Carole King’s pulsating anthem, “I Feel the Earth Move,” could have been the theme song for leadership development in 2023 as it was a year of disruptions in technology and budget.
And as the dust settles in the aftermath of COVID and the birth of the hybrid work environment, we could be in line for the next shock wave. Artificial intelligence and generative AI (genAI) are poised to reset leadership development, introducing changes in how it is financed, delivered, and evaluated.
This year’s Annual Leadership Development Survey shows that disruptions are coming from multiple directions. Successful organizations are Ending a pathway through this change, while others are still searching. In this eighth Annual Leadership Development Survey, conducted in partnership between Training magazine and Wilson Learning Worldwide Inc., we surveyed nearly 900 Learning and Development (L&D) professionals on a wide variety of issues, from the skills and learning methods used to the impact of AI and the changing financials of our profession. The results offer a valuable glimpse into the potentially ground-breaking future—if L&D professionals are quick to adapt and capitalize on continuously shifting opportunities.
FLAT LEARNING INVESTMENT
Total training and development spending per employee saw a slight (1 percent) increase from the previous year. As Graph 1 shows, we have seen large fluctuations over the eight years of the study. While in 2022 (as reported in 2023), we saw one of the largest increases (27 percent), this year, investment was virtually flat. The last time a large increase was followed by a smaller increase, a significant drop was observed the next year, as well (a 24 percent drop in 2019).
LEADERSHIP DEVELOPMENT DOLLARS DOWN
Despite a slightly higher investment in training overall, the percentage of the training budget allocated to leadership development decreased. Overall investment in leadership development dropped 5 percent from last year. Graph 2 shows there was a significant increase in the number of organizations spending less than 10 percent of their training budget on leadership development and a significant decrease in the number spending 40 percent or more.
Where is the reduction coming from? Results indicate that spending on high potentials, managers without direct reports, and C-level leadership development has decreased compared to other groups in the organization.
CHANGES IN PRIORITY SKILLS
We asked organizations to identify their top five priority leadership skills (Graph 3). While the top three priority skills remained the same (coaching, communication, and team leadership skills), this year saw the greatest number of changes in the history of the survey. Eleven skills changed their rank. The greatest decrease was in interpersonal relationship skills, moving from 7th last year down to 12th this year. This year, we also added “using emerging technologies” (such as AI), which ranked 13th in priority.
AI USAGE
One of the most significant advances this year has been in the use of genAI technology (e.g., ChatGPT, MS Co-Pilot, and Google Bard). Therefore, we thought it would be insightful to explore its impact on leadership development.
Participants were asked to describe their use of genAI in their leadership development (Graph 4). The vast majority of participants have not incorporated genAI in their leadership development yet, and nearly half (48 percent) have not explored it at all. Only 7 percent are actively using genAI in their leadership development.
So what are those who are using or experimenting with genAI doing? Their responses indicated five primary development activities where genAI has improved performance and efficiency:
1. Content outlines for training opportunities: GenAI can assist in developing structured outlines for programs, improving efficiency and ensuring comprehensive coverage of topics.
“Using AI to create content outlines for training has streamlined our development process and ensured consistency across different modules.”—Survey Respondent
2. Scenario-based video learning content: GenAI has been used to create realistic scenarios in video format for immersive learning and practice experiences.
“Generative AI has allowed us to create realistic scenario-based video content that enhances learner engagement and decision-making skills.” —Survey Respondent
3. Personalized coaching: Personalized coaching and feedback can be delivered through AI chatbots, enhancing leadership skills.
“AI creates coaches and mentors that match the leader’s needs, creating personalized coaching relationships that drive professional development.” —Survey Respondent
4. Curriculum development idea generator: GenAI can generate ideas for curriculum development, ensuring innovative and relevant content.
“Generative AI aids in researching topics efficiently and summarizing longer texts, saving time and improving information synthesis.”—Survey Respondent
5. Copy editing and content refinement: Using genAI can improve communication clarity and accuracy.
“I use it for almost all copy editing, crafting messages, designs, presentations, writing letters, responding to e-mails, request for proposal (RFP) reviews, meeting minutes summaries, etc.”—Survey Respondent
CONCERNS AND BARRIERS TO USING AI
Asked to project when genAI will have a significant impact on leadership development, the largest group projected sometime in the next one to two years (Graph 5).
Participants identified four main challenges in implementing genAI in leadership development within their organizations:
1. Resource constraints: Lack of training and budget combined with little current knowledge about the existing tools and capabilities is a challenge during implementation.
“As an L&D department, we are small and lack capacity to incorporate such new technologies. Budget for software and training in AI is nearly nonexistent.” —Survey Respondent
2. Skepticism and acceptance: Some individuals and organizations are skeptical of AI. Its adoption needs widespread acceptance, especially among senior leaders and conservative corporate cultures.
