Developing Your Leadership Talent

Making Leadership Development
an Organizational Priority

“The bottleneck is always at the top of the bottle”-Peter Drucker

Leadership-DevelopmentYou have to spend money to make money, as the old saying goes. It’s an expression with staying power because it’s true. Capital is key – everyone knows that. But isn’t your human capital  just as important?

Just as a stagnant cash flow situation can grind any business to a halt, think about what would happen if you fail to provide leadership development opportunities to your people. The dollar is almighty, alright. But the dollars will only come your way when you’ve set the stage for everyone at every level at your company to hone their skills, accomplish goals and live up to their potential.

Walking the walk

Only one tenth of one percent of companies across all industries ever break $250 million in annual sales revenue. In his recent book, The Breakthrough Company, Keith McFarland set out to find out why. After testing thousands of organizations across many criteria, he found nine of the top-performing companies were superior to their competition in recruiting, developing and retaining top talent.

The nine CEO’s placed a premium on coaching and developing leadership capabilities at all levels of the organization. It wasn’t mere lip service, either. These companies walked the walk by instituting structured coaching programs, setting benchmarks, standardizing evaluation and assessment processes and tying development to meaningful incentives. According to McFarland, leaders flourish when they are given clear goals, unambiguous feedback, and a sense of control.

A lot of companies claim, “People are our most important asset.” Just saying it won’t convince anyone, though. People are smart. They can see through slogans if there’s no buy-in from top executives about really insisting that everyone get everything they can out of their experience with your business.

Tellingly, McFarland’s nine companies’ profits exceeded their closest competition at a ratio of three to one!

Canary in the coal mine

In the days before high tech devices for monitoring the air quality in a mine, a caged canary performed this duty. If the bird was still chirping and flapping, all was good. If it keeled over, it was time to head toward daylight.

It’s not a nice metaphor, but it’s also not nice to ignore the signs that something is not right in your corporate culture. Don’t let your people be the canary. They won’t do anything as obvious as keel over – I hope! But they will give subtle signs that they’re not as engaged in the company as they could be.

Have you ever wondered why some companies can substantially outperform their competition, in the same economy? And what is engagement worth? In his book, First, Break All the Rules, Marcus Buckingham explained that companies exhibiting the highest levels of employee engagement were more likely to have above-average:

employee retention(44%), customer loyalty (56%),
safety records (50%), productivity (50%),
and profitability (33%).

If your own staff is not engaged with your company, how can you expect high engagement from potential customers? It really is a direct mathematical equation: employee engagement equals sales revenue. At the end of the day, employee engagement is a leadership issue.

Nuts and bolts

The question, then, is: how do you foster engagement? The answer is simple: develop your staff. There are future leaders ready to be developed and established leaders that also need further leadership development-leaders can be made. If you’ve done a serviceable job in attracting talent, you have leaders that want to live up to their potential. If they can receive training and support at work that will help them do just that, they will thank you for it. They will be engaged with your company, and become evangelists for your brand.

You must refine a process by which leaders at various levels are chosen for this type of focused leadership development – and identify the core competencies that need to be developed at every level. Just imagine if you developed a twelve month “leadership development program” to systematically develop the next generation of executives.

In a new 2012 national study we just sent to 33,000 executives, 81.5% of the respondents reported that executives could really benefit from having an executive coach to expedite their development and enhance their ability to execute. You will find it helpful to bring in an outside expert, to help your company build such a leadership development system. In Jim Collins new book Great by Choice, he set out to understand by researching over 20,000 companies why just ten of them outperformed the general stock market by 32 times. One key finding was how those CEO’s leveraged external resources that Collins calls “scaffolding”. When, where and how to use outside experts to improve your planning and execution.

You should also consider designing leadership development into your accountability system, so leaders will hold each other responsible for the design and execution of their individual development plan (IDP). The culture of coaching becomes so integrated into discussions of leaders performance when developing current and future leaders is one of the organizations top four priorities. Execution starts with great leadership talent.

External leadership trainers can bring outside assistance to help you bring in top talent into your classroom leadership training. Insist on program content that is important to your leadership team today and in the near future. The leadership assessment data you compiled in your selection and promotion processes will help customize the program’s focus and content.

Buy-in and leadership participation at all levels is absolutely essential. Hold annual review sessions in which the CEO and other top executives are intimately involved. Build leadership development into your budget, as though your company’s future depends on it. Integrate leadership development into your annual performance management system. Finally, be sure to collect accurate data about each leaders current individual and team performance, to align their individual development plan (IDP) with your organizational leadership development scorecard.

By Design or Luck?

Leadership development systems can be seamlessly integrated into existing recruiting, hiring, new employee “on-boarding,” and accountability processes, just to name a few. Below are two case studies of organizations that have applied such an integrated, customized approach to leadership development, over a three-year period.

A)  A healthcare organization improved organizational trust in management by 89%, which helped increase employee satisfaction by 46% over three years, which reduced turnover 31%, contributing to an $8 million dollar annual savings.

In his book, 21 Irrefutable Laws of Leadership, John Maxwell cites his number-one rule, The Law of the Lid, which articulates that an organization will never outperform its leadership team. Is your company’s future going to play out by design or by luck? Your leadership team’s ability equates to being able to tap into the strengths of your leadership teams and keep them engaged and, for better or worse, determines your effectiveness and profitability.B)  At one “high-involvement engine plant,” a manufacturing company reduced its high mileage warranty costs by one half billion dollars. During one quarter, quality defects dropped to zero – a first for a Big-3 automotive engine plant.

ROI – Everybody Wins

The following areas of your organization benefit when you focus on leadership development:

A)  Recruitment—A well designed program can attract top talent.

B)  Retention—People have every reason to stay in a culture when there are opportunities for professional growth.

C)  Performance—Personal development must be linked to performance expectations.

D)  ROI—Well-defined ROI is easy to calculate and more than pays for the costs of the program.

E)  Collaboration—As each group goes through 12 to 15 months of focused development, they become far closer as a team.

F)  Resources—This targeted approach saves time, money and resources.

G)  Communication—Cross-functional communication will improve.

H)  Culture—When top performers are moved horizontally and vertically throughout the company, the company’s values and culture are reinforced.

I)    Compensation—This systematic approach provides additional data for accurate compensation planning.

J)   Cost Reduction—To answer the question of why you should develop leaders internally, studies show 50% of executives hired from outside a company fail within 24 months.

Provide leadership development training and a culture where personal growth is expected, rewarded and nurtured, and your bottom line will thank you for it.

John Lankford

John Lankford was recognized as the 2007-2010 Associate Business Advisor of the Year in North America and brings proven executive experience and best practices to select companies every year. He served 18 years at the Executive Education Center at Ford Motor Company and is former Senior Director of Ascension Health Learning Institute. John has developed top leaders around the world in partnership with the University of Michigan Business School, the Center for Creative Leadership, Comcast University and GE University, to name a few. His business expertise has been tapped by prominent business media such as the New York Times, CBS and Dbusiness magazine and has been a syndicated business columnist. He is the author of The Answer is Leadership and Superstar for life…Career Transitions. John’s keynote speaking has landed him on the elite team that trains and certifies the new Executive Coaches joining the worldwide coaching community. John is also former Chief Executive Officer of the Innisbrook Leadership Institute. Lankford can be reached at john@premierexecutiveforums.com or call (888) 730-1950

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