Global Leadership Defined
This blog discusses the importance of developing global leaders and the human resources role. Few things are more important to an organization than having great leadership, as leaders make the difference in the organization’s success, sustainability, and impact on shareholders, customers, employees, and the community.
What makes an effective, successful global leader? What does it take to be successful, and how is that success determined? Is the success to be evaluated quarterly and based on results delivered to the satisfaction of analysts and shareholders?
Is it to be judged by results delivered during the tenure in the role, over the course of a lifetime of leadership, or ultimately by the future success of the company, business unit, or team after the leader has departed?
What role does character play in this examination of business impact? What characteristics and competencies of a leader distinguish the “best” from the merely “very good”?
As a core criterion, the expectation of leaders has always been to “get the job done” by managing assets and people in a complex global environment. Often missing has been a more holistic view of the process in terms of how to motivate, engage, reward, and lead employees.
Twentieth-century research began to crystallize the way effective organizational leaders are viewed and subsequently developed.
Few depictions of effective leadership have withstood the test of time as well as that of Peter Drucker, who articulated the eight core practices of the effective leaders he worked with over his sixty-year career.
As he saw it, these questions “gave them the knowledge they needed . . . helped them convert this knowledge into action . . . [and] ensured that the whole organization felt responsible and accountable.” Jim Collins offered that in addition to IQ and technical skills, these five emotional intelligence attributes characterize the true leader:
“Level 5 leaders,” as he described them, credit others with success yet assume personal responsibility for failure. These leaders are characterized by humility and a will to succeed that does not tolerate mediocrity; they are quietly and calmly determined to succeed.
Over the years, we’ve seen the “one-minute manager” joined by the “situational leader” and the “servant leader” and by those leaders who are “values-driven,” “principle-centred,” and searching for “true north” or “multipliers.”
While definitions will undoubtedly continue to evolve, the fundamental description of a leader as one who delivers results in a way that affirms, engages, inspires, and respects others is unlikely to fade from view.
The Forces for Effective Global Leadership
Effective global leadership is critical to success, and often the survival, of corporations. In recent years, we have witnessed the demise or serious crippling of companies because of the inability of leaders to competently and ethically lead, creating a breach of trust with the public as well as with employees.
Newspaper headlines and, in some cases, high-profile trials remind us of the failures of leadership.
They are not confined to a particular region or industry, as scandals surrounding such companies as WorldCom, Satyam Computer Services, Adelphia, Parmalat, Tyco International, Clearstream, Enron, Global Crossing, and Arthur Anderson can attest. While most companies do not make the headlines for their leadership failures, they are all accountable for business results.
CEOs Care About Leadership
In the years since the global financial crisis, companies and their leaders have been shifting from survival mode to a business growth approach. It is no wonder that leadership development was on the minds of CEOs around the world when they responded to The Conference Board’s annual CEO Challenge survey.5 When asked to rank their top challenges for the coming year, they ranked business growth first.
The surprise was that, after an absence from the 2009 and 2010 “top ten” findings, talent emerged as the second-most important global challenge; Asian CEOs ranked it number one, ahead of business growth.
CEOs thought talent, innovation, and cost optimization would fuel business growth. When asked about the strategies CEOs would implement to address the talent challenge, these were the top ten:
Improve leadership development programs; grow talent internally.
Enhance the effectiveness of the senior management team.
Provide employee training and development.
Improve leadership succession planning.
Hire more talent in the open market.
Promote and reward entrepreneurship and risk-taking.
Raise employee engagement.
Increase diversity and cross-cultural competencies.
Flatten the organization, and empower leaders from the bottom up.
Redesign financial rewards and incentives.
Even a cursory read of the top strategies indicates a focus on internal leadership (improving the existing internal leadership base, especially at the top of the house; up-skilling all employees; improving leadership succession) before fighting for talent in the open market.
In Asia, where talent was scarce before the global financial crisis, “hiring more talent in the open market” was ranked eleventh, with an internal development and retention focus being preferred, as qualified talent is both scarce and expensive.