“We need assistance in helping leaders clearly understand the strengths and limitations of current AI tools.” —Survey Respondent
3. Strategic planning and policies: Implementing genAI requires strategic planning, clear policies regarding its use, and coordination across the entire organization.
“GenAI requires strategic planning and coordination throughout the organization before moving forward. We have yet to align sponsors and senior managers on a strategic plan.” —Survey Respondent
4. Lack of accuracy and inconsistency of results: GenAI results have a host of potential challenges— accuracy, adaptability, and bias mitigation.
“GenAI is not always reliable, and the generated content is not always high quality, or consistent from time to time. AI results can be racially biased and culturally insensitive.” —Survey Respondent
In addition to challenges, participants also raised several ongoing concerns with genAI:
1. Ethical concerns: There are concerns regarding privacy of organizational information, data security, and ownership of the content created, particularly with public genAI systems.
“We have privacy concerns regarding the information we put into AI systems, how it gets used, the potential for violation of intellectual property laws, and plagiarism.” —Survey Respondent
2. Changing regulations: Current governmental regulations are in flux and will affect different industries differently.
“As a bank, it’s all about compliance and regulatory, privacy, and security considerations. How can we use AI when the regulated environment keeps changing?” —Survey Respondent
3. Misuse and abuse: There are concerns about plagiarism and other misuses in the workplace.
“Potential for misuse always exists, by learners, employees, and others. AI needs human oversight but with very few ways to accomplish that.” —Survey Respondent
4. Loss of human interaction: Becoming over-reliant on AI may come at the expense of human interaction and decision-making.
“Will we avoid becoming primarily reliant on AI as a substitute for human interaction and leadership decision-making? Can AI relate to the employee’s needs?” —Survey Respondent
HIGHLY EFFECTIVE LEADERSHIP DEVELOPMENT
While good training is part of effective leadership development, results indicate that effectiveness goes beyond just training. As in past years, we included measures of leadership development effectiveness (see the next section below) to find what works. These measures have proven effective in separating organizations with high-performing leadership development from those with lower-performing leadership development.
The results indicated that there are six critical elements to highly effective leadership development:
- Use of the right learning methods
- Support for transitioning in their leadership role
- Executive involvement
- Manager coaching and feedback
- Helping leaders take responsibility for their development
- Developing the character of leaders
Organizations that take these steps have more effective leadership development.
HOW DO WE DEFINE EFFECTIVE LEADERSHIP DEVELOPMENT?
Benchmarks for performance are useful in making improvements. Through our research, we identified outcomes that define leadership effectiveness. These six indicators are measures of leadership development impact that experts agree provide a reliable indication of leadership development performance.
- Leadership is a source of competitive advantage: Do senior executives acknowledge the importance of leadership development to the organization’s success?
- Best-in-class leaders: Are other companies trying to recruit their leaders?
- Attracting high potentials: Does the organization’s approach to leadership development attract high-potential leaders from other companies?
- No leadership gaps: Does the organization have significant gaps in leadership capacity?
- Sufficient resources: Does the organization have the necessary resources to effectively develop its leaders?
- Sufficient leadership bench strength: How satisfied is the company with its ability to replace departing leaders?
By combining these six measures and then ranking organizations from high-performing to lower-performing, we create a measure of overall leadership effectiveness.
USE OF THE RIGHT LEARNING METHODS
Not all learning methods are equally effective for all skill development needs. What might work for a technical skills program may not work for leadership development. Unfortunately, our research shows that organizations are not always choosing the most effective methods for their leadership learning experiences.
In the Leadership Development Survey, participants provided ratings for both their use of 23 specific learning methods and the effectiveness of the methods they used. These ratings allow us to construct a map of learning methods (Graph 6).
Highly effective methods were divided into two groups: Core Methods and Leverage Methods. While the Core Methods tend to be used by most organizations, the Leverage Methods are what separate the highly effective organizations from the less effective. Leverage methods are highly effective methods used by only the highly effective organizations. Lower-performing organizations can improve their performance by incorporating more learning activities that involve action learning assignments, challenge and stretch assignments, and mentoring programs.
TRANSITION SUPPORT
While all organizations support leaders as they transition into new roles, four specific actions differentiate higher-performing from lower-performing organizations (Graph 7). High-performing organizations develop potential leaders early in their career, provide more advanced leadership skills throughout their career, help manage their expectations, and mentor during their transition.
EXECUTIVE INVOLVEMENT
A clear difference between high- and lower-performing organizations is the degree to which executives are involved in leadership development. Results show that high-performing organizations are much more likely to directly involve executives in all aspects of leadership development (Graph 8). High-performing organizations are significantly more likely to engage their executives in modeling effective leadership behaviors, setting clear expectations for leadership development, sponsoring leadership community efforts, leading sessions, and recording videos for leadership programs.
MANAGER INVOLVEMENT
The involvement of a new leader’s direct manager is critical. Current leaders of high-performing organizations are more likely to let go of responsibilities, document critical processes, and provide coaching and support.
