Leadership development is a top—although sometimes elusive—priority for many organizations these days. In fact, organizations said they planned to allocate the most funding to management/supervisory training in the coming year, according to Training’s 2013 Industry Report.
But while leadership development is a driving force in most organizations, it’s not always easy to formulate an effective program that helps companies identify, develop, and retain leaders. In search of leadership development best practices, we checked our 2014 Training Top 125 and Training Top 10 Hall of Fame lists and found that nine of those companies also appear on Chief Executive magazine’s Best Companies for Leaders list, which was created in collaboration with Chally Group Worldwide and the Human Capital Institute.
Leadership development clearly is a big part of the Top 125 application as companies must detail their programs in executive coaching, first-line supervisor development, leadership development, mentoring, succession planning, job rotation, and more, plus provide metrics on retention and internal promotions. Chief Executive magazine’s e 2014 Best Companies for Leaders ranking is based on five factors:
- Having a formal leadership development process in place.
- The commitment level of the CEO to the leadership development program, as measured by the percentage of time spent.
- The depth of the leadership funnel, as measured by the percentage of senior and middle management positions filled internally.
- The number of other companies that report recruiting from the company being evaluated.
- A shareholder value-performance metric based on 10-year growth or decline in market capitalization.
The 10 Best Private Companies for Leaders were chosen from among larger private companies with a minimum revenue of $1 billion and include Hall of Famers Deloitte (No. 1) and PwC (No. 2), and No. 21 Top 125er American Infrastructure (No. 4). Among the 40 public companies recognized are Hall of Famers IBM (No. 2), General Mills (No. 10), and Verizon (No. 14), along with No. 7 Top 125er McDonald’s (No. 7), No. 20 Top 125er ADP (No. 20), and No. 16 Top 125er Paychex (No. 39).
Several of these “leadership leaders” offered insight into their leadership development strategies, including how they define leaders, the leadership competencies they nurture, C-suite involvement, program measurement, and best practices that have proven most successful.
DEFINITION OF LEADERS
More and more organizations these days are adopting a policy similar to American Infrastructure’s strategy of considering “all of our employees (at every level within the organization) to be ‘leaders.’ We have no ‘followers’ within our organization,” says Jamie Leitch, SPHR, MBA, MSHRD, Mc.AEd, director, Career Development & Training, American Infrastructure – Continuous Learning Center. “We believe that leadership is a skill; not a position. As such, employees at every level and in every position are able to grow and perfect their leadership skills to the highest degree. Within their position, they are able to influence themselves, others, the organization, and even our industry as they attain higher levels of leadership competency.”
Growth from level to level is a function of employee effort as part of their individual career development plan, Leitch says. Employees working within certain positions are expected to have attained specific leadership levels, but leadership-level attainment is not limited by position.
General Mills Organization Effectiveness VP and Chief Learning Officer Kevin D. Wilde agrees. “Our general approach is more ‘and’ and less ‘or.’ We focus much of our development effort around ‘managers of people at all levels’ and also see the act of leadership to come from any employee at any level.”
At Paychex, “we define leaders as those individuals not only in a position with direct reports, but more importantly, as people in the organization who exhibit the highest level of values and perform consistently at the highest levels,” says Jeff Grenzer, director, Leadership & Organizational Development, Paychex, Inc.
By principle, IBM leaders are defined by their contributions to the company’s growth, and identified by potential and role, according to the team at the IBM Center for Advanced Learning. “It encompasses the people-oriented leadership of our managers and executives, and other professional leadership roles that reflect special career paths for our best individual contributors—for example, our Distinguished Engineers and IBM Fellows. All of our senior, non-executive IBMers also have an explicit leadership expectation within their job roles.”
General Mills’ corporate Leadership Expectations are based on an internal analysis of critical capabilities to enable the business strategy, as well as talent studies of leadership success and derailment, and benchmarking best practices, says Wilde. Desired competencies include:
- Play to win/results
- Act boldly, move quickly/urgency
- Win as a team/collaboration
- Grow and inspire/talent
- Do the right thing all the time/Integrity to live the values
IBMers are identified and united by what they value, the IBM team says:
- Dedication to every client’s success
- Innovation that matters—for the company and the world
- Trust and personal responsibility in all relationships
“Instead of competencies, our leadership development programs focus on the nine practices that relate to these three values,” the IBM team says. “Our practices define how we behave—what our values look like in action.” IBM’s practices are:
- Put the client first.
- Listen for need, envision the future.
- Share expertise.
- Restlessly reinvent—our company and ourselves.
- Dare to create original ideas.
- Treasure wild ducks.
- Think. Prepare. Rehearse.
- Unite to get it done now.
- Show personal interest.
