2006 SHRMResearch Quarterly

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Nancy R. Lockwood, SPHR, GPHR, M.A.
Manager, HR Content Program
Introduction
Many organizations continue to jump from one quick
fix to the next, never stopping to truly understand the
issues of leadership and the changing dynamics that
are at work in the marketplace.
1
In todays changing times, effective leadership is a
key component of organizational success. With the
impending retirement of the baby boom generation,
changing demographics and limited resources,
leadership development is rising to the top as an
organizational priority. Corporate investment in
leadership development in 2000, for example, was
estimated at $50 billion. At the same time, a new
paradigm is emerging, shifting from authoritative
leadership and position power to collaborative
leadership and knowledge power.
2
And organiza-
tions are increasingly under pressure to show
return on investment for training and development.
Reflecting business needs, the SHRM 2006 HR
Strategic Management Survey Report points out
that 74% of HR professionals perceive leadership
development as one of the core areas where HR
can make a strategic contribution.
3
From a strate-
gic standpoint, therefore, HR is ideally placed to
lead the way to foster talent for future leaders.
Linking Leadership Development
With Business Success
Leadership development is defined as formal and
informal training and professional development
programs designed for all management and
executive-level employees to assist in develop-
ing the required leadership skills and styles to
deal with a variety of situations.
4
Increasingly,
organizations are linking leadership development
with business value and organizational success.
A recent study found that the more organizations
do toward developing leaders, the greater the
financial success.
5
When linked with organizational
strategy, leadership development programs and
leadership competencies effectively support
profound long-lasting change.
6
However, according
to a recent survey of globally recognized leaders
responsible for leadership development, leader-
ship development must first be aligned with the
business of the organization before its value can
be determined. At Colgate-Palmolive Company,
for example, leadership is governed by three core
valuescaring, continuous improvement and
global teamworkand the company carefully moni-
tors how development fits with its business model
and objectives.
7

Leadership development is fraught with challenges
and opportunities (see Figure 1). Todays fiercely
competitive marketplace requires staunch devotion
to excellence and the ability to see the big picture
that affects the changing face of leadership. For
example, successful organizations have moved
from security to pay for performance in knowl-
edge-intensive work environments that demand
adaptability, innovation and flexibility. Therefore,
firms that produce effective leaders who engage
peoples passion for a better tomorrow will truly
foster business success.
8

Critical Leadership Skills
In the discussion and context of leadership develop-
ment, there are some important points to keep in
mind. First, the terms leader and manager are
often used interchangeably, although the literature
points to differences between leadership and
management. The primary difference, simply put, is
that managers control and solve problem whereas
leaders motivate and inspire. Similarities include
creating relationships to accomplish an agenda and
working to ensure that people get their jobs done.
9

Second, there is debate regarding whether leader-
ship can be taught. The overarching agreement,
however, is that the learner must have a personal
commitment to learning the necessary leadership
Abstract
Linking leadership development to the organizations mission and strategic goals is a smart business
strategy. Changing timesand the changing nature of leadershipdemands solid commitment to the
development of future leaders. Successful firms maximize their investment in human capital by develop-
ing leadership potential throughout the organization with integrated programs that emphasize corporate
values, critical skills and competencies, knowledge management, succession planning, and a global
mindset for business success. With collaborative leadership taking center stage as the new paradigm in
todays global marketplace, organizations that strategically focus on building leadership capacity for the
future will reap the benefits in the years to come.
2 Leadership Development
2006 SHRMResearch Quarterly

1. The extent to which and the way in which

leadership can really be taught.
2. The changing nature of leadership.
3. The comparative nature of leadership.
4. The measurement and evaluation of leader-
ship development interventions.
5. The integration of leadership programs with
other organizational systemssuch as
career development or reward systemsand
the degree of linkage with business strategy.
Source: Adapted from Storey, J. (2004). Leadership develop-
ment through corporate universities. Training & Management
Development Methods, 18, 4, 441+.
Five Dilemmas of
Leadership Development
Figure 1
skills, behaviors and competencies and then exhib-
iting these behaviors.
10
Third, there is also debate
about whether leaders are made or born.
11
According to the Center for Creative Leadership,
resourcefulness, composure, straightforwardness,
decisiveness and building and mending relation-
ships are essential leadership skills for business
success.
12
In contrast to other skills, such as
technical skills that change over time, intangible
skills are of enduring value. Additional key soft
skills include initiative, communication, collabora-
tion/teamwork, people development/coaching,
personal effectiveness/personal mastery, planning
and organizing, and presentation skills.
13
The
Gallup Leadership Institute Summit on Authentic
Leadership points to the importance of leading with
authenticity. Authentic leaders, highly aware of how
they behave and think, positively affect sustained
performance and are optimistic, confident and
resilient with high principles, values and ethics.
14

