By Camelia Ilie, Guillermo Cardoza and Schon Beechler

In business, one would typically not make a large investment without an idea of how to gauge its results. This does not happen with leadership development programmes (LDPs), which lack the typical business analysis of return on investment and the impact of the programmes. Our research is focussed on addressing this gap by identifying and explaining two often-overlooked elements that have a significant impact on both individual leaders and organisations.

According to the Corporate Learning Factbook (2014),1 spending on corporate training grew by more than $130 Billion worldwide in 2013. This report mentions that 60 percent of all companies indicate that the leadership gap is their top business challenge, and, therefore, they invest 35% of their entire training budget (35 cents of every training dollar) on LDPs. Also, a recent survey by Deloitte (2016) reports that 89 percent of executives rated organisational leadership as an important priority, and more than half of the respondents mentioned that their organisations are not ready to meet leadership needs.

Many LDPs graduates do go on to become successful senior leaders. However, there is no proven method to assess how much, if any, of their success is due to the programme. Since only rising stars are invited to attend LDPs, one could argue that their careers would have turned out the same without any training.

Much of the confusion stems from the designation “leader,” which evokes a variety of images and emotions.  Leaders are judged by their inner and outer qualities, and leadership development is geared toward nurturing both. Companies are increasingly aware that leadership is as much about how one thinks and feels as it is about tangible business outcomes.2,3 Yet how these interact to enable leadership success remains largely a mystery. For both companies and learning providers, this creates a lot of guesswork when it comes to designing a curriculum.

Our research question is focussed on how various aspects of leadership development programmes affect participants both individually (i.e., their knowledge, behaviour, and attitudes) and organisationally (i.e., their contributions to the company).4 While there is no universal formula for cultivating leadership, our research suggests some specific ways for companies to maximise the impact of their current programmes.

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Research Methodology

Our research had three stages.5 First, after a comprehensive review of the literature on leadership development programmes,6,7,8 we defined three main features of LDPs (intellectual, emotional and experiential) that are critical to producing impact on both executives’ capacities and organisational results (Figure 1). We then linked each feature to a specific impact on the executive capacities (knowledge, attitudes and behaviour) and organisational KPIs (business results, retention and promotion).

Second, we conducted a focus group involving ten managers from Spanish multinationals that were expanding into Latin America. The participants, all of whom had taken part in the design and had attended several LDPs, were asked to identify the most impactful methodologies and features of their programmes and to explain their choices, as well as to share any concerns that they had about particular curriculum elements.

Figure 1. Leadership Development Program methodologies and their impact on participants and organisations

The insights collected during the focus group were used to inform the second stage of our research, a quantitative survey that was emailed to 107v leadership development alumni (top management or HR directors). Our analysis of the survey results found statistical confirmation for a number of commonly held assumptions about leadership development. For example, programme content that was aligned with firm strategy appeared to have greater organisational impact, as did programmes whose preliminary stages included participants’ training needs assessments.

As for the impact on participants as individuals, we found that personalised post-course follow-up made a noticeable difference. One-on-one mentoring, in particular, seemed to improve the process of converting lessons learned during the programme into meaningful changes in knowledge, behaviour and attitudes.

In addition to the variables that were related to either individual or organisational outcomes, some variables affected both types of outcomes. On a broader level, there is evidence of a low-to-moderate correlation between the two types. This finding may go toward refuting detractors, who claim that it is a waste of time and resources to invest in training leaders who may end up leaving the firm anyway. Our data suggest a modest but clear bump in results for organisations that invest in leadership development, provided that the programmes delivered are effective.

 

Key results. The two “must-haves”

Two variables, in particular, strongly impacted both individual and organisational outcomes – the degree to which different aspects of LDPs were evaluated, and the number of company directors involved in participant selection.

Too often, programme evaluations are imprecise and poorly constructed. Participants will be asked, for example, to record how they felt about an instructor’s classroom performance as a whole, regardless of that instructor’s particular strengths and weaknesses. Our survey analysis indicates that a more granular approach would garner more positive results for the programme overall. Each stage should be audited on its own, in tandem with course delivery rather than as an afterthought.

Our data suggest a modest but clear bump in results for organisations that invest in leadership development, provided that the programmes delivered are effective.

Additionally, evaluations should be geared toward assessing impact, not impressions. Rather than asking how a participant felt about the programme, evaluations should determine, for example, whether a specific module offered takeaways that are clear and relevant enough for participants to use in their post-course working life. Only then can feedback be channeled into productive, targeted improvements.

