WSJ: Despite Cutbacks, Firms Invest in Developing Leaders

By DANA MATTIOLI
Despite layoffs and recession-starved budgets, many employers are investing in leadership-development programs, hoping not to be caught short of strong managers when the economy recovers.

Identifying and grooming leaders is important in good times, says Bret Furio, senior vice president of consumer lifestyle for Philips Electronics North America. "In times of crisis when the economy is struggling," he adds, "it's imperative."

Like many companies,

Philips Electronics NV is trimming its training budget this year. A December survey of 117 large U.S. companies by Watson Wyatt Worldwide Inc. found 23% of respondents had recently cut training programs, and another 18% planned to do so this year.

But Philips will offer its annual Inspire program for 30 high-potential employees, stressing subjects such as business strategy and personal leadership. Participants are assigned to teams to work on a business project. Mr. Furio reasons that investing in leadership development will help Philips through the recession and the recovery.

In a nod to the tough times, Philips trimmed the budget for Inspire, eliminating one tutor and tapping more employees, rather than outsiders, as trainers. It's holding the program near Seattle and Boston, where Philips has many employees, saving the company transportation costs. Last year, one seminar was held in Huntington Beach, Calif.

Philips is typical of many companies, according to Bersin & Associates, a research firm that studies corporate training. Bersin estimates that companies cut overall training budgets 11% last year and projects another decline this year, based on a recent survey of human-resources executives. President Josh Bersin says the deepest cuts are in training for "soft skills" such as communicating with co-workers and conducting meetings. He says leadership development is taking a growing share of training budgets.

Yaarit Silverstone, global managing director for the organizational-effectiveness practice at consulting firm Accenture Ltd., says the emphasis on leadership development is a departure from the past. Ms. Silverstone says companies historically cut leadership-development programs during downturns, but the moves backfired, prompting midlevel managers and top performers to leave when the economy recovered. Now, she says, executives believe that without capable managers, "their ability to come through [the recession] in a healthy fashion is diminished."

Consider Estée Lauder Cos. The New York cosmetics maker Thursday reported lower sales and profit for the period ended Dec. 31, and said it would eliminate 2,000 jobs over the next two years. But Lauder is continuing its leadership-development programs, albeit more cheaply. Lauder typically sends 120 executives to a two- or three-week summer program at Vassar College. This year, it plans to send 60, for one week. In all its leadership programs, Lauder will emphasize innovation and managing change in volatile business conditions.

The budget cuts are hurting business schools, which say companies are sending fewer employees for executive-education courses and ordering fewer custom programs, which can cost hundreds of thousands of dollars. David Newkirk, CEO of Executive Education for the University of Virginia Darden School of Business, says the school began to feel the downturn early last year, as financial companies deferred decisions. He says few companies have dropped programs completely, but many are delaying custom program enrollment by six months or so as they watch expenses.
But leadership coaches say they're still in demand.

Author and consultant Paul Hellman has been expecting a slowdown, but says December was his busiest December ever. Mr. Hellman, president of Express Potential, says employers know employees are less likely to jump ship during the recession, and are exhibiting a "let's make sure people are developed" mentality. He says he sees companies cutting costs by using more Web training than in past years; he hosted four "Webinars" in January, compared with six for all of last year.

That's the case at Canon USA Inc., which launched "Canon Academy" in 2008 to expand leadership development. This year, the camera and office-equipment maker is combining Web tools and instructor-led courses to offer training to more newly promoted managers than in the past. The program will touch on strategic decision-making and influencing employees. "Certainly times are tough, but we recognize that employee development needs to continue," says David Metzger, Canon USA's director of management development.

Some consultants see a renewed focus on leadership development, even at companies that are laying off employees. Patrick Sweeney, president of Caliper, a Princeton, N.J., management-consulting firm, says companies are trying to grab managers' attention and focus them on "keeping the ship afloat." Mr. Sweeney says much of Caliper's current work is geared toward identifying employees with high potential and developing their leadership skills.

Improving Assessment Usage

Everything DiSC Pulse: Improving Assessment UseMay 13, 2009
By Mark Scullard and Jeffrey Sugerman

"Show me the value of assessments" is a common refrain heard by many training professionals. We thought we'd ask training participants to weigh in on the debate. We surveyed 2,362 recent participants of corporate training programs about their previous experiences with assessments in development programs. Overall, participants were positive about using assessments in training, giving high marks for usefulness and accuracy of information. We also identified two areas that can boost the value and impact of assessments: follow-up and boss involvement.

The Follow-Up Opportunity"Follow-up is priceless." It's something everyone in training and development can agree on. Follow-up gives participants the opportunity to practice the right way of doing things. Our study supports previous research showing the dramatic impact of processes that support practice and integration of the learning experience.Participants who said their organization followed up on the assessment felt the training was a better use of their time than people whose organizations didn't do any follow-up. When asked if the assessment helped to develop skills that would benefit their career in the long term, 94 percent of those people whose training included follow-up said yes. Among those whose training didn't include follow-up, that number dropped to 79 percent.The difference is even more pronounced when they were asked if the training made them more effective at their job, overall.

The follow-up group was overwhelmingly positive with 93 percent agreeing. For those without follow up, it was significantly less, with 73 percent agreeing. The impact of follow-up also could be seen when we asked if the assessment created a common language that helped the organization communicate better. Among those whose training included follow-up, 90 percent agreed. Only 68 percent of those without follow-up felt the assessment created a common language.Any skill improves with reinforcement. Some skills can be mastered in the course of a training session, and participants can take that skill into their job and use it effectively. But with complex skills, such as those taught through assessments, learning is ongoing and requires "perfect practice." Many times these skills are subtle and can be quickly replaced by old routines, whether because they're easier or simply because they are habits. Follow-up gives the nudge some of us need to keep practicing and developing the skill. And this practice is never more effective than when it is done on the job—making transfer of those skills more likely.Keep the Boss in the KnowKeeping participants' managers in the loop is another way to boost the power of the assessment and the training experience. Participants whose boss had a good grasp of what was taught in the training were more likely to view the class as a good use their time. The difference was more pronounced when asked if the training made them more effective at their job.

Of those whose boss was involved in the process, 90 percent said the training made them more effective; of those without boss involvement, 73 percent.But the boss' understanding of content wasn't the only important factor. Participants also gave higher marks to training effectiveness if they discussed the assessment with their manager. Among those who discussed the assessment, 91 percent said the training was more effective. That number dropped to 72 percent if they did not discuss it with their boss.Being able to talk with their boss about what they learned can give extra weight to the training, but it also gives the participant another check-in point. The manager can serve as a sounding-board for their new skills, giving reinforcement and, if necessary, correction. In addition, when their boss is in the loop, training participants have an additional level of accountability for the skills learned. When the boss isn't knowledgeable or just isn't involved enough to discuss the training, this can send the message that the training isn't important. Or that the boss is too busy to worry about whether or not new skills (and corporate mandates) are being practiced. After all, wouldn't the boss know about it if it really mattered? As training professionals, we should hope so.

Mark Scullard is the director of research at Inscape Publishing, a leading provider of training materials for the corporate market. He has more than a decade of research and data analysis experience in the development of psychological evaluation tools and methods. Scullard received his doctorate in psychology from the University of Minnesota, with a supporting program in statistics.Jeffrey Sugerman is the president and CEO of Inscape Publishing. He has more than 20 years of experience in senior management, marketing, and business development in the technology, training, and publishing industries. He holds doctorate and master's degrees in psychology from Washington University in St. Louis, and a bachelor's degree in psychology from Northwestern University.