Talent management skills, including diversity
management across cultures, genders and age
groups, in conjunction with strategic thinking for
global competition and technology application,
are also essential.
15
Consequently, when seeking
future senior-executive material, organizations
often value personal leadership traits more highly
than business-oriented capabilities. Thus, being
open to change and growth, having the courage
to make decisions that feel right, building strong
relationships both internally and externally, and
motivating and inspiring others are necessary skills
for success.
16

One of the most critical skills in todays competitive
marketplace is building and maintaining trust.
Building trustthrough transparency, honesty,
communication and actionsdoes not happen
overnight. Being viewed as credible and trustworthy
requires that one deliver on agreements or explain
why it is not possible, be clear about expectations
and take responsibility for ones mistakes. An
ongoing dialogue is essential. For example, it is
important to spend time getting to know the desires
and hopes of each person on the team. If trust
is violated through actions or in the eyes of the
employee, the leader must work it out directly and
quickly. Along with actions, saying I am sorry and
Ill fix it goes a long way toward reestablishing
trust. Trust leads to sustainability, portable both
domestically as well as globally.
17
Poor leadership skills, however, along with unethical
behavior and incompetence, contribute to leader-
ship failure and can be costly (e.g., poor company
reputation, loss of customers, increased turnover).
Leaders fail because of how they act and who
they are, particularly when under stress. Common
causes of derailment are arrogance, bullying, self-
centered ambition and betrayal of trust. Certain
flawed behaviorssuch as arrogance, emotional
instability and abrasivenessare more damaging at
upper-level positions, which have high stakes and
thus potentially higher costs of failure. Solutions
include getting feedback, using a coach, analyzing
potential factors of derailment (e.g., business fail-
ures, stress from events, problems, environments)
and using small failures to prompt awareness
through learning and change.
18
Finally, since todays leadership roles are increas-
ingly complex and diverse, the role itself determines
certain key skills. Operational rolesthe more
traditional management positionsrequire self-
confidence and flexibility. Advisory roles that provide
support in a specific area (e.g., HR or IT) require
excellent people skills, influence and organizational
knowledge. Collaborative roles that accomplish
work through others are highly proactive, requiring
tenacity at gathering information. Overall, the more
strategic and sophisticated the role, the wider the
essential repertoire of leadership skills.
19

An Integrated-Solution Approach
to Leadership Development
Many organizations struggle to find the right strat-
egy to bridge the leadership gap. Some focus on a
single-method approach (e.g., classroom learning)
while others use the multi-solution approach with a
hodgepodge of programs and no strategic process
in place. In todays complex business environment,
the integrated-solution approach, with its holistic
and strategic focus, works best to 1) transfer
vital skills and ideas to leaders; 2) enhance
performance; 3) reinforce corporate culture and
values; 4) drive business results; and 5) adapt to
changing business realities. One of the advantages,
for example, is the focus on critical moments in the
leadership lifestyle, such as the first time being a
people manager or moving into an executive posi-
tion. During transitions, leaders need to learn new
ways of thinking about their roles or risk derailing or
failing. The integrated approach offers a synergistic,
strategic and sustainable pathway for organiza-
tions to build leadership capacity. Alignment to
organizational strategy with long-term planning for
best use of resources requires serious commitment
on the part of the organization, senior leaders and
HR (see Figure 2). With its comprehensive strategy,
the value of the integrated-solution approach is
that it focuses on the selection of appropriate
development options and, most importantly, aligns
them with business goals and objectives, ensuring
that organizations can be proactive and responsive
because they are aware of what is happening in the
business.
20