Customers and Consumers Care About Leadership
We live in an age when maintaining an organization’s reputation and brand management is a constant challenge. Of the many ways corporate reputations are made and lost, few factors are more important than the quality of their leaders.
Consumers are negatively influenced by headlines of errant and unethical behavior and positively influenced by lists of most-admired companies, especially those touted for their strong managerial practices.
Consumers and customers have strong brand affiliations, product dependencies (e.g., prescriptions or replacement parts), and business affiliations that would be difficult to replace, and they take note of leadership behaviours.
Knowing that raw materials are harvested in a sustainable way, that clothing is not manufactured by the use of child labor, that executives are not “tone deaf” to the average citizen, and that the stock market is still a fair and level playing field is important to consumers.
In a world of choices, they will provide feedback by remaining loyal to a brand or by choosing a competitor for essentially the same prod-uct. They often share their thoughts and feelings among the members of their social networks with messages and postings that seem to never fade from the Internet.
Shareholders Care About Leadership
Those shareholders whose investment dollars and pension funds balance on the edge and are subject to mismanagement lost revenue, and missed opportunity costs pay close attention.
They are looking for superior returns and believe that those returns are the result of well-run companies led by ethical leaders. Analysts agree. There is mounting evidence of a direct correlation between effective leadership and business results.
In their examination of CEO performance at publicly traded companies, researchers found that the “best-performing CEOs in the world” came from many countries and industries, and on average, those CEOs delivered a total shareholder return of 997 percent (adjusted for exchange-rate effects) during their tenure.
On average, these top fifty CEOs increased the wealth of their companies’ shareholders by $48.2 billion (adjusted for inflation, dividends, share repurchases, and share issues).
Internal Stakeholders Care About Leadership
In an era of increased scrutiny of virtually all expenditures, accountability for the development of leaders, particularly at the top, will only increase. Significant resources continue to be devoted to developing leaders.
The Association for Talent Development (ATD) estimates that, even in the midst of the global financial crisis, U.S. companies alone spent just under $126 billion per year on employee learning and development; slightly more than 10 per cent of that expenditure was devoted to developing leaders and managers, and an additional 4 per cent was expended on executive development.
The inability to determine whether or not resources have been expended wisely cannot be sustained in most corporate environments, even when we intuitively believe that leadership development (along with all employee development) is a noble pursuit.
Current and Prospective Employees Care About Leadership
Effective leaders create a culture that serves as a magnet for attracting top talent. With each generation entering the workplace, a greater emphasis is placed on continual development, as these new employees know that they are unlikely to stay more than a few years; it’s about what they can develop, acquire, and take with them to the next step in their career journey.
We know that effective leaders are one of the most important influences on levels of engagement. Recent research reaffirms the correlation between engagement and the leaders’ ability to do the following:
Develop a positive and significant relationship with each employee.
Provide constructive performance feedback often.
Provide opportunities to grow and develop.
Set a clear direction—at whatever level is appropriate.
Communicate not only corporate strategic goals but also progress toward those goals.
Act in ways that are consistent with words.
Higher rates of engagement translate into higher rates of retention, an important factor in retaining talent in an increasingly competitive job market. In a world in which fewer than one in three employees are engaged, trust in executives can have a significant impact on engagement.
Other Stakeholders Care About Leadership
In an increasingly interconnected world, there are many stakeholders whose fortunes and fates are inextricably linked to successful leaders and the leadership development (LD) programs that create and support them:
The families of employees who have offered their talents and energy in return for current compensation and, in many cases, future retirement and security. Taxpayers called upon to “bail out” specific companies or even entire industries when economic stability hangs in the balance.
Communities that stand to benefit from business profits that are poured back into the community in the form of goods and services purchased from local companies, as well as scholarships, endowments, and sponsorships.
Current Status of Leadership Development
There is no doubt that leadership development is important, and it has changed dramatically in the past decade. Starting many years ago as typical classroom training on the principles of leadership, it has evolved into a critical part of organizational growth and development.
How leaders are selected for programs and the specific ways in which programs are offered and structured are significant issues that define the current status.
