Professional Documents
Culture Documents
Developing leaders in turbulent times: Five steps towards integrating soft practices with hard measures of organizational performance
Dennis Tourish
data, with participants themselves estimating (that is, guessing) the impact they think their involvement in particular programs is likely to have on their organizations performance. This is certainly not rigorous, and is rarely persuasive. Other studies simply assume that since some data shows successful companies investing more in human capital, succession planning and leadership development, it follows that these practices have a causal relationship to business success. It is equally plausible to suggest that successful companies have more resources to invest in such activities than their less successful rivals. Leadership development and business performance may correlate without being causally connected. Given this, it is little wonder that fully 78 percent of American businesses responding to one survey revealed they made no attempt to evaluate the return on investment (ROI) of their leadership development activities. On the surface, this is surprising. Few of them would spend heavily in new technology without evaluating whether it delivers an adequate ROI. Yet a less than systematic approach to leadership development seems common. Without evaluation, organizations nd it hard to impossible to know whether their investment of time and money in development has any positive impact. Reecting this, a 2006 study of leadership development in Fortune 500 companies concluded that establishing measurable and repeatable ROI for leadership development is the wave of the future. Yet the ongoing lack of serious evaluation suggests that little real progress has been made. To address this challenge, the present article outlines ve steps that enable organizations to develop robust measurements of the relationship between their leadership development activities and business performance, and which integrates it into strategy formulation and implementation. It draws on a range of studies, plus data from an in-depth study of 192 organizations, using a survey instrument and follow-up face-to-face interviews with
0090-2616/$ see front matter # 2012 Elsevier Inc. All rights reserved. doi:10.1016/j.orgdyn.2011.12.004
24 47 key managers centrally involved in leadership development. It also reects many years of consulting with companies, and experience in leading leadership development programs. In essence, the article suggests that leadership development must be oriented around the evaluation of results, to ensure that it impacts much more directly on organizational performance than it has in the past.
D. Tourish their leadership development activities at all four levels. Over a quarter (26 percent) did not evaluate it at all. Of those that did, only 32 percent evaluated it for its impact on business results arguably, the most important category of all. This suggests that either the need for evaluation is little recognized, or that the task is perceived as too difcult to warrant rigorous and sustained attention. Given the difculty of demonstrating bottom line benets, advocates of leadership development often resort to bland suggestions that leadership is a good thing, and that something should be done to develop key people. Meanwhile, sceptical senior managers want evidence that this something will work, and be seen to do so. This is part of a wider challenge. How do we develop hard measures of the impact of soft practices on organizational performance?
Figure 1
Developing leaders in turbulent times This means that we need greater clarity on what the purpose of leadership development should be. When we put organizational results and outcomes at the heart of the process, its core purpose can be described as to solve problems, and help organizations to achieve their business objectives. Its goal is system-wide change, in which individual leader development is intimately connected to the context in which leadership is practiced. This means that it is geared at achieving direction, alignment and commitment between the needs of the organization, the behaviors/values of those practicing leadership and the other constituents of the organization. It follows that each stage of leadership development needs to be checked against its capacity to impact on business results. Accordingly: 1: START WITH CLARITY ON THE ORGANIZATIONS VISION AND GOALS This means much more than articulating a vision, however compelling or energizing it is. The vision must be translated into short-, medium- and long-term goals across a range of results based criteria. These include sales, productivity and protability. It also means determining how people can be supported and developed to achieve them. It might be expected that leadership development is routinely related to an organizations strategic goals that is, designed with such goals in mind, intended to further their achievement and evaluated on the degree to which it does so. Yet the 192 organizations surveyed in this research reported that their leadership development activities were never (8 percent), rarely (17 percent) or only sometimes (41 percent) related to their strategic goals a total of 66 percent. Follow-up interviews found that even those who insisted such connections existed could rarely show what they were. Contrast this with PricewaterhouseCoopers (PwC), now employing over 130,000 people in 148 countries. Flowing from its strategy, business goals are set in the three key areas of people, clients and quality. The Quality Lens program that addresses the latter issue is used to drive extensive internal consultation on the issue, and a key priority move auditing on from the check-box approach that was implicated in the Enron debacle.