Leadership Development 3

2006 SHRMResearch Quarterly

4 Leadership Development
2006 SHRMResearch Quarterly

Mini Case Study: Integrated Leadership

Development
This mini case study illustrates a successful
leadership development initiative designed to match
the organizational culture and firm readiness.
21
The vice president of HR of a large engineering
firm wanted to implement an assessment center
process to launch a leadership development
initiative. However, in discussions with the execu-
tive team, there was resistance. Also, considering
all the organizational priorities, the CEO was
concerned about the level of financial commit-
ment required and the firms ability to effectively
accomplish this goal. After much reflection, the
HR executive realized that the organization was
not ready for this type of solution because it did
not yet have a culture in which leaders were open
to receiving feedback that an assessment center
would generate. Rather than risk failure, the VP
of HR introduced a staged approach. In the first
year of the initiative, an online self-assessment
tool was implemented, giving leaders the oppor-
tunity to assess themselves based on the firms
leadership competencies. In the second year,
a multi-rater assessment was implemented, in
which leaders were assessed on leadership com-
petencies by direct reports, managers and peers.
In the third year, an assessment center process
that focused first on high-potential candidates
was introduced. The initiative was successful, as
both the culture and the readiness of the firm
were respected.
Succession Planning
Across the organization, effective succession
planning integrates talent management with
strategic planning.
22
The goal is to anticipate future
leadership requirements by finding, assessing and
developing the human capital necessary to accom-
plish the organizations strategy.
23
Succession
management requires visible and consistent
support from the CEO and senior management
(see Figure 3). As companies become more
complex and global, evolving toward a knowledge-
era mindset, the focus expands from emphasis
on individual leaders to leadership teams with
complementary skills and a shared vision.
24

However, demographic trends indicate a significant
decline in the workforce of 35- to 45-year-olds over
the next 15 years, with fewer people available for
management positions. Consequently, executive
talent will be in high demand, and at the same
time, younger managers will not yet be ready to
take on leadership responsibilities.
25
Since com-
petition for leadership expertise will be intense,
organizations must develop succession plans now
to ensure their future. Yet surprisingly, many firms
are not strongly focusing on succession planning,
as confirmed by the SHRM 2006 Succession
Planning Survey Report, in which only 29% of
companies reported having a formal succession
plan in place.
26

To help offset the looming leadership crisis, HR
can both spearhead and manage succession
planning. For organizations new to succession
planning, a good starting place is to assess key
positions in the current organizational chart, the
1. Develop a comprehensive strategy for
integrated leadership development.
2. Connect leadership development to the
organizations environmental challenges.
3. Use the leadership story to set the context
for development.
4. Balance global enterprise-wide needs with
local individual needs.
5. Employ emergent design and implementa-
tion.
6. Ensure that development options fit the
culture.
7. Focus on critical moments of the leadership
lifecycle.
8. Apply a blended methodology.
Source: Weiss, D., & Molinaro, V. (2006). Integrated leadership devel-
opment. Industrial and Commercial Training, 38, 1, 3-12.
Eight Steps to Implementing an
Integrated-Solution Approach to
Leadership Development
Figure 2
1. Visible support from the CEO and all mem-
bers of top management.
2. Clearly defined leadership criteria.
3. A defined plan to find, retain and motivate
future leaders.
4. A simple, easy-to-follow, measurable
process.
5. The use of succession planning to reinforce
the corporate culture.
6. A process that focuses primarily on leader-
ship development.
7. A process that is a real organizational
priority.
Source: Berchelman, D. K. (2005, Fall). Succession planning. The
Journal for Quality and Participation, 28, 3, 11-13.
Seven Common Elements of
Successful Succession Plans
Figure 3
Leadership Development 5

2006 SHRMResearch Quarterly

staff holding these positions and their anticipated
retirement dates, and develop a projected organi-
zational chart. From there, the process depends
on company goals and the current stage of succes-
sion planning. Some firms may decide to redesign
and/or rethink their approaches to find, develop,
retain and motivate future leadership by focusing
first on needed leadership skills, while others may
take a more comprehensive approach, looking at
talent throughout the entire organization and then
developing programs to utilize current leadership
strength as well as build new competencies. Some
firms may already be at an advanced stage of suc-
cession planning, closely looking at individuals as
leaders, team leadership and/or individuals who
can lead the entire organization.
27

