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The Business Case for Leadership Development: The Bottom Line

30 July 2013

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"I'll bet most of the companies that are in life-or-death battles got into that kind of trouble because they didn't pay enough attention to developing their leaders." - Wayne Calloway, former Chairman, Pepsico, Inc.

70% of Senior Executives cite leadership development as their top priority, according to a 2010 McKinsey survey of 1440 global business leaders. Despite this, only 33% of companies align a training program with specific skill development to drive revenue growth.

Alarmingly, in a recent McKinsey survey with 30,000 respondents, less than half rated their immediate managers and leaders as effective. This would suggest that leadership development is a critical priority.

On the flipside, it is estimated that $16.8 billion dollars is squandered annually in the leadership development global arena. Companies feel that a need has been met, an agenda addressed, but a token development day will have little impact on the company if the following questions are not addressed:

  • What is the learning intent of the leadership development session?
  • Is it aligned to the strategic organisational initiatives?
  • What are the success criteria by which you will measure the program?

With over 60,000 leadership manuals and thousands of beige 'consultants' plying their trade across the globe, there is clearly a need in the market that has yet to be satisfied. The reasons for this are obvious – leadership cannot be a 'cookie cutter' process or strategy that is a one-size-fits-all model. There is no black and white when dealing with human beings. We are a complex beast with traits and personalities that are diverse and intricate; however, we do have one thing in common - a brain that has the unique ability to transform thoughts into actions and sustainable behaviours. It is increasingly critical that this universal powerhouse is harnessed to become a fundamental tool in building the capacity and growth within companies.

The Global Financial Crisis presented some companies with, what they viewed, as a unique opportunity – keep investing in capacity building while others instantly retracted their professional development budgets and focused solely on the bottom line.

 

"Organisations fail when the custodians of the past control the purse strings for investment in the future" - Gary Hamel
(World's most influential business thinker – Wall street Journal)

Leadership development is the maximising of human capital, through increasing skills and knowledge. It is the most valued 'commodity' in business but also the most misunderstood. Behavioural change is the desired outcome of an investment in developing professionals, not just improved thinking. This is where neuroscience can provide companies with 'the edge' over other methodologies.

It is difficult to quantitatively measure the impact of improved leadership capacity in employees. Traditional metrics such as improved productivity, decreased waste, increased retention, increased efficiency, etc. are not instantly capable of measuring the impressive outcomes of quality leadership development. Gary Hamel's winning combination of behaviours such as passion, creativity, initiative, intellect and diligence are not statistically measureable but in no way can be undervalued. Ultimately, over time, organisations would see the monetary benefits of leadership development through the improvements to culture and climate and there is a direct correlation between climate and financial results. While not the only driver of financial improvement, climate significantly impacts on organisational excellence.

 

"Leaders don't create more followers; they create more leaders" - Tom Peters

 Investing in leadership development should not be directed solely at the upper echelons of an organisation. To build sustainable excellence, leadership density is the key, where employees are given 'permission to lead', empowered with skills to 'step up', and provided with opportunities to discover the untapped potential within an organisation.

Neuroscience provides the ability to produce behavioural change but for the process to be embedded and sustainable, a blended methodology is the most effective. Beginning with a LEADQ 360 survey, which identifies 8 crucial elements of leadership, the participant is informed of their leadership traits. A customised training and coaching program can then be implemented, followed by an online embedding stage, designed to personalise the process even further. Naturally, for any leadership development program to be effective it is the leaders in the organisation who have the power to make or break it by driving it and promoting the value of the program.

Neuroscience has the insights to change the leadership 'derailment' factors that are deeply ingrained in a leader's personality which CAN be identified and modified.

Crisis averted! Opportunity seized!

If it is sustainable behavioural change that your organisation is seeking, then neuroscience is the obvious way to make that happen. This is not 'business as usual'; this is operational excellence using your most powerful tool for change.

 

"Leadership, like swimming, cannot be learned by reading about it."
Henry Mintzberg

The bottom line is that leadership development improves business performance. Investing in improved performance as a perpetual strategy is regarded by many experts as essential to continued innovation and organisational excellence.

Equip your people with knowledge, methods and skills to boost your organisation's internal brain power, rather than outsource your thinking by applying beige models and processes that do not build your company's culture.

It is not about whether you can afford to invest in leadership development.... but whether you can afford not to.

 

Lisa Newland, Education Consultant

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