Cost Effective Leadership Development

Organizations are changing the way they approach executive development, some permanently so, as economic realities are forcing innovative practices for both companies and those who provide development services. A new study by The Institute of Executive Development finds that organizations find themselves in a quandary. There is a tremendous need to leverage executives to drive required change and new strategies; yet, budgets for development and support of these leaders are considerably lower (or nonexistent) vs. recent years. There are several key ways in which the process of senior-leader development is adapting and trying to keep up with the pace of change across the organization. Ultimately, some organizations’ strategies may be at risk if the development of their leaders does not continue in some way, shape or form.The study, “Cost Effective Executive Development,” contains data from more than 25 global organizations across Asia, the Americas and Europe and 10 industry sectors. Among the key findings:

High potential’s go virtual: Relative to their executive peers, up-and-coming high-potential managers, all things being equal, are more comfortable with the use of technology across all areas of business, including their own development. Several high-potential programs have turned to technology as a cornerstone in development activities which reduces time, travel and costs, and also opens up new development opportunities with a global audience.

Delivery models are morphing: Faced with flat budgets and less staff, some companies are changing their delivery models and sending instructors to the field instead of having all participants travel to headquarters. These corporate programs are delivered in multiple locations, eliminating participant travel expenses and reducing employee’s time out of office, which all add up to dollars saved.

Action learning more common: Already popular in many organizations because of the significant learning that comes when development is embedded with real work, the use of action learning is increasing now as it also has little direct cost.

Leaders become teachers: Active participation by an organization’s own executives is another way to manage program costs and provide excellent learning experiences. Utilizing executives and managers as mentors is a terrific way to transfer organizational knowledge and share the wisdom of someone with deep institutional knowledge.

Development more customized: General competency building for wide bands of employees are under tight scrutiny, and organizations are seeking specific development for specific populations, and in some cases are focusing on a smaller number of leaders or a given cohort, vs. an entire group.

Leader development professionals have few options in this demanding economy: make cuts across the board and hope that development effectiveness is not too severely affected; make cuts strategically by analyzing current spend, investments and priorities, and revising the plan to maintain high-quality development in selected areas with less spending; cut what was planned but not yet implemented and continue with what is already under way.

The problem in many organizations is they do not understand the extent of their current costs, where tradeoffs might be made, and often feel tied to existing programs and approaches for leader development. “This is unlike previous situations when people dealt with budget cuts by simply trimming back or canceling programs,” said Nancy Thomas, director with The Institute of Executive Development.“Organizations are re-evaluating their overall strategies and how they develop leaders. Some development professionals don’t anticipate budgets will ever return to recent levels, requiring them to find ways to be much more efficient with far fewer resources.”Findings from the study give new insight into the realities of the executive development field.

The study culminates in a set of recommendations to help organizations navigate the economic reality and any longer-term changes to the industry:

Investigate new technology. Technology is used across a wide spectrum of development and there is an increasing interest in how to explicitly incorporate technology into a leader development strategy. For many people, this remains a mystery as reported through the interviews conducted for this study. The first step is to think carefully about what the organization needs including the specific audience and content to be provided, and then focus on the right technology to use and go get familiar with the various options (custom leader development portals, social media, LMS systems, webinar technologies, online learning, virtual classrooms).

Explore new models for leader development. After cutting programs, resetting budgets and downsizing staff, it’s an opportune time to take a fresh look at how to structure leadership development within a cost model that will enable sustainable high quality development. Consider what work should be centralized and what should be managed regionally and how to balance the need for consistency in content and design across the enterprise with local/regional needs.Take a look at how to maximize staffing resources across the development value chain. For some work it may be more effective to increase capabilities internally to design, develop, deliver programs and coach executives, and in other cases more cost effective to contract with external consultants where expertise is required for specific assignments.

Review organizational needs. Given the changes most organizations have undertaken, now is the right time to reassess leadership needs. Think strategically about where the organization is going, what the leadership pipeline looks like now after all the downsizing and realigning of departments and what new leadership capabilities are required to support future direction.
Inventory current development programs with a critical eye and determine if it’s time to revamp or obsolete some legacy programs. For organizations still relying heavily on traditional classes and workshops for development, now is your chance to redefine and reposition what development is.

Measure impact. Having relevant data on the impact of leader development activities provides a strong business case. The need for measurement may have been overlooked or downplayed in the past, but this is critical during times of budget cuts. Look for ways to gather both quantitative and qualitative data, and make changes to ensure resources are invested in high impact places.

"I find it encouraging to see companies with a tradition of commitment to management development finding innovative ways to continue that commitment even through the downturn,” said Stephen Mercer, associate of The Institute of Executive Development.
“They find opportunity in adversity and use the pressure-packed environment to get more productivity out of their development dollars, without sacrificing the quality of their efforts. The management development teams in those companies didn't complain; they adapted."