Companies Invest in Leadership Development, but the Money Is Largely Wasted

BOSTON, MA--(Marketwired - Oct 20, 2015) - The most pressing human-resources issue at a majority of companies is leadership and talent development. Tens of billions of dollars are spent on it annually, but companies often squander these investments because the training is not geared to drive business results, say experts at The Boston Consulting Group (BCG).

"Improving leadership development" and "managing talent" are the two highest business priorities cited by respondents in BCG's annual survey of more than 4,000 senior business and HR leaders worldwide. But the respondents also ranked these issues among their company's most significant weaknesses.

This apparent disconnect makes perfect sense to Debbie Lovich, leader of BCG's Leadership and Talent Enablement Center (LTEC) in North America. "Senior executives often think that they must focus on the business and delegate talent development -- which they see as 'training' -- to HR or someone else without continued involvement. With that approach, leadership development instantly becomes disconnected from the business priorities. The training that employees receive does not develop the skills that will enable them to have a meaningful impact on colleagues, customers, and business results," says Lovich.

BCG's LTEC operates globally and focuses on helping senior executives and their HR partners in large companies develop the leadership capabilities of managers at all levels so that they have the knowledge, skills and attitudes to drive stronger business outcomes.

One group of leaders that is frequently overlooked by organizations is frontline leaders. Lovich defines these as "the leaders who are at the rockface of the organization -- they're right there where the customer matters most, where the work gets done and where the value is directly created." Often, frontline leaders are being asked to lead a team for the first time or through significant change, and still achieve significant results. BCG's LTEC considers the development of senior team and frontline leadership capabilities to be of equal importance. The LTEC recently worked with a retail client to develop an integrated leadership capability-building program. The company wanted to transform its store experience to deepen its relationship with its customers. The store managers were critical to driving the transformation but didn't have the necessary skills. A program designed to build the capabilities of the company's thousands of store managers led to increased employee engagement, customer satisfaction, and sales.

The typical approach to leadership development has a number of other, related pitfalls that limit the impact:

• Planning a one-off event, such as a workshop, and not recognizing that true capability is developed over time and regularly reinforced
• Tackling broad, generic themes, rather than focusing on the two or three specific skills that individuals or cohorts need to improve their work results
• Measuring success on the basis of inputs such as days in training or satisfaction with the program, rather than by assessing the capabilities developed and the results achieved
  
  

"People don't develop skills from simply reading a book or going to a one-off workshop. They build skills by having to do something, failing, and trying again and again," says Lovich, who, during her 20 years at BCG, has worked to develop leaders across industries.

"The best leadership and talent development is built around finding opportunities during the workday to test and reinforce new skills. An intensive weekend at the gym once a month will not be as effective for getting in shape as walking to and from work or taking the stairs instead of the elevator every day," says Lovich.

BCG's LTEC worked with a company to implement a leadership development program aimed at more than 6,000 frontline managers across four continents. To reinforce crucial skills, the company scheduled capability-building exercises for specific times -- at the daily morning meeting, for example. Beforehand, each manager received an electronic reminder of what to do to make the meeting as effective as possible for those developing leadership skills. The company found the program so successful that they highlighted it in their Annual Report. As Lovich explains: "A few simple things done consistently well across daily routines can drive cultural change. By teaching through practical daily routines and providing simple tools to practice and observe leadership at work, organizations can give their people a practical way to improve every day."

Another tenet -- often forgotten -- of effective training is making sure the business isn't unintentionally discouraging employees from developing the new capabilities that are needed.

"People are rational, and if they are -- or perceive they are -- rewarded for a different set of capabilities than the ones the company is trying to develop, they will never learn those capabilities," says Lovich. "For example, if you're training someone to improve her innovation and risk-taking skills, but you evaluate her performance on the basis of consistently and safely delivering specific numbers, she's not going to innovate and take risks."

"It's important to think about formal and informal HR systems and make sure that they are, at a minimum, not in the way," adds Lovich. "Ideally, the systems will reinforce the incentive to develop the capabilities that a company wants its people to have."

For more information, or to schedule an interview with Debbie Lovich, contact Eric Mosher of Sommerfield Communications at +1 (212) 255-8386 or eric@sommerfield.com.

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