It is crucial that top managers be involved in the design and delivery of LDPs, despite the difficulties of securing their highly sought-after time and attention. Senior executives are invaluable repositories of organisational knowledge, though they may not even realise it. If they can be convinced to share their wealth of expertise with learning providers, the resulting programmes will be far more enriching for participants. Our experiences with corporate clients have proven this time and time again. Ideally, three to five executives would be included in the process, each representing different business areas, so as to provide a well-rounded array of expertise.

 

How to attract top managers

Our focus group participants named top management’s involvement as one of the most critical ingredients of leadership development – but also one of the most elusive. It appears, then, that companies are knowingly settling for less by leaving leadership development programmes largely in the hands of HR or learning departments. This could be due to a politically expedient desire to seek the path of least resistance or to intimidation at the prospect of asking top management to participate.

In our work with corporate clients, we find that top management leaders are more willing to collaborate with us when there is something in it for them. As an initial overture, we offer them guest speaking and mentorship opportunities – preferably at their own company. They may have attended a leadership development programme in the past, but participating as an educator or mentor is an entirely different experience. Giving them a platform – and a taste of the spotlight – often starts them down the path to complete co-ownership.

Once you have top executives’ attention, you must sustain it over the long term. We recommend regularly emailing the participating executives with newsletters or blogs containing leadership information and relevant articles. Also, annual business seminars featuring top experts, networking sessions, and peer forums are some of the lifelong learning activities that can be implemented to maintain leadership development as an ongoing strategy imbedded in the organisations’ lives.

 

Money isn’t everything

In sum, our research should caution companies against off-the-shelf approaches to leadership development. Just as R&D investments would be considered wasted if they generated cookie-cutter products, investments in leadership development pay off most when programmes are customised to organisational needs and their outcomes are continually monitored. And, to facilitate the implementation of the programs results, organisations must be prepared to devote not only financial investments, but also a corresponding amount of resources and time, to the alignment of internal processes and organisational culture.

Investments in leadership development pay off most when programmes are customised to organisational needs and their outcomes are continually monitored.

Finally, the most critical success factor is the commitment of organisations’ top management to the programmes’ design and delivery. It is crucial that they create a close mentorship and support of the LDP alumni in order to facilitate the changes they are expected to implement after attending a program and, thus, assuring a greater impact of LDPs on business success.

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About the Authors

Camelia Ilie is Associate Professor and Dean of Executive Education at INCAE Business School. She is also the Chair of the Center for Collaborative & Women Leadership at the Business School. She teaches leadership development, neuroscience and transformation and organisational change. An engineer with a specialisation in Optical and Biomedical Devices, she earned her doctorate, Summa Cum Laude, from the Pontificia de Comillas University in Spain.

Guillermo Cardoza , is full Professor at INCAE Business School. He was a Research Fellow at Kennedy School of Government, Harvard University, where he conducted research on innovation and competitiveness in emerging economies. During his term as Executive Director of the Latin American Academy of Science, he created and directed the Center for Science Studies and Information. He was a professor at IE Business School in Spain for 14 years.

Schon Beechler is Senior Affiliate Professor of Leadership and Organisational Behaviour, INSEAD. She received her undergraduate degree in Sociology and Anthropology with high honours from Oberlin College and earned a joint PhD in Business Administration and Sociology from the University of Michigan. She is a specialist in global leadership and the management of multinational corporations.

References

1. Corporate Learning Factbook. (2014). The Corporate Learning Factbook 2014: Benchmarks, Trends, and Analysis of the U.S. Training Market. Available at http://marketing.bersin.com/corporate-learning-factbook-2014.html

2. Tompson, H.B. & Tompson, G. (2013).The Focus of Leadership Development in MNCs. International Journal of Leadership Studies, 8(1): 67-75.

3. Thomas J.R. (2013). Developing Tomorrow’s Global Leaders. MIT Sloan Management Review, 55(1): 12-13

4. Ilie, C. 2009. The impact of management development programmes on business strategies. Doctoral thesis. Universidad Comillas—ICADE. Madrid. 

5. Ilie, C., Cardoza, G., Beechler, S, Hugas, J. Designing leadership development programs for high impact in Emerging Economies: The case of Spanish Multinationals in Latin America, http://dx.doi.org/10.2139/ssrn.3064353, 2017

6. De Vries, K. M. & Korotov, K. (2007). Creating transformational Executive Education programs. Academy of Management Learning & Education, 6(3): 375-387

7. Dalakoura, A. (2010). Differentiating leader and leadership development. A collective framework for leadership development. Journal of Management Development, 29(5): 432-441.

8. DiStefano, J., Kemanian, V., Keys, T., & Strebel, P. (2005). Mastering Executive Education: How to combine content with context and emotion – the IMD Guide: 42-54. Session scripting. Pearson Education Limited, Harlow: FT Press.

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