25 But two other major factors impact on how seriously they are likely to be taken. First, a public commitment to goals creates a dynamic to live up to the commitment made. It creates an imperative to save face in ones eyes and that of others, particularly around the issue of integrity. Second, regular feedback that summarizes progress made towards the goal is much more powerful than goals on their own. All this suggests that near-term goals to which people are expected to publicly commit, where progress or its lack can be readily discerned and where regular feedback will be made available are more likely to drive changes in behavior than distant goals where progress is more difcult to observe, evaluate and provide feedback on.
26 in the present are unlikely to be achieved. Peoples behavior is driven most dramatically by immediate opportunities, readily available rewards and imminent rather than long term challenges. A small number of attainable goals that are severely time-limited focuses attention on the most critical question that leaders face each day: what are my priorities right now? Leadership development programs can address this challenge head-on, and contribute to the identication of leadership behaviors that will deliver measurable results (Step 2). 2: IDENTIFY THOSE LEADERSHIP BEHAVIORS THAT ARE NEEDED TO ACHIEVE THESE GOALS. BE SPECIFIC No one should entertain the illusion that greater clarity on the issue is either easy to achieve, or a transformational route to instant change. Behavior statements or competency models may encourage the view that behaviors can exist independently of context, or that it is easier to associate them with predictable outcomes than is actually the case. They may also assume a generic quality that fails to act as a guide to organization specic action. To avert this, they should emerge more organically from a full consideration of the business challenges that individual organizations actually face (Step 1 above). This means deep reection on the concept or theory of leadership that is in action within the organization, and a hardnosed assessment of its usefulness in the current operating environment. In essence, organizations need to ask themselves seriously: what kind of leadership do we need? What do we need to change to ensure that we get more of it? What stops us getting it? How will we recognize it when it arrives?
D. Tourish consistent with its culture and business strategy, and which were not. Only those that matched its needs were adopted. General Electric interviews company leaders worldwide to identify business needs and emerging leadership competencies. Barclays Global Investors holds focus groups with over 100 middle level managers and interviews others to identify the critical abilities they think need to be developed in the organizations leaders. The Bose Corporation, a global leader in high-end home entertainment systems, goes further. They have developed different competency models for rst line, middle and senior management positions. These are regularly reviewed to ensure that they remain consistent with current business needs. The more specic the behaviors in question, the more likely they are to drive improved performance on the ground. Recognizing that required behaviors vary between contexts, PepsiCo has created global competency models for marketing, sales, nance and other functional areas. Following similar principles, the Army Management Staff College in the U.S. runs a Sustaining Base Leadership and Management Program (SBLMP). Civilian personnel in military employment participate alongside a range of ofcers. The key question guiding its design is an analysis of the skills, abilities and knowledge that are required of those graduating the program and assuming greater leadership responsibility. Its content is specic to the needs of the U.S. military. Sessions are held on such topics as the national security environment, and designing and resourcing military forces.
Developing leaders in turbulent times 3: SELECT LEADERS BASED ON THESE LEADERSHIP BEHAVIORS Selection for leadership development is often haphazard. One study of 260 multinational companies found that less than half of them had succession planning or formal development programs in place for their high potentials. Contrast this with Cisco Systems, consistently ranked as one of Americas top companies, and one of its most admired. Fully 20 percent of its people have been identied as having high potential. Gretchen Spreitzer, drawing on positive psychology, has argued that it is better to focus on leveraging peoples strengths, rather than identifying gaps in their performance and attempting to overcome them. This suggests that organizations should select people for leadership development based on their already identied ability to demonstrate those leadership behaviors that are important for future success.
27 Can you see this person leading from and living the companys core values? Would they t our culture? Does the person have the potential to assume greater responsibility in the future?