How Leaders Are Selected for Development
Because leadership development can be one of the most expensive types of development (it is not uncommon for it to be four or five times the expenditure made for other employees), the selection is usually a thoughtful process.
At higher levels in the organization, participants in LD programs are often selected by one or a combination of the following methods:
Cumulative data from performance management systems and/or past talent review discussions
Individual assessment (including a 360-degree instrument and/or psychological profiles) and custom developmental plans based on the outcomes of that assessment
Participation in an “assessment center” exercise
Testing (the test needs to be subjected to validity and reliability checks to determine the value of administration)
Behavioural or structured interviews
At lower levels, participants are often “selected in” versus “screened out” and enter into an LD program by virtue of a promotion or a change in the job title. For example, all new supervisors may be automatically enrolled in a particular program.
How Leaders Are Developed
Lewis Carroll, in Alice’s Adventures in Wonderland, wrote, “If you don’t know where you are going, any road will get you there.” This is also true with leadership development.
Unless there is a clear roadmap, it is indeed a lovely journey but one without a destination or committed travelers. The methods for development are varied, and many are combined into programs and initiatives of infinite variety:
Formal training, usually in a classroom (a virtual or “brick and mortar” one)
Informal learning including self-guided or structured content (books, online learning, audio/video podcasts, etc.)
Action learning (with a focus on strategic planning or innovation)
Coaching (either internal or external)
“Community of practice” or network involvement
Short-term rotational assignments
Long-term international assignments
Years ago, researchers created assignment log, a way of mapping standard leadership competencies to specific opportunities for development, such as serving on a task force, chairing a major initiative, or assuming a role with a greatly expanded scope.
The science of knowing what developmental experiences will result in specific competency improvements (and, by extension, what will not) is an extraordinary global positioning system in a world of increasingly fewer marked paths.
The Myth of 70–20–10
The time devoted to learning about leadership is a critical issue. For decades, there has been an assumption that 70 per cent of the time should be spent on the job with actual experiences, 20 per cent learning from others (usually through coaching, mentoring, shadowing, and role modelling), and 10 per cent in formal leadership development programs (in the classroom, e-learning, or blended learning).
This ratio comes from leaders who were asked to reflect on how they learned effective leadership.
As you can imagine, there has always been a small amount of time in classroom leadership development, so their input naturally reflected a small amount in the formal learning category.
The rest of it was their best guess of what has happened—it was never meant to be a prescription of what should be done! It’s safe to assume that there is not enough formal learning provided during a person’s career, at least in most organizations.
A better approach is to ask leaders how they want to learn—what their preference is. A recent study by The Conference Board and Development Dimensions International (DDI) involved more than 13,000 leaders, 1,500 global human resources executives, and 2,000 participating organizations.
The 70–20–10 ratio is the perception, but the reality in terms of time spent for this group in learning about leadership is closer to 55–25–20.
When this data was sorted for those individuals who have highest-quality leadership, the ratio is 52–27–21. While this reflects the reality of what is happening in organizations, the important issue is what is preferred.
This same group was asked to indicate how much additional time they would like to spend on leadership development per month.
The average response was that they spent 5.4 hours per month now, and they desired 8.1 hours, with a difference of 2.7 hours, almost an additional week for a year.
When asked how they would prefer to spend their time, 76 per cent of them said on formal learning, whereas 71 per cent said learning from others. Only 26 per cent said they wanted to spend it on the job.
These data clearly show what many have experienced: that the 70–20–10 rule does not reflect reality, and it should not be used to prescribe a process; it is merely a reflection on what has occurred in the past. It is much better to plan the proper mix around the needs of the organization and the needs of the leaders.
How Leadership Development Programs Are Structured
There will always be a need for a structured process of developing leaders. Simply dropping talented and successful individual contributors into the “manager’s chair” robs them of the opportunity to continue to be successful in a completely new situation. It also runs the risk of doing not only professional harm to the individual but also organizational harm to those he or she impacts.
This critical juncture in a career should be carefully managed, and all stakeholders need to be involved for mutual success to occur. Deploying new leaders to different environments or challenging situations without careful planning and support is not a recipe for success.
