incredible speed, but developing so many lead- need to understand the role of social media in the organiza-
ers in so little time is challenging.” tion and in leadership development.
Close behind the resource issue is the issue of which de- When asked to describe how social media makes leadership
velopmental model and learning approaches will have the easier or more difficult, the responses were overwhelming,
greatest success. Organizations are struggling with leaving with more than 80 percent of survey respondents providing
behind traditional approaches to developing leaders and descriptions. This level of participation on an open-ended
adopting approaches more in line with the expectations of question is almost unheard of in a survey, indicating that it
younger learners. For example: did, in fact, touch a nerve.
“The greatest challenge is the training methodology. The next How does social media make leading easier? Responses
generation has different expectations and needs. Instructor-led tended to boil down to two main advantages:
classrooms are not their most popular choice. But developing s Greater sharing and interaction among employees and
training on technical platforms—mobile, e-learning, etc.—is managers. Messaging and discussion boards allow man-
not sufficient alone either. We also need active support and agers to give employees more immediate feedback, share
participation from high-level leaders to sponsor the programs information, and build better relationships despite physi-
and current managers to coach and mentor. Learning the skills cal distances.
is not the problem; practice and an understanding of the need Social media has made it easier to reach more employees and
for character and competence in leadership development is get feedback faster.
required—not just creating an app for that.” s Greater and easier access to information. Organizations
A large number of organizations also cite lack of executive also saw advantages for both employees and leaders in

26 | MAY/JUNE 2018 training www.trainingmag.com


GRAPH 13: IMPACT OF SOCIAL MEDIA has been a focus on efficiency (lowering costs, doing
ON LEADERSHIP more with less). It is clear from this survey that if the
next generation is going to be prepared to take the lead,
7% there must be a shift of focus toward improved effec-
tiveness of the learning. When designing a leadership
28% development process, the first question should be: “Will
17% this improve the leadership behaviors of our people?” It
should not be: “How do we make this less expensive or
time consuming?”
s Getting executives engaged. Senior executives need to see
leadership development as a priority. Encourage the exec-
utive team to communicate specific expectations, model
desired leadership behavior, create leadership succession
J Easier plans, and engage direction in leadership development
J More difficult activities.
J Both easier and more difficult s Making speed to proficiency a key performance indicator
J Neither easier nor more difficult (KPI). There are many reasons you should focus on get-
48%
ting leaders to a high level of proficiency faster. This is not
about finding a way to shorten a program from three days
to two; it’s about how to shorten the time effective leader-
accessing the latest knowledge and information quickly ship behaviors show up in the workplace from 24 months
without the effort it once required. to 12. One key critical activity is the need to support new
Daily information on certain leadership topics, as well as leaders in their transition.
people talking about their leadership requirements, have helped s Tailoring learning methods to the younger generations. Or-
leaders make quick adjustments to their leadership styles. ganizations have shown great progress in expanding the
Not surprisingly, the ways social media makes leading more methods they use in leadership development. Yet despite
difficult parallel the ways it makes it easier: this, the most frequently used method is still instructor-
s Greater sharing can lead to a blurring of personal and led classroom training. Newer generations have exposure
business boundaries. People can get too involved in each to a much more diverse and integrated approach to learn-
other’s personal lives. This raises employment law issues, ing than did prior generations, and their expectations are
particularly when there are union rules involved. high for how learning can be conducted. A first step is to
You know too much about them, and they know too much examine leadership development from a process or jour-
about you. ney perspective.
s Greater access to information leads to information overload s Engaging all generations of leaders. Organizations that de-
at best and, at worst, confusion when that information is velop programs to prepare the current generation of leaders
contradictory. for the role of coach and mentor have more effective leader-
So many items coming at you from every direction cause ship development efforts. Organizations need to encourage
competing priorities; it is harder to disseminate accurate infor- the Baby Boom generation to embrace the role of coach and
mation from the vast pool of “opinions.” help prepare them to effectively fulfill that role.
s Greater sharing also increases the possibility of uninten- s Paying attention to social media and leadership. There is
tionally leaking confidential information to others outside no question the growth of social media is affecting lead-
the company. ership behavior, for the positive and negative. What is
Employees are more likely to post content that is a breach of not clear is how. More research should be emerging over
confidentiality of some kind without realizing the possible im- the next several years; in the meantime, it would be wise
pacts and downstream fallout. to engage leaders in discussions about the potential ben-
efits and risks of social media and track any outcomes
STRENGTHENING NEW LEADER you observe.
DEVELOPMENT These best practices of leadership development can help
The results of this survey suggest several actions organiza- you make a greater strategic contribution to your organi-
tions can take to strengthen their leadership development zation’s leadership. As the next generation of leaders begins
efforts when preparing the next generation of leaders. Spe- leading teams, departments, business units, and organiza-
cifically, the results indicate you can achieve a greater impact tions, it is your responsibility to make sure they are well
on your organization by: prepared for these roles. The very future of your organiza-
s Focusing on effectiveness. In the last several years, there tion may depend on it. Qt

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