28 Give people the job of solving them. Link leadership development to whatever support they need to do it. Provide feedback on progress towards solving the problems that have been identied. There is signicant evidence that the best forms of leadership development create opportunities for people to learn from their experiences, and then apply it to solving pressing problems in their organizations. Keith Grint has suggested that effective leadership practice ows not just from knowing why something needs to be done, but from having sufcient access to knowledge and situated practice to identify appropriate ends, think strategically from that starting point and then act accordingly. As he puts it, this requires exposure to experience as well as information, so that forms of action are created that focus directly on xing the problem itself, not a form of reeducation or re-skilling that xes the people. The implications for leadership development are immense. Organizations need to focus peoples attention on problems they face at work that are likely to impede the achievement of key business goals, draw out appropriate lessons, and equip them to make a real difference in their daily work. Formal programs must be supplemented by mentoring, coaching and other interventions designed to sustain deep reection and ongoing learning in the real world of work. This puts action at the heart of the learning process. In particular, and consistent with the ndings of social cognition theorists, people grow in self-condence and selfbelief when they experience success in solving problems. We are motivated to repeat behaviors that have been rewarded. And few things feel more rewarding than the frisson of success.
D. Tourish not t all. Above all, people need feedback on their efforts to solve the problems that have been identied, to ensure that real change is taking place. Some companies are already doing this. Eli Lilly is a major pharmaceuticals rm. Potential leaders are identied through a rigorous selection process. Their development program then mixes people from different functions and sets them major strategic tasks. As an example, Jay Conger and Robert Fulmer cite the case of a team charged with developing an e-business strategy. The team spent ve weeks interviewing over 150 people and then presented their proposals to senior managers, who sanctioned the teams proposals. Participants in PepsiCos Building the Business Program spend a month developing an idea for a growth project in conjunction with their divisions president. While continuing with their normal job, they then spend 90 days developing the project with the aim of having it ready for implementation by the end of this timeframe. Other companies are blazing a similar trail. IMASCO is a Canadian company that extracts material from mineral deposits. Its three-stage development program begins by exposing participants to a general managers perspective on a particular organizational case study. They embark on a program where they explore each operating companys business challenges and how it is dealing with them. Finally, teams are formed to address a specic business issue and make recommendations to the companys top team. GEs LIG program was discussed earlier in this article. It is also structured so that the teams participating draft an action plan to change their business and take responsibility for implementing it. All this goes to show that while sending people on courses makes them think differently, setting them problems to solve makes them act differently. The distinction is crucial.
Developing leaders in turbulent times 5: ASSESS FOR BEHAVIOR CHANGE AND IMPACT ON BUSINESS PERFORMANCE Some organizations separate the possession of leadership skills from the greater challenge of delivery. This may be like selecting players for a baseball team by assessing them psychologically for scoring competence, or asking them how they would hypothetically pass the ball to a teammate, rather than observing how they perform under actual game conditions. As Keith Grint has suggested, it follows that even selecting people because they have demonstrated particular skills in the past may, by itself, prove insufcient to guarantee that such behaviors will be repeated, have a positive impact on the wider organization and that hard measures of such impact can be tabulated. The framework proposed here suggests two measures designed to address this challenge. The rst is assessment for behavior change. Repeating the 360-appraisal process with the same items as before should indicate how much change and improvement has occurred in the individual, if it is required.
29 ROI of 79 percent. This approach maintains a results orientation to evaluation. But it is selective, and therefore doable. Other companies have also made huge progress on this issue. EDF Energy, a large U.K. energy company with 12,000 employees, shows what can be done. EDF created a leadership development program for 1800 people focused on sales and which made extensive use of coaching. In its aftermath, staff turnover fell from 17 percent to 11 percent, staff satisfaction increased from 33 percent to 72 percent, and 515,000 new customer contacts were made against a target of 375,000. The company estimates that more than 3000 in savings per employee was made per year, against a cost of 1000 per employee to run the program.
