Episode Transcript
[00:00:05] Hello, everyone. This week I'm going to do a midweek podcast on a very significant research study we just introduced called Irresistible Leadership. And I'm going to give you a brief overview of what we found. This was a two year project. We probably interviewed 50 CHROs we surveyed seven or 800 companies. We looked at the level of sophistication companies have in the leadership development. We looked at their models. We looked at their alignment with the senior leaders. We looked at their spending. We looked at their mix of development strategies and development approaches. And unbelievably interesting. This is the fourth time I've done this. I've done this kind of work. The first time I did it was back in 2005, I think. And we generally find that leadership development is an uneven market. Most companies do it to some degree, some companies do it very, very carefully and very, very strategically and periodically. Every company has to revisit their leadership strategy and their leadership approach. Oftentimes a new CEO or a board member or a board issue will force the discussion of leadership. We talked to quite a few companies about that. And what we concluded, or what I concluded, is that for the last at least three or four years, companies have been neglecting this investment. And I think the reason for that is because of the pandemic. And most of us were more worried about our frontline employees and our general employee experience and general issues of well being and reskilling and upskilling and transformation. And we probably weren't spending enough time with leaders. To give you an example of the statistics, it's pretty striking. 51% of the companies spend less than $500 per year on leadership. Now, with the senior leaders, they spend a lot more. But generally speaking, across the whole audience, it's pretty low. The top companies spend 2000 $3,000 per year on senior leaders and well over 800 and $900 on all leaders. So there's a big group of companies, more than half, that are just really behind on this. And that's not uncommon or unusual. I think it's always been that way. But the number is higher than I've ever seen it. And let me give you a few more statistics that will sort of boggle your mind. Only 25% of companies believe their leadership development is delivering high value to the company. Only 24% believe their model is relevant or up to date, so they haven't looked at it for a while, or they bought it off the shelf.
[00:02:46] Only 11% embrace mentoring. