Based on Brandon Hall Group’s recent leadership development (LD) research, it is hard to argue with the premise that leadership matters. Effective leaders are at the heart of successful organizations. An organization’s leadership development strategy is likely the most critical link in achieving business success. Yet many organizations continue to struggle with how to design and implement leadership development solutions that have a measurable impact on the business.
High-performing organizations (HPOs) have moved from investing in leadership development as a separate talent endeavor to integrating it with all other talent processes. Further, HPOs are methodical about knitting together each leader-level LD solution to build collective leadership performance in a progressive fashion. Designing and implementing LD in this way amplifies its impact on the business and optimizes organizational leadership capability.
Finally, HPOs measure the business impact of integrated LD and tweak its design and execution in alignment with changing business goals to evoke perpetual levels of greater business results. Therein lies the calls to action for most organizations: designing, executing, measuring, re-executing, and re-measuring LD in an integrated fashion to develop leaders at all levels, including individual contributors and high potentials, for the purpose of optimizing organizational capability.
High-performance leadership development starts with execution of leading practices:
- Executive (not HR) ownership of leadership development
- Integration of LD with other talent processes (particularly workforce planning and succession planning and management)
- Customization of core LD solutions to meet business unit and geographical needs
- Global delivery capability of LD solutions
- Consideration of external influencers (industry, economy, demographics, government regulations and legislation)
- Development of a leadership strategy
- Strategic alignment of LD solutions and LD content with business strategy
- Innovative design of LD solutions featuring a strong orientation to coaching, mentoring, experiential, social, and collaborative learning rather than traditional, in-person classroom sessions
- Progressive LD solutions targeted for leaders at all levels
- Governance
Additionally, these steps should be taken:
- Where possible, LD should be enabled with technology to improve consistent execution across the enterprise.
- Ensure LD solutions align with your corporate climate, and most importantly, with your business strategy.
- Commit to regularly measuring the effectiveness of LD solutions for purposes of optimization.
Taken together, these ingredients—LD leading practices, technology enablement, organizational/corporate climate, and measurement—equal business impact. The extent of the impact varies with how effectively each of the four components is designed, aligned, executed, and measured.
Four Drivers of Business Impact
In studying this equation, it is clear that the business impact of leadership development can be assessed and measured in four categories that we call business impact drivers:
- People
- Process
- Technology
- Culture
People: High-performing organizations are careful to design and implement targeted development for all leader segments. While the labels for these segments vary among organizations, the following leader audiences are typical:
- Emerging leaders (individual contributors)
- First-line leaders
- Mid-level leaders
- Executive/senior leaders
- High potentials at each leader level
- Leaders of high-performance teams
Leadership and leadership development at all levels are even more relevant in today’s highly matrix, globally distributed, and fast-moving organizations. High-performance leadership development is a collective and ongoing endeavor for existing and future leaders at all levels and in all functions and geographies throughout an organization.
Process: Results are achieved quicker and are sustained when leadership development is efficient, effective, and aligned with business goals. Beyond keen insight into each leader segment, high-performance leadership development is tightly integrated with workforce and succession planning. It is essentially impossible to prioritize leader capabilities to develop without first knowing what the existing supply and future demand for leaders (at all levels) is and what skill gaps exist in current and potential leaders. Understanding the implications of today’s labor demographics, as well as industry-specific and legislative actions, are also key influencers of LD decisions.
Leadership strategy is another requisite to LD solutions. Before making choices about what development solutions need to look like for each leader segment, organizations first should identify the number of leaders they need, with what capabilities, in what parts of the business —functionally and geographically—today and going forward to meet business priorities.
To ensure LD strategy and solutions are enhancing organizational performance, not just building good leaders, the best-performing companies implement a measurement strategy. HPO measurement strategies define a few key business and talent metrics (revenue per employee, engagement score, turnover rate, etc.). HPOs establish baselines for each metric and re-capture data on each metric after leadership development has been deployed for a number of months.
Technology: Deploying user-generated LD solutions and sustaining ongoing leader development is enhanced by technology enablement. More organizations are relying on social intranet sites to provide the 24×7 platform to support leader-to-leader networking and collaboration. Enabling chat rooms, discussion forums, themed communities, and online coaching and mentoring tools allow leaders to share user-generated content and freely compare notes about experiential assignments.
While technology likely will never solely replace traditional in-person development sessions, it does enable today’s leaders’ preferred methods of learning and boosts real learning in the context of leaders’ real responsibilities.
Culture: A leadership culture is the organization’s set of shared beliefs that drives aligned movement among leaders toward critical business goals. Individual leader development and organizational capability are inseparable from leadership culture.
When an organization aspires to a new level of performance, the capacity of that organization to develop a new leadership culture—a new set of beliefs about how to achieve alignment among leaders and achieve new goals—will determine its success. Similarly, if the economy, market conditions, workforce demographics, global diversity, or other external influencers create a change in business context or challenges, organizations respond by making changes to their leadership culture.
The best-performing organizations anticipate internal goal changes and external influencers and proactively modify their leadership culture to keep more than a pace ahead of the business landscape changing around them. In this fashion, culture accelerates (or in some cases, may hinder) the degree to which leaders embrace change and are prepared to come together to collectively take a new direction to achieve the next level of organizational performance.
Leadership Development Business Impact Model
To determine the maturity level and quantify the business impact of their leadership development, HPOs use an impact model such as the Brandon Hall Group High-Performance Leadership Development Impact Model, which you can access in the full report, High-Performance Leadership Development: Measuring Business Impact
We define business impact at four levels of maturity from least to most mature and within the context of the four business drivers: people, process, technology, and culture. The business impact maturity levels are:
- Level 1: Ad Hoc Leader Training
- Level 2: Targeted Leader Development
- Level 3: Sustainable Leader Performance
- Level 4: Optimized Organizational Capability.
Recommendations on Increasing Business Impact of Leadership Development
Driving business impact through leadership development involves:
- Understanding the organization’s business objectives and performance expectations as they relate to each of the four business drivers
- Assessing the organization’s maturity of their leadership development practices in each of the four business driver areas
- Identifying gaps between the organization’s current assessment and leading practices
- Executing plans to close the gaps and sustain optimized organizational performance.
Leadership development is achieved in varying degrees of maturity based on the successful alignment and implementation of the three phases of leadership development with the four business drivers. Organizations reach different levels of maturity by executing some phases and business drivers better than others.
Our four-level leadership development impact model does not imply that every organization should aim for, or even needs to achieve, Level 4. Each organization should decide which maturity level would be optimal for its particular business needs at a given time. In fact, few organizations have earned Level 4.
Laci Loew is vice president of Talent Management Practice and principal analyst at Brandon Hall Group, a human capital management analyst and advisory services firm. Core practice areas are Learning and Development, Talent Management, Leadership Development, Talent Acquisition, and Human Resources.