RESPONSIBILITY FOR DEVELOPMENT
Organizations increasingly are asking leaders to take personal responsibility for their own development. Overall, 70 percent of organizations have this expectation. However, a differentiating factor between high- and low-performing organizations is the level of support they provide to new leaders in accepting this responsibility. Graph 9 shows that high-performing organizations support this effort by making leadership development a key performance indicator (KPI), using stretch assignments to guide development choices, and providing 360-degree or self-assessments of leadership skills.
DEVELOPING LEADERSHIP CHARACTER
High-performing organizations also differ from lower-performing organizations in their approach to character development and on which elements of character they focus. High-performing organizations are more likely to provide leadership programs specihc to developing character or incorporate character into leadership programs, while low-performing organizations are more likely to offer no character development at all.
All organizations, regardless of performance level, see integrity/ethics as the most important character element. More than 80 percent of all organizations rank integrity/ethics as a top priority. However, they differ on other priority character elements. Low-performing organizations are more focused on resilience, while high-performing organizations are more focused on nurturing growth, promoting diversity, and facilitating openness.
TIPS AND TAKEAWAYS
As organizations continue to navigate the changes they encounter during this disruptive period, we asked respondents to share their best practices, tips, or lessons. Approximately 400 respondents shared their ideas, with many echoing the outcomes of this survey. The best practices and the results of this survey suggest several actions organizations can take to strengthen their leadership development efforts:
- Tailor learning to leaders: Learning tailored to individual needs is more impactful for the learner and shortens time to proficiency and use. New technology, especially genAI, is making the tailoring of learning to the specific needs of smaller groups or individuals much more cost effective.
BEST PRACTICE: “Leverage technology to deliver personalized and adaptive learning experiences. Incorporate feedback and real-time performance data to tailor leadership development programs to individual needs.”
- Engage top management: While more senior executives see leadership development as a priority, the executive team needs guidance on how to best be involved and the specific actions that have an impact, and be given tasks that match their capabilities.
BEST PRACTICE: “Gaining buy-in and support from top executive leadership is critical. If they do not demonstrate support for development, management will view development as optional.”
- Leaders as teachers: Both the survey results and the participants’ best practices show the critical value of new leaders having good managers as mentors and coaches. Every new leader needs someone available to share experience, provide guidance, and reflect on actions.
BEST PRACTICE: “Coaching, coaching, and coaching. Managers play a great part in the success of a team and that can be done through coaching.”
- Choosing the right learning methods: Leadership is largely a social activity, and effective leadership development mirrors that. Most highly effective learning methods are social in nature—instructor-led training (ILT) and virtual instructor-led training (vILT), role-plays, manager coaching, mentoring, action learning, and challenge assignments. Unfortunately, many of the methods used by lower-performing organizations are also the least effective at changing behavior. High-performing organizations build multiple collaborative learning experiences into their leadership development, whether in person, remotely, or digitally.
BEST PRACTICE: “Provide access to a variety of learning methods and resources. Use multiple modalities and ways of interacting to adapt to diverse learning preferences.”
- Continuous learning: Leadership development is not a “one-and-done” proposition. From early on, leaders must have an expectation that leadership is not something they master, but something they are always in the process of mastering.
BEST PRACTICE: “Encourage leaders to engage in ongoing development opportunities. Provide access to resources on leadership skills and trends. And above all, create a culture where leaders are encouraged to seek input from peers, subordinates, and mentors, and to reflect on their own experiences and challenges.”
- Measurement and accountability: Though forgoing measurement of the impact of leadership development is tempting due to its difficulty, it is increasingly important to use solid business metrics to measure the effectiveness of programs, make adjustments based on feedback and results, and demonstrate that L&D’s efforts make a measurable impact on organizational performance.
BEST PRACTICE: “Assessing changes in leadership performance is essential. This may include key performance indicators (KPIs) tied to leadership goals, improved decision- making, enhanced team collaboration, or increased employee engagement.”
Tighter budgets and emerging technologies such as genAI create an opportunity to experiment and think of creative ways to deliver better leadership behavior change. Now is the time to shake things up and figure out how to ensure today’s leaders have the necessary skills to successfully navigate the seismic changes on the horizon.
SURVEY METHODOLOGY
More than 870 Learning and Development (L&D) professionals responded to the 2024 Leadership Development survey. Over the eight years the survey has been conducted, we have collected data from approximately 7,500 professionals. All were employees of companies that create and use leadership development services with their own employees; we exclude external providers of learning and development services from the results.
The majority of respondents (61 percent) had management responsibility, with the largest groups with titles of Manager (29 percent), Director (21 percent), and VP or higher (12 percent).
Most respondents (61 percent) operated only in the United States; the remaining were composed of multinational (17 percent) and global (22 percent) companies. Organizations were evenly distributed in company size, ranging from less than 100 employees to greater than 50,000, with the largest group (24 percent) having 1,000 to 5,000 employees.