Developing the Leadership Pipeline
Talent development is the most critical aspect
of managing human capital. Research shows
that best companies for leaders, working
hand-in-hand with succession planning, create a
leadership pipeline through 1) encouraging leaders
at all levels to create work climates that motivate
all employees to perform at their best; 2) making
leadership development a priority for everyone,
not just an HR issue; 3) providing job shadowing
opportunities for mid-career managers; 4) helping
leadership teams as well as individual leaders
work better together; 5) ensuring high-potential
individuals have 360-degree feedback; 6) providing
mid-level managers with leadership development
early in their careers; and 7) providing external
coaches to senior managers.
28
By using a number
of leadership development options, companies
can foster a more inclusive and extensive group of
potential leaders (see Figure 4).
As highlighted in the SHRM/Catalyst Employee
Development Survey Report, 80% of organizations
use a number of initiatives to develop future
leaders (e.g., formal coaching, job rotation,
high-visibility assignments, formal career mentor-
ing, leadership forums, identification of high
potentials, succession planning). In general, large
organizations use leadership training (88%) and
development planning (79%) more than medium-
sized organizations (81% and 76%, respectively)
and small organizations (50% and 57%). And 49%
of organizations effectively identify high-potential
employees, while 25% do not.
29

Casting a wide web to expand the leadership
pipeline translates into more potential talent. For
example, at Sonoco Products, a large manufacturer
of packaging products, the succession process
considers lower-level employees with leadership
potential as well as senior management. By iden-
tifying linchpin positions (those essential to the
long-term health of the firm) and including middle
management, a company can develop a broader
talent pool. A transparent succession planning
process also helps to identify additional talent. For
example, at Eli Lilly, a top company in succession
management, the HR managers and the succes-
sion management team can access the company
intranet-based succession management tool to
consider an employees current level, potential
level, experience and development plans.
30

Assessment Uoaohng Learnng Lxperenoe
Psychometric
assessment
Multi-rater feedback
Competency
assessment
Assessment centers
Internal
External
Mentoring
Individualized
development planning
High-profile
learning events
Leaders developing
leaders
Partnering with
thought leaders
Technology-based
learning
Business school
affiliations
Development of
intact teams
Stretch assignments
Outside positions
and projects
Action learning

Source: Weiss, D., & Molinaro, V. (2006). Integrated leadership development. Industrial and Commercial Training, 38, 1, 3-12.
Four Broad Types of Leadership Development Options Figure 4
6 Leadership Development
2006 SHRMResearch Quarterly

Ensuring a diverse mix of people in the leader-

ship pipelinesuch as women and racial/ethnic
minority groupsfurther adds to available skills.
However, research shows that organizations
are not optimizing leadership development
opportunities for diverse groups. Common bar-
riers to minority advancement, for example, are
the scarcity of mentors and personal networks,
the lack of visible assignments and significant
line experience, and, for women in particular,
family responsibilities. Solutions include holding
managers accountable for training on diversity
and associated attitudes and behaviors as well as
progress on diversity metrics. Organizations can
also provide work/life support to their workforce.
However, research shows that only 38% of compa-
nies have formal diversity and inclusion initiatives,
and of these, 25% offer leadership development
programs to women and racial/ethnic minority
groups. In general, formal career mentoring for
women (14%) and racial/ethnic minority groups
(13%) is underutilized. Large organizations with
diversity initiatives and more staff devoted to
diversity are twice as likely to use formal coaching
and high-visibility assignments for women and
racial/ethnic minority groups than are small and
medium organizations.
31
Yet developing more and better leaders is not the
sole focus of the leadership pipeline. Broadly,
certain themes highlight the state of leadership
development today: 1) leadership development
increasingly occurs within the context of work;
2) there is critical reflection about the role of
competencies in leadership development; and 3)
companies are revisiting the issue of work/life
balance. Rather than focusing on what may be
lacking, it is very important to develop and lever-
age strengths, along with minimizing weaknesses
and looking at the whole person. Topics for leader-
ship development increasingly include managing
stress and personal renewal to avoid burnout, with
health and well-being at work gaining attention.
32
Corporate Universities
In recent years, the corporate university (CU) has
gained popularity as a vehicle for leadership devel-
opment. The concept of the CU emerged in the
mid-19th century, when companies such as DuPont
set up technical schools for prospective employees
when they encountered problems recruiting talent
with the requisite skills. Generally, a small core
staff works closely with prestigious partners
to deliver programs. The CU creates deliberate
formative experiences, with comprehensive and
sustained leadership development programs that
serve a number of strategic prioritiesintegration,
culture building and knowledge managementand
are key change management initiatives that
can, for example, restore intellectual capital
lost through delayering.
33
The CU also forwards
strategic drivers. BAE Systems, for example, has
used its CU for post-merger integration, developing
a learning organization, focusing on knowledge
management across business units and develop-
ing senior leaders. Overall, the concept of the CU
continues to evolve, reflecting the organizations
priorities.
34

