The Growing Trend of Leadership Development Programs Among Fortune 500 Companies
The largest companies have found that the best investment for their workers is leadership development. One of the biggest hindrances to a company’s growth is the lack of leadership in its ranks, leading to slower competitiveness and development.
That is starting to change with Fortune 500 companies substantially increasing their investment in leadership development. And the investments are not just a tiny amount; TrainingIndustry places the value of leadership training at $166 billion in the USA.
But what is leadership development, and why are the most prominent companies placing such a high premium on it?
Leadership development is an effort to nurture and cultivate soft skills like coaching, communication, management, and strategic planning. This may be contrasted with “hard skills,” which are more technical and measurable in nature, such as computing, bookkeeping, and analytics. Hard skills are usually tied to a specific job, while soft skills are deeply integrated into a person. Thus, soft skills are useful even as employees move across the corporate ladder.
However, despite the massive investments that these companies have put into leadership, a study by McKinsey shows that the leadership development programs are failing to produce the results desired by companies. This may be tied into the fact that while leadership demands have changed throughout the decades, the what, the who, and the how of leadership training have mainly remained the same.
Companies have begun to recognize the stagnancy in leadership development, and changes to the system itself have become more visible in an effort to fully integrate the benefits of leadership skills in the company.
Leadership development is now more contextualized
When it comes to leadership, everyone is used to believing that there is a set of irrefutable, time-tested rules that all aspiring leaders must adhere to. As a result, organizations have tended to use blanket approaches to leadership development.
This “one size fits all” approach has produced generic leaders that are good at a broad set of “leadership skills.” However, these skills have largely failed to translate into anything of tangible value for the company because the program that developed these leaders was not made with the organization’s goals in mind.
Companies are beginning to recognize the importance of context. By integrating leadership development programs into the goals and priorities of an organization, companies are producing leaders that can steer the company into where it wants to be instead of leaders who are just capable of steering the wheel, period.
From Theory to Practice, from Ideas to Actions
Leadership development programs are traditionally perceived as sessions where “gurus” or “experts” are brought in to talk about their own leadership experiences and what attendees can learn from them.
These conferences and seminars usually result in attendees taking away many good theories, but with nowhere to apply them. They may have plenty of concepts in their head, but nothing concrete allows them to utilize the new information.
As a result, companies have begun filling up with “armchair leaders”: People who are full of ideas about what the company should do or where it should go, but end up stumped when placed in a position where they can effectively implement their desired ideas.
To make things worse, the knowledge that these new “leaders” gained in the company’s academy or development program is not used in any way that calls for consistent application. Other than the occasional surveys used to check on them, these ideas remain ideas that are eventually forgotten.
To remedy this problem, companies are beginning to place their developing leaders in positions to execute and apply new learnings. From simple things like having mid-level managers review weekly deliverables and delegate tasks to members all the way to encouraging senior executives to schedule strategic thinking sessions, the need to translate newly obtained information into concrete actions is seeing increased visibility.
Tying Back Leadership Development to Employee Engagement
The traditional notion of leadership development has milestones and progress indicators hugely different from the metrics measured in employee engagement surveys. The result of this is that the company mistakenly believes that its leaders are performing well (because they are ticking all the checkboxes they were taught during leadership development) only to be stumped by employee surveys that paint the managers in a bad light.
The solution for this is to redefine leadership development programs not only in the context of organizational goals but also in the context of the metrics that the company uses in its employee surveys. If it wants the employees to feel improved leadership, they must look at the engagement survey and align their leadership development goals with the metrics.
An Increased Use of Artificial Intelligence
Companies are using data to back their decisions more and more. There are certain types of information best suited for analysis by artificial intelligence.
While organizations are typically accustomed to metrics that measure the number of leadership workshop participants or the “satisfaction meter” of employees, artificial intelligence can measure more abstract concepts such as the number of people ready to move from one leadership level to another and which leadership development programs result in faster promotions.
The use of AI to correlate seemingly different sets of data is nothing new. The biggest digital companies use artificial intelligence extensively to gain profiles of their customers, allowing the delivery of hyper-personalized advertisements. This technology can similarly be used by AI to take a comprehensive look at all the employees and leaders of a company. It can also determine who should be promoted and how best to develop skills that lead to promotions based on complex matrices.
As companies increasingly rely on data-driven decisions, even leadership development programs will not be spared from full integration with AI. Selective, data-based decisions can ultimately save businesses more time and money and allow them to better manage their human resources.
As a new decade is ahead of us, companies should take it upon themselves to revisit their methods for developing leaders. Modern leadership is defined not only by skill sets but also by how much impact they can make in their respective organizations.
By developing leaders that are impactful and are aligned with the company’s goals, businesses will be more poised to tackle the challenges of the years ahead.