Simply hiring a new CEO from the outside without considering the cultural assimilation challenges, as well as the internal communications and talent implications, is terribly shortsighted.
Assess the bench strength of the current leadership, and develop targeted plans to address deficiencies or placement issues for individuals as well as organizational talent gaps that could impact the execution of the strategy.
Identify possible successors for critical roles.
Enhance the effectiveness of current leaders by building specific competencies and/or reducing the potential for “derailers.”
Accelerate the development of high-potential and emerging leaders.
Develop a strong leadership bench.
Set standards of behaviour and cultural norms.
Leverage leaders’ ability to develop and engage their employees, leading to increased levels of productivity, engagement, and retention.
The structure and effectiveness of LD programs are highly variable and, on the whole, disappointingly ineffective. Research indicates that these programs are “immature,” according to a leadership development maturity model:
“Inconsistent management training” is the lowest level of maturity, reflective of a program that lacks development process and has no involvement of business leaders but where content is available and viewed as a “benefit” to employees (47 per cent).
“Structured leadership training” is characterized by the development of competencies and a clearly defined curriculum, where management begins to embrace and support initiatives and programs (27 per cent).
“Focused leadership development” is culture-setting and future-focused, where individuals are assessed and thought of as corporate assets and where the organization’s leadership needs are factored into the process (16 per cent).
“Strategic leadership development” is where development is championed by executives who take their own development seriously and all aspects of talent management are integrated (11 per cent).
Managing Versus Leading
An important challenge in organizations is to increase the number of time leaders actually spend on leading instead of managing. Leaders spend much of their time on classic management activities of planning, organization, and control.
For example, developing plans, controlling the budget, and handling administrative work are all more managerial activities. Leading involves skill sets that include interaction with employees. The study found that leaders who spent more time interacting are more effective at these skills:
Coaching and developing others
Communicating and interacting with others
Developing strong networks/partnerships
Fostering employee creativity and innovation
Identifying and developing future talent
This has been a classic issue with organizations that value spending more time on managing and less time on leading. In this particular study, 41 per cent of leaders’ time spent was spent on managing versus 25 per cent on leading.
However, leaders preferred to spend 22 percent on managing and 40 percent on leading. The Communicating and interacting with others
Building consensus and commitment
Coaching and developing others
Managing and successfully introducing change
Developing strong networks/partnerships
Identifying and developing future talent
Inspiring others toward a challenging future vision
Fostering employee creativity and innovation
Leading across generations
Integrating oneself into foreign environments
Leading across countries and cultures the challenge for organizations, therefore, is to encourage and build environments to support, spending more time on leading, which is where most of the payoff will be.
The perception that this is an “HR thing”
Disconnection of leadership development from conversations and presentations about strategic direction and/or key performance indicators
Lack of adequate resources to fully execute programs and initiatives
An inability to articulate the impact of LD programs, initiatives, and resource deployments in business terms
The Success and Failure of Leadership Development
The success factors for leadership development are identified from the barriers and enablers of successful leadership development. When leadership development is successful, the enablers to that success are identified and isolated. When leadership development fails, the barriers that caused the failure are isolated as well.
Failure does not necessarily mean that the program did not deliver a positive return on investment or even influence significant business impact measures.
A failure is described as a program not living up to its expectations—not achieving the established impact or ROI objectives. It could have been more successful if adjustments or changes had been made; it will achieve success if changes are made going forward.
The data for the success factors are identified in a variety of sources. The most important sources are the ROI studies conducted by the officers, consultants, associates, and partners of the ROI Institute.
Each year, this team is involved in approximately 100 to 150 leadership development studies, and each study reveals important issues about failure and success factors. In the case of disappointments, the data show the cause of the disappointment (i.e., barriers that must change in the program to generate more success).
From time to time, the ROI Institute conducts reviews of these studies to determine the general barriers and enablers to success. Failure is divided into three categories. In the worst-case scenario, the studies are negative, delivering less value than the cost of the program.
These are failures that present serious disappointments and the lessons learned are very clear. The second category is when success has not been achieved at the minimal targets defined by the impact and ROI objectives.
While these programs have positive results, they do not meet expectations; there are opportunities for improvement that will drive more success. A third category consists of programs that exceed the objectives and show additional potential.
While these programs are successful, if adjustments are made, they can be more so. These adjustments are vital because maximization of the value delivered is always a goal of success.
These distinctions are made because of the impact of leadership development, when properly designed and implemented, can be considerable, sometimes ranging from 300 to 1,000 per cent return on investment.
Consider the impact created when a leader changes his or her behaviour and it affects the entire team. For example, for a first-level team leader in a call centre with twenty direct reports, the impact would be the improvement of the team.
If productivity (e.g., call volume) improves because of leadership development, the team’s productivity is measured.
When the monetary value from the team’s improvement is compared to the cost of formal learning for the team leader, the ROI value can be significant.
In our experience at the ROI Institute, when this leverage or multiplicative effect is explained to chief financial officers, they understand the value of leadership development.
Consequently, we should expect high returns on investment from leadership development; if they are not there, we should determine what can be done to improve them.
In addition to examination of ROI studies, research began with an examination of the literature, probing into both the failures and the success factors of leadership development.
Next, a survey was conducted with LD organizers: those who organize, coordinate, or facilitate leadership development and are often aware of the causes of failure. For the most part, these results parallel what the ROI Institute team has uncovered in the analysis of its studies.
What Does the Future Hold for Leadership Development?
The ability to develop leaders more quickly and efficiently will become a competitive advantage for those companies who do this successfully.
This concept of flexible and adaptive leadership is well suited for our turbulent times. One of the best crucibles for developing adaptive leaders in the military. Four principles have served military leaders well:
Create a personal link, which is crucial to leading people through challenging times.
Make good and timely calls, which is the crux of responsibility in a leadership position.
Establish a common purpose, buttress those who will help you achieve it, and eschew personal gain.
Make the objectives clear, but avoid micromanaging those who will execute them.
Success factors for leadership development.
Align the program to business measures in the beginning.
Identify specific behaviour changes needed for the target audience.
Identify the learning needs of the target audience.
Establish application and impact objectives for LD programs.
Involve the right people at the right time.
Design leadership development for successful learning and application.
Create expectations to achieve results and provide data.
Address the learning transfer issue early and often.
Establish supportive partnerships with key managers.
10. Select the proper data sets for the desired evaluation level.
11. Build data collection into the process and position it as an application tool.
12. Always isolate the effects of the program on impact data.
13. Be proactive and develop impact and ROI analyses for major programs.
14. Use data collected at different levels for adjustments and improvements.
Another core skill for future leaders will be the ability to thrive (not simply survive) in a permanent crisis; this VUCA world (VUCA is a term that originated in military circles, which means volatile, uncertain, complex, and ambiguous) means a never-ending series of strategy refreshes, setbacks, and unexpected opportunities.
Many believe that effective leaders in this environment will need to foster adaptation, embrace disequilibrium, and generate leadership at all levels of the organization.
Where will we find such leaders? Some suggest that we expand our search to include different markets, emerging economies, and differing cultural values— finding leaders who have forged their leadership skills in the crucible of resistance to apartheid, the growth trajectory of emerging markets, or during stints with mission-driven entities addressing humanitarian crises around the world.
The models are there; the largest India-based companies provide leadership lessons in terms of where and how they focus their energy and their emphasis on being transformational leaders.
So many types of experiential learning are finding their way into corporate leadership development programs at industry-leading companies such as UBS and IBM.
Leadership development will morph and adapt, just as the leaders, it attempts to create must do. But one thing will remain constant: the need to articulate the impact of such a major investment.
The journey is always the same for leadership development; at the end of the day, learning to effectively lead people remains a transformational process. It is always about how willing someone is to make himself or herself the lesser so that someone else can be the greater.
Many approaches can be successful, given the right support, the right timing, and the right alignment with corporate imperatives. While setting the course is difficult, attaining the results is even more challenging.
One study of leadership competencies that matter most for growth (which, according to the authors, constitute “the Holy Grail of corporate strategy”) reveals that great leaders are very rare indeed.
Some companies have found a way. There is no one path; there is no one correct answer. There are, however, correct questions:
What are you trying to accomplish?
How aligned are you with the organizational strategy?
Who will be the champion(s)?
What specifically will you do? For how long? In what way? What methods will you use?
Who will be selected to participate, and on the basis of what criteria?
How integrated is this into every other aspect of talent management?
How will you measure success?
How will you articulate success?
Investment in leadership development is at an all-time high. Here are three examples of leadership development approaches.
This manufacturer of instruments and equipment for life sciences, healthcare, and the chemical industry have introduced a leadership effectiveness analysis program, which has led to improvements across a number of key business outcomes.
Introduced by incoming chief executive Bill Sullivan, the program has changed the strategic intent of the company through leadership excellence and created a set of expectations for leaders to fulfil.
The analysis takes the form of a leadership audit, with the questions adjusted over time to reflect not only changes in the business but also changes in leadership measurements.
The results of the surveys are measured against external norms rather than against previous survey results. Once scores for particular traits have reached a level that is considered top quartile and it is clear that particular leadership quality has become embedded in the company, new questions are introduced.
This leadership effectiveness analysis has enabled Agilent to develop different expectations of leaders at different levels, based on a “core” of expectations running all the way through the business. The analysis has become part of the DNA of the company and has a participation rate of 89 percent.
The program was implemented from the C-suite downward in order to ensure that when leaders began participating in the program, their own managers were already fully supportive of it.
The analysis provides Agilent’s twelve thousand employees with a reliable, consistent understanding of what leadership is and ensures that every business leader is following the same path.
This has helped Agilent, which operates across many sites and has made a number of acquisitions in the past six years, ensure that its leadership is aligned across the company.
In addition to surveying its employees, Agilent also surveys its customers, and it has found that customers and employees give similar feedback, underlining the value of the program.
It should come as no surprise that Agilent’s customer loyalty and customer satisfaction ratings are better than those of its best-in-class competitors.
In addition, the program has helped to create a company-wide understanding of the direction of the company, as set out by the chief executive, and employee retention is better than the market average. The program has also helped Agilent attract new talent, with acceptance rates now above 90 percent.
Ultimately, Agilent has seen a marked improvement in the leadership of the company, as the analysis has helped identify managers who are struggling to lead their teams effectively and the specific areas in which they are struggling.
This has enabled HR to provide targeted support for these leaders, pairing them with mentors, teaching best practices, and working closely with them to improve their leadership skills.
This food and beverage company based in New York is focusing heavily on leadership development programs to support its managers. While the company generally takes a top-down approach to training, the company found that new managers have a high risk of failure without the right support.
This led PepsiCo to begin its leadership program with individuals assuming a management role for the first time.
The First Time Manager program was implemented because new managers benefit from greater support following their promotion.
The program is a global one, and as the company works on a governance model, all the company’s sector chief HR officers were in favor of initiating the leadership transition suite of programs by first focusing on the transition from individual contributor to manager.
In addition, a global task force was set up to assist with the design of the program. It takes the form of a two-day residential course, followed by eighteen months of continuous learning, with participants undertaking regular tasks, readings, and so on to provide a combination of both active and passive learning.
The course focuses on teaching newly promoted managers the value of the role of a manager and adapting to a “manager mindset,” and it provides guidance on how managers should adjust their time usage to ensure that they are properly delegating while at the same time building on the talent within their team.
PepsiCo has also introduced a Leaders of Managers program, as the second offering in its leadership-transition suite of programs, for the managers of managers.
It covers a number of core skills, including business acumen, strategy, collaboration, talent management, and global mindset, and the course is a combination of leader-led learning and business simulation.
As a highly diverse company, both geographically and sectorally, with twenty- two billion-dollar brands, PepsiCo believes that the biggest impact of its leadership programs has been in helping managers to take a more global and cross-functional approach—giving them a greater understanding of the impact of decisions made at the local level on the rest of the company.
The program has also assisted managers in building networks throughout the company outside of their own region and line of business.