Leadership Styles, Worldviews and Organizational
Behavior
Composed of values and orientations toward
people, a worldview portrays a philosophy of life.
How leaders view the world is illustrated by their
leadership styles and, correspondingly, by their
behavior. The interrelations of worldviews and
leadership styles promote specific workplace
cultures that, in turn, influence organizational
behavior. Worldviews also influence what key traits
are emphasized for leadership development. For
example, will a leadership program focus on creat-
ing partnerships? Perhaps not, if senior leaders
have a bureaucratic leadership style. Enhancing
relationships, for example, is a skill supported by
enabling and charismatic leaders. Training that
reshapes mindsets around power and influencing
skills is promoted by enabling, charismatic and
visionary leaders, as are action-learning and
self-worth/assertiveness skills. By comparing the
worldviews of its organizations leaders to organiza-
tional behavior, HR can better identify and promote
appropriate training for competitive advantage in
its specific industry.
35

Assessing the Value of Leadership Development
From competition, globalization and increased
expectations of shareholders, pressure to perform
puts organizations in the hot seat to measure
human capital initiatives. When considerable
resources are devoted to leadership development,
organizations need to know if and how these pro-
grams make a difference. Interestingly, intangible
assetsas a percentage of market valuehave
risen from 38% in 1982 to 85% in 2000.
36

However, determining the impact of intangiblesas
training is often consideredcan be a challenge.
In fact, according to the SHRM/Catalyst 2005
Employee Development Survey Report, 78% of orga-
nizations do not analyze the return on investment
(ROI) of leadership training. For those organiza-
tions that do measure the ROI of development
methods, the highest ROI comes from apprentice-
ships/internships (20%), leadership development
(18%) and formal coaching (18%).
37

Designed to provide business leaders with an
interlinked view of strategy, one possible place to
house the assessment of leadership value is in
Leadership Development 7

2006 SHRMResearch Quarterly

the four-quadrant balanced scorecard. Leadership
development falls in the quadrant for innovation,
learning and growth, with subtopics of human and
organizational capital.
38
To measure leadership
development value against strategic goals, many
organizations create their own metrics. Wachovia
Corporation, for example, uses business indicators
to illustrate enhanced performance following train-
ing and the reduction in the number and amount
of legal claims. Often, it is potential, performance
and growth that offer good measures. Unilever, for
example, assesses the value of leadership devel-
opment by answering specific questions, such as
are leaders clear about what the business wants
to do and did the business grow its bottom
line? Thus, it is hard business results, influenced
by effective leadership development, that illustrate
an impact on the bottom line.
39

Global Leadership Development
A recent global leadership survey that explored
how organizations identify and develop future
leaders illustrates the leadership gap that
companies are struggling with today. A negative
correlation was found between a firms need to
hire outside leaders and its confidence to meet
future growth needs. In the next five to seven
years, for example, 75% of companies expect to
hire 25% or more of their leaders from the outside.
However, only 57% of organizations have been
formally identifying and developing high-potential
talent for less than three years.
40
This information
has important implications for the pipeline of
global leaders, suggesting that the global leader-
ship gap may be even wider than originally known.
A survey of CEOs and 1,000 senior executives
of more than 75 companies in 28 countries
highlights that global literacy is the new leader-
ship competence required for business success.
To be globally literate means seeing, thinking,
acting and mobilizing in culturally minded ways.
Two key predictors of success in the global
marketplace are leadership development across
all levels of the company and valuing multicultural
experiences/competencies. As the world becomes
more economically integrated, the ability to value
and leverage cultural differences is one of the top
global literacies.
41

Evans, Pucik and Barsoux, experts in global
HR management, point out that it is the global
mindseta state of mindthat differentiates
global managers due to their ability to work
effectively across organizational, functional and
cross-cultural boundaries. HR can foster develop-
ment of the global mindset by ensuring that
talented employees worldwideno matter their
passport countryhave equal access to opportuni-
ties (see Figure 5). The strongest mechanism
to develop a global mindset is the international
assignment. In addition, multinational corpora-
tions, such as General Electric, Unilever and
Johnson & Johnson, have effectively used in-house
experiential action-learning programs for a broad
cross-section of high-potential employees to speed
up the development of the global mindset.
42

