Human Resources: Is leadership development worth it?

When people tell us they don’t think an investment in leadership development is worth it, we understand. But the world has changed. The old ways of doing things won’t guarantee you’ll have the leaders you need, when you need them, for a price you are willing to pay. Learn what it takes to improve your internal pipeline.

Using insider knowledge and expertise, the Generator Group's articles in our Expert Network are designed to present thought-provoking ideas, information and workplace trends that will help manufacturers and retailers alike acquire, retain or develop their workforce to drive business success.

When people tell us they don’t think an investment in leadership development is worth it, we understand. Many of them are successful people who reached their position without so much as a single training course. Some are working in organizations that have succeeded without having any formal development program in place…ever. And most have been around the block long enough to know a real leader when they see one. We get that.

But the world has changed. The old ways of doing things won’t guarantee you’ll have the leaders you need, when you need them, for a price you are willing to pay.

High priority, limited progress

In a global online survey of 412 executives conducted by the Economist Intelligence Unit (EIU) in 2007, 55 percent of respondents said that their firms’ performance was “likely” or “very likely” to suffer in the near future due to insufficient leadership talent. Companies are aware that they need to improve their ability to find and develop better executives -- and it must happen soon -- or business performance will suffer. Yet awareness of the problem is not resulting in actual progress toward resolving it.

Based on its 2010 survey of talent management practices across 725 companies with 100 to 10,000-plus employees, Bersin and Associates reported only 30 percent of U.S. companies have a dedicated talent management executive -- a role that is responsible for some or all of the talent functions across the enterprise. This figure is up from 21 percent in 2008.

For the 7 percent of companies that have truly put talent management practices in place, they perform better in the following areas than other survey participants:

29 percent higher scores on employee engagement

36 percent higher ratings on leadership development

41 percent higher ratings on creating a pipeline of ready successors

These findings should serve as motivation for companies to improve their talent management efforts.

Leadership development programs can provide up-and-coming talent with the diverse experiences they need to test their limits and stretch their comfort zones. That’s how leaders are made. Some people are lucky enough to have these experiences in the natural course of their careers, but great organizations aren’t built on luck.

At its best, a leadership development system ensures that talent is available when you need it, at the quality, quantity and price you desire. At its worse, it is an expensive time-consuming task that makes people wary of exposing their vulnerabilities.

Top actions to improve your talent pipeline

Although each organization faces its specific set of challenges, there are some common strategies that can be implemented to improve talent management.

>> Start with the end in mind -- your current and future business needs. Effective talent management requires that your business goals and strategies drive the quality and quantity of the talent you need. Define what it will take for your organization to succeed over the next three to five years. Ask: Do we have enough leaders with the right capabilities to tackle these challenges? If not, how can we identify those with the greatest potential and accelerate their development? Then ask: What will be the measurable indicators of talent growth? A well-known management axiom is that “you can’t manage what you can’t measure.”

>> Craft an integrated talent strategy. Some companies follow an ad hoc approach to talent management, patching together different programs that may vary by division or region. Instead, companies need to adopt one comprehensive strategy.

>> Foundational competencies are needed. Create a leadership model and agree on selection criteria, include both competencies and character in the evaluation. If your organization isn’t using competencies, you are missing the cornerstone to performance management, talent selection and development.

>> Own talent management at the top -- and at all levels. Talent management demands that the CEO, and the entire senior leadership team, play a significant role. It is this group that must own the outcomes of talent management, much like a sales leader would own the sales growth of his or her unit. Senior leaders that serve not only as executive sponsors and champions of the strategy, but also as active participants in the development and growth of talent with coaching and mentoring.

>> Accurately diagnose leader skills. Benchmark your current talent against your model. Evaluate and assess the strengths on your team. Use formal assessment processes with all candidates, including internal ones. Create a transparent, comprehensive succession planning and management process for your organization

>> Stay close to your internal talent. At least once a year, evaluate their strengths, performance history, potential, assessment results against competencies, developmental actions plans, career aspirations, and level of flight risk. Engage in honest feedback with your high potentials. Appoint someone to meet with them at least twice a year to discuss their progress toward goals.

Post-recession companies are redefining their business strategies and goals in light of the new economy. But, companies have been slower to realize that shifts in talent are needed to achieve these goals. Executives who are serious about developing talent for the future need to realize their company will need to be more deliberate in their efforts to create leaders than what they may have experienced in their own career. This examination of what “needs to be different” should flow from strategy to workforce planning and recruiting to leadership development to retention and compensation strategies. Smart companies realize that these talent activities are inextricably linked.

--Elaine Lees

Elaine Lees is a partner and vice president of talent management at the Generator Group, which is an integrated talent management services firm delivering executive search and talent management consulting to brands in apparel, footwear, hardgoods and softgoods, retail and more. For more information about the group’s work or working with it, go to



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