American Infrastructure’s Leitch says leadership is one of “what we call our ‘What We Believe Principles.’ We have 12 leadership disciplines within this competency: Influencer, Proactive, Accountable, Discerning, Innovative, Continual Learner, Teacher/ Coach, Agent of Change, Collaborative, Integrity-Based, Successful, and Balanced. These disciplines remain the same at the leadership development level within our Graduate Leadership Model; only the behavior statements/skills change at each level.”
One key to successful leadership development programs is a C-suite that not only buys into the need for such programs but also actively gets involved. American Infrastructure’s C-suite serves as leaders, designers, coaches, mentors, guest speakers, and even facilitators of its formal leadership development programs. “Our CEO, Ross Myers, serves as a co-facilitator within our Developing Emerging Leaders program and as the facilitator of our Leadership Intensive program,” Leitch says. “I would estimate our CEO spends at least an average of 408 hours per year dedicated to our formal development programs alone. In addition, I estimate that our SVP of Corporate Services dedicates approximately 423 hours to our formal development programs.”
Verizon’s CEO is personally involved in defining the critical focus areas for leadership development, says Amy Hirsch, director of Leadership Development, Verizon. “He also provides input into the design and has co-facilitated select executive education sessions.” Participation for other senior leaders may include program sponsor, guest speaker, panel participant, or networking reception guest. Program sponsors are involved in the design of the course such as reviewing content or providing case studies, and typically open and close each session. For example, Hirsch says, “our chief technology officer and his senior leadership team regularly review and update content for our executive-level technology course prior to each quarterly delivery to ensure our content is accurate and relevant for greatest impact. As program sponsor, he is also our opening guest speaker for the sessions, providing context for how our technology platforms and innovations position us for the future.”
At Paychex, senior officers spend time teaching in the leadership programs, Grenzer says. “Also, many serve as mentors and sponsors to strategic initiative teams within our programs.”
LEADERSHIP DEVELOPMENT MEASUREMENT
How do companies effectively measure the success of a leadership development program—and ensure it has the desired impact on business results? General Mills utilizes 360-degree surveys, climate survey trends, succession pipeline metrics, and diversity scorecards.
Paychex looks at retention, filling of next-level leadership openings (both functionally and cross-functionally) with program attendees, bench plan effectiveness, and continued performance ratings of those attendees. Another measure occurs typically at the five-month mark, Grenzer says. “We ask the participants and their managers to connect the development focus to a measurable difference in the function. Impact on business results is measured in terms of business growth and achievement of strategic business unit objectives under the leadership of our top talent leaders. Furthermore, we track the number of leaders required in the organization over a specified time period.”
Among the measurement metrics American Infrastructure utilizes are:
- Kirkpatrick Levels 1-3 for all initiatives
- ROI for all formal leadership development programs
- Employee retention as compared with their leadership development level of achievement
- Formal development program participant retention
- Employee promotion as compared with their leadership development level of achievement
- Employee performance related to leadership disciplines (as compared with their leadership development level of achievement)
- Employee leadership growth—before/after formal leadership development programs (the company created a 360-degree tool that contains its leadership disciplines)
- Kirkpatrick Level 4 measurement as it relates to specific business goals tied to specific leadership development programs
In 2013, Verizon adopted the Kirkpatrick/Phillips ROI model enterprise-wide for measuring the effectiveness of learning and development programs and certified several team members in this practice. “Level 4 and 5 evaluation of business impact and full return on investment is considered for programs with large investments and broad audiences in alignment with program objectives,” Hirsch says. “For example, evaluators conservatively estimate that the ROI from the Leading for the Shareholder Value leadership development program in 2012 was more than 10 times the amount invested, and that the amount would increase over time with 30 percent of the participants having already produced measurable business impact within three months. In 2013, a full ROI analysis realized 204 percent ROI on the Leadership Direct program for top talent director and manager cohorts from around the globe. These outcomes, coupled with intangible business results—such as leader cascade, cultural acceptance, and use of language—demonstrate the impact and importance of continuing to develop leaders at Verizon.”
IBM is governed by a simple equation: engaged employees deliver differentiated client experiences, which lead to business results. “Our leadership development efforts, therefore, are targeted to enabling leaders to maximize this engagement through selecting the right people, serving as role models of our 9 Practices, and by keeping our business focused on delivering signature client experiences,” the IBM team says.
The impact of these efforts rests on the perceptions IBM clients have of IBM. As such, the IBM team says, “we track client satisfaction, likelihood to repurchase, and likelihood to recommend.”
CASE STUDY: IBM
From the IBM Center for Advanced Learning
In the last year, IBM has transformed how it enables new managers from a single intervention supported by various resources into a “new manager experience” more able to engage managers around their new and important role. While this new experience is just launching, early feedback from managers indicates that our new approach is achieving our goal of minting IBM managers who can embody our Practices.
IBM managers shape our client-centric culture by engaging their teams in living our 9 Practices. To ensure they become role models of this culture, we have transformed the way we appoint, induct, and develop our managers. From aspiring to experienced, managers play a critical role in delivering unique client experiences to make IBM essential.
When aspiring leaders think about becoming an IBM manager, they are able to assess their strengths and gaps by completing an online assessment based on the newly designed First-Line Manager Success Profile. Supported by their manager, aspiring leaders proactively develop themselves to be more competitive for the IBM manager role. They also go through a formal assessment process, which may include an online test, simulations, and a structured interview to determine additional development needs and readiness for appointment. Line leaders select new managers from qualified IBMers and actively sponsor and support new managers through their induction and development.
After new managers are appointed, they are inducted through a new ritual of a personalized letter from our CEO welcoming them to this important role at IBM. Their Upline manager also is provided with a guide, called Upline Connect, to create a signature induction experience that includes an orientation to their organization—an invitation to meet with a senior leader who welcomes them and sets expectations on their role. New managers receive a high-touch welcome from their manager, HR partner, and appropriate business unit or geography executives in their line of business.
New managers also receive Manager FastStart, a personalized welcome package that helps them engage, connect, and prepare for the role. It includes a 30-, 60-, and 90-day plan; key HR information; pre-populated networking tool; and additional manager recognition. A support network is created immediately through a social network comprising Manager Champions, HR partners, other managers, and senior leaders who will continuously enrich and develop managers in their first two years in the role.
We have transformed Management Development to create programs that are:
- Active, social, mobile, and focused through analytics
- Experiential from pre-lab to post-learning engagement with peer cohorts
- Rich with real-work-based scenarios that are customizable based on participants’ actual experiences
- Led by a faculty academy made up of exemplary line managers, executives, and expert facilitators
- Leverage mobile technologies and digital knowledge containers
- Focus on applying judgment based on our values and 9 Practices
A new manager takes three Management Development courses: Manager Development or MD 101, 102, and 103. MD 101 is an interactive introduction to the responsibilities of people managers and sets up each new manager for success. This offering can be deployed virtually or face to face.
As new managers complete their 90-day plans, a senior leader in their organization invites them to MD 102. This is a three-day, in-person, transformative, and practical learning experience that is focused on Moments of Impact (key opportunities where managers can engage employees), our 9 Practices, and IBMer engagement. Participants are immersed in activities that challenge them to enhance their coaching skills through various methodologies and tools that can be used in the creation of signature experiences between managers and IBMers.
Experienced managers with at least 18 months in the role are encouraged to participate in MD 103, a new virtual learning experience. Based on the Manager Success Profile mentioned above, MD 103 is designed to refresh core skills and concepts for all managers, and ensure consistent awareness and knowledge of our IBM values and practices.
Upline managers are invited to MD 201, a two-day, in-person learning experience based on the belief that Upline managers are key change agents in our cultural transformation at IBM. Participants use storytelling and our 9 Practices to resolve real business problems and dilemmas, focus on how to role-model behaviors, and adopt new rituals.
In addition to transforming the manager appointment, induction, and development experience, IBM also simplified, streamlined, and integrated manager tools and resources. All managers have access to a Manager Hub, where they go to do work; THINK Management, where they can connect with our CEO, other senior leaders, and their peers; and the Manager Development Center, where they go to learn as it is designed for continuous engagement and development through social technologies and access to management resources and tools.
- Create leadership development opportunities for all of your employees.
- Take advantage of mentoring and reverse-mentoring activities as part of your leadership initiatives; everyone has something to teach/learn from others.
- Create continuous opportunities for your leaders to be involved and active in forwarding organizational business goals.
- Integrate leadership development planning and prioritization into business planning practices.
- Ensure consistency of investment and involvement in leadership development over the years.
- Attract higher-potential talent, inspiring and enabling the potential to come to life.
- Leadership development is a lever of strategic transformation, so design it in partnership with senior executives.
- Identify a “manager champion group” representing the expertise of top managers to co-lead and co-design the future of management.
- Deploy management programs led by line faculty to make behavior change back in the field more likely.
- Implement a talent assessment process that is driven deep into the company. Assess and conduct calibration sessions for every manager and include sales reps and a variety of other individual contributors to identify early potential.
- Create leadership development programs targeted to people who are identified as high potential and high performing via talent assessments. Create separate leadership programs for senior managers, managers, and supervisors that concentrate on competencies required to achieve success at the next level. Competencies can be addressed through large and small group guided discussions, simulations, gaming technology, strategic projects, assessment instruments, mentoring, coaching, and officer strategy briefings.
- Utilize Education, Exposure, and Experiential (3Es) developmental activities outlined within a searchable online catalog. Educational leadership curricula are assigned to all managerial positions via a learning management system (LMS) and aligned with specific competencies.