Thus, in todays global marketplace, effective
cross-cultural leaders are those who are able to
behave differently in different cultures and respect
different values, work ethics, business protocols
and the cultural diversity of their workforce.
Successfully leading organizations in the 21st
century requires emotional and cultural intelligence
to understand regional and ethnical cultural
diversity of global working environments and
cross-cultural communities worldwide. The concept
of emotional intelligence has been around for
some time. Yet cultural intelligence is a relatively
new concept, described as the ability to switch
national and/or ethnic contexts and quickly learn
new patterns of social interaction with appropriate
behavioral responses. Linking global business
success and future career paths with cultural com-
petence is an important area for corporate trainers
to emphasize, so that managers are motivated
to learn new behaviors and skills and understand
the benefits of learning from different cultures.
Yet while role plays, case studies and simulations
are helpful to develop cultural intelligence, it is
immersion in the culture itself that truly makes the
difference.
43

For multinational corporations, moving talent
across organizational silos via succession manage-
ment helps develop leaders in different businesses
and geographies. Procter & Gamble is particularly
rigorous about global talent management, requiring
1. Longer-term international assignments.
2. International cross-function team participa-
tion.
3. Internal management/executive development
programs.
4. Development of global management teams.
5. Mentoring and/or coaching.
6. International leader development centers.
7. 360-degree feedback.
Source: Kramer, R. J. (2005). Developing global leaders: Enhancing
competencies and accelerating the expatriate experience. New York:
The Conference Board.
Most Effective Practices to
Develop Global Business Leaders
Figure 5
8 Leadership Development
2006 SHRMResearch Quarterly

a prior overseas assignment for candidates for

president of a business line. Some companies
are exploring actions to help speed up global
leadership development. A relatively new approach
is sending high-potential employees on foreign
assignments early in their careers for a period of
six months to a year. However, 86% of companies
that use this development method have rated it
as not very effective or only moderately effective.
Another innovative approach is to move experience
to people, rather than people to experiences, by
reengineering development opportunities (e.g.,
company action-learning projects for international
collaboration experiences). Yet while it may seem
like a good idea to accelerate development,
complex leadership and cultural lessons are
often best learned in stages. It takes time to truly
develop a global leader, from working with different
cultures and understanding complex relationships
to developing cultural skills and attitudes to
behave effectively in a multinational context.
44

Today, with the dramatic economic growth in
Asia-Pacific in recent years and a forecast that
by 2015 this region will account for 45% of the
worlds gross domestic product, much of the
attention of the business world has been focused
on Asia-Pacific. Local and international companies
are working hard toward effective leadership
development. A major challenge is the current
limited supply of leadership capability in contrast
to the anticipated need and the resulting severe
competition for talent. For example, in some
sectors, Bangalore and Shanghai have annual
turnover rates greater than 40%. International
organizations are seeking to reduce the number of
expatriates and localize leadership. Key benefits
of local leadership are speaking the local language
and understanding the nuances of Asian cultures.
Other drivers to develop leaders in Asia-Pacific
include substantial growth prospects for business,
availability of raw talent, expansion of learning
infrastructure in commercial and government
facets, diversity and inclusion programs, corporate
social responsibility programs, and international
expansion along with the success of local/regional
firms. However, the challenges are many: incum-
bent expatriates, low mobility, high turnover and
escalating salaries from competition for talent,
capability of HR professionals in some locations,
and preservation of established company cultures,
networks and behaviors.
45

Studies on Leadership Development
Recent studies highlight todays best practices and
challenges regarding leadership development.
A New Paradigm for Leadership Development
46
Due to the changing role of business (e.g., demo-
graphic shifts, globalization and degradation of
natural resources) and the corresponding critical
challenges that demand immediate responses
from organizations, a new paradigm for leadership
development is evolving. The Center for Creative
Leadership is examining leadership at the
organizational level, focusing on building connec-
tions across boundaries, establishing leadership
practices for interdependent work and developing
interdependent cultures. The underlying belief is
that being highly flexible in a changing environ-
ment increasingly requires organizations to use
collaboration, action-learning and shared mental
models to not only drive leadership capability but
also become more proactive in addressing critical
challenges. Critical challenges necessitate new
learning, creativity and rapid decisive action, yet
they also require individuals and organizations to
slow down and carefully reflect on situations.
What Makes Great Leaders: Rethinking the Route
to Effective Leadership
47
The most-admired organizations on the FORTUNE
500 list have strong leadership development prac-
tices: 1) emphasis on ongoing development efforts
closely linked to strategic business goals and sup-
ported by formal reward programs; 2) frequent use
of competency models as well as a wide variety
of developmental programs to select and advance
leaders; 3) low tolerance of inappropriate behavior
in order to meet the numbers; and 4) emotional
intelligence of leaders. Successful leaders create
workplace environments that foster performance,
pride and purpose, always remember whom they
are leading and do not support performance at
any cost. They can build relationships with diverse
groups of people, create a believable vision,
motivate others and negotiate a wide range of
business and social situations.
Leadership Succession Planning Affects
Commercial Success
48
This global leadership survey of 19 industries
explored how organizations identify and develop
future leaders. The study findings note a signifi-
cant negative correlation between a firms need to
hire outside leaders and its confidence to meet
future growth needs. To successfully develop
future leaders, specific resources are important for
high-potential individuals: 1) a chief executive who
is actively involved in the development of future
leaders; 2) significant roles that truly tax the abili-
ties of high potentials; 3) coaching relationships
within the organization; 4) senior executives who
are involved in the mentoring relationships; and 5)
external executive education programs.
How Top Companies Grow Great Leaders
49

In a survey of 375 U.S. public and private
Leadership Development 9

2006 SHRMResearch Quarterly

companies, 20 companies were found to be the
most effective at leadership development. A key
enabler was active involvement by the board of
directors and the CEO. In top companies, 83% with
active CEO involvement in leadership development
performed at the 75th percentile or higher in
total shareholder return, compared with 56% that
performed below the 25th percentile. Additionally,
at 65% of top companies, board members were
directly involved in leadership development. A
wide range of developmental opportunities was
provided: 95% offered mentoring, compared with
45% of other companies, and 90% had a defined
process for assimilating leadership into new posi-
tions, compared with 44%. Effective companies
emphasized developing talent across the organiza-
tion, with 85% of top companies holding leaders
accountable for developing others, compared with
46% of other companies. Further, 20% or more
of a leaders annual incentive was dedicated to
accountability of people development, compared
with 10% at most companies.
Trends for Leadership Development
In closing, many forcesinformation technology,
global competition, retiring baby boomers, the
need for rapid and flexible organizations and
teams and differing employee needsare shaping
future leadership requirements. Nontraditional
business factors, such as international markets,
world economic trends and focus on regions
(e.g., the Asia-Pacific), are influencing leadership
needs. Keeping up with international trends will
be essential for business success. In the future,
HR will see new perspectives regarding leadership
that will significantly change the thinking about,
approaches to and practices of leadership devel-
opment (see Figure 6).
50

Acknowledgments
The author extends appreciation and thanks
to members of the SHRM Organizational
Development Expertise Panel: Fernn R. Cepero,
Isaac E. Dixon, SPHR, Joan E. Moore, J.D., SPHR,
and Patricia Miller, SPHR, GPHR.
1. Importance of leadership competencies.
2. Globalization/internationalization of
leadership concepts, constructs and
development methods.
3. The role of technology for communication
with a geographically diverse workforce.
4. Increasing interest in the integrity and
character of leaders.
5. Pressure to demonstrate return on
investment.
6. New ways of thinking about the nature of
leadership and leadership development.
Source: Adapted from Hernez-Broome, G., & Hughes, R. L. (2004).
Leadership development: Past, present and future. HR. Human
Resource Planning, 27, 1, 24-33.
Six Trends for Leadership
Development
Figure 6
Online Resources
Center for Creative Leadership
www.ccl.org
Corporate Leadership Council
www.corporateleadershipcouncil.com
Human Capital Institute
www.humancapitalinstitute.org
Institute of Leadership & Management
www.i-l-m.com
Society for Human Resource Management
www.shrm.org
The Conference Board
www.conference-board.org
The Institute of Executive Development
www.execsight.org
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2006 SHRMResearch Quarterly

Leadership Development 11
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