30 annual cycle. At the conclusion of each cycle, goals for the coming year are claried, and the results focus on leadership development kicks into action once again. It is not unusual to encounter organizations with a leadership development program that has been running for many years, essentially unchanged. While participants often report that they are happy with it, they are less certain when asked to show how it impacts on business results. Often, this is because it doesnt. The framework proposed here requires senior management engagement, not least because it depends on the vision and goals that the organization is committed to. It is challenging, since it means that managers must focus greater attention on a range of issues than they might otherwise do. But the payoff is that it binds strategy and implementation together. There is no shortcut. Leadership development can connect peoples behaviors on the ground with an organizations strategic intent, improve execution and reduce the volume of wildres that consume so much attention in many companies. This will only be realized when a lead is given from the top; when strategy and execution become more closely linked; and when leadership development becomes synonymous with attempts to address an organizations most pressing problems, rather than an optional but questionable extra. MAIN LESSONS AND CONCLUSIONS If leadership development really matters, it should be declared a priority, a clear vision of what leadership means needs to be developed, and statements should be made that attempt to articulate how organizations expect their leaders to behave. To suggest otherwise is to imply that any set of leadership practices, spanning the full range from autocratic to laissez faire, is as effective as any other. The reality is: context matters. Regular reviews are needed to see if expected and desirable leadership behaviors still make
D. Tourish sense, have materialized in practice as well as theory and have made a positive impact on organizational performance. As we have seen, Shell and General Electric are among the companies that take this seriously. But people will only respond to the challenges posed if leadership development identies strategic priorities, relates these to their everyday role and gives them the tools to address them. The long- and short-term have to be kept simultaneously in view. Yet managers often fear that providing such development will divert people from their day jobs, cost a great deal of money, and yield few if any tangible gains. Leadership development must therefore focus peoples attention more tightly on the job rather than less, produce gains that can be measured, and hold people more fully to account for their actions. In the process, the development of individual leaders (leader development) is more likely to proceed in alignment with leadership development i.e. the transformation of leadership culture, values, beliefs and practices within the wider organizational system. Few organizations have yet mastered every aspect of this. For example, while PepsiCo has been cited here for many excellent practices, it doesnt yet quantify any ROI for its development programs. A new approach is needed. The framework proposed in this article puts both reection and action at the core of leadership development, strengthening both through evaluation. It enables organizations to integrate soft practices with hard measures of organizational performance, in pursuit of improved strategic direction, alignment, commitment and competitive advantage.
31
SELECTED BIBLIOGRAPHY
A comprehensive overview of many of the issues that are most central to leadership development, including the importance of goals, feedback and experiential learning can be found in D. Day, Leadership development, in A. Bryman, D. Collinson, K. Grint and B. Jackson, eds., The SAGE Handbook of Leadership (London: SAGE, 2011). The challenge of developing leaders and how to ensure that the right people can be selected for leadership roles is thoroughly explored in J. Conger and R. Fulmer, Developing Your Leadership Pipeline, Harvard Business Review, 2003, December, 7684. This involves identifying peoples strengths, particularly in terms of a demonstrable ability to utilize those leadership behaviors an organization has identied as critical to its success. A detailed discussion of how this can be approached can be found in G. Spreitzer, Leading to Grow and Growing to Lead: Leadership Development Lessons from Positive Organizational Studies, Organizational Dynamics, 2006, 35, 305315. Keith Grints work on the relationship between wisdom and leadership also informs some of the analysis here of how people should be selected for leadership roles. His ideas are detailed in K. Grint, Learning to Lead: Can Aristotle Help Us Find the Road to Wisdom? Leadership, 2007, 3, 231246. One of the most insightful summaries of leadership development and its relationship to strategy, including plentiful examples of best company practice, can be found in: R. Fulmer, The Leadership Advantage: How The Best Companies Are Developing Their Talent To Pave The Way For Future Success (New York: Amacom, 2008).
Dennis Tourish is a professor of leadership and organization studies at Royal Holloway, University of London in the U.K., a Fellow of the Leadership Trust Foundation, a visiting professor of leadership at several universities, and an associate editor of the journal Leadership. He has published seven books and over 60 journal articles on leadership, leadership development and organizational communication. (Royal Holloway, University of London, Egham, Surrey TW20 OEX, United Kingdom. Tel.: +44 01784276684; email: Dennis.Tourish@rhul.ac.uk).