Leadership development termed vital expense

Large companies could learn from smaller organizations, states Conference Board of Canada
Friday, February 19, 2016
By Rebecca Melnyk

When it comes to leadership development, bigger companies aren’t always better, according to the Conference Board of Canada’s (Conference Board) first leadership benchmarking study, the Leadership Outlook 2015.

After surveying 441 human resources and business leaders in Canada to gain a deeper understanding of how leadership impacts competitive organizational performance, the Conference Board is prompting companies with more than 500 employees to adopt some leadership approaches of smaller companies.

Through the use of current and previous research in human resources and organizational performance, the Conference Board profiled organizations at each level of a Leadership Property Performance Index (LDPI) that consisted of five drivers: alignment and culture, capacity for change and innovation, trust and relationship-building, personal and professional development and identification and development of top talent.

Some of the findings show that smaller organizations tend to be better positioned along this index because their senior leaders are more involved in the day-to-day operations and more engaged with staff than larger companies. Embracing innovation was also a main trait among smaller companies, which report a less risk-adverse culture.

Innovation and risk

In fact, all companies that placed high on the LDPI listed innovation as a key strength, reflected in their business culture. While this acceptance shows promise for new ideas in the country, Canadian companies lag on the global stage. To help remedy this situation, The Conference Board suggests senior leaders allow employees time to innovate, reward their involvement in such matters and offer more educative tools to learn from mistakes.

Sharing success stories and making them more visible within a company is another way to integrate innovation into a business strategy. Other considerations should include welcoming leaders who understand current innovation trends, increasing collaboration between management and employees and seeking board members that encourage reasonable risk-taking.

Business case for leadership development

Although 60 per cent of respondents noted that leadership development is a strategic priority within their organization, it becomes less prioritized when competing with other business matters.

Still, effective leaders, specifically those high LDPI scorers, report a variety of skills that set them apart. In fact, they are 30 times more likely to have strong employee engagement, change readiness and values, market and consumer orientation than organizations at moderate to low levels. They also have more ability to attract and retain top talent and maintain overall productivity and leadership performance.

Such frontrunners also readily identify high-potential employees and almost equally invest the same resources in these employees as they do with those at the executive-level.

Top performers on the leadership front are also competitive, and are six times more likely to meet financial unit goals and have higher growth and revenue expectations. In fact, three-quarters of this group expect moderate to strong growth over their next fiscal year and 70 per cent anticipate revenue increases.

While some companies understand how leadership development improves their bottom-line financial performance, there is still work to be done. The Conference Board recommends that organizations invest more in such development and not view it as an optional expense; it contributes to the overall performance, culture and financial outlook of a company.

Still, survey results show that 60 per cent of organizations do not formally measure leadership development, with only one-quarter evaluating their programs. This lack of assessment is seen as a barrier to understanding and prioritizing the changing needs of employees and identifying opportunities for development.

Metrics and target-setting

The most common assessment tools used to measure leadership activities and programs are 360-degree assessments, engagement surveys and satisfaction surveys. Organizations with highly effective leadership use more of a variety of such tools.

Top metrics to evaluate and measure the impact of leadership development on an organization include engagement and satisfaction levels and program completion rates. Organizations that are less effective at leadership gather fewer metrics and include more basic data such as employee satisfaction.

The Conference Board states that performance data for target-setting comes mainly from internal tracking and course evaluations. Organizations with low leadership performance use benchmarking data from external sources like independent consulting firms, whereas those with high leadership performance use both internal and external sources, from human resource systems and in-house employee engagement surveys to industry association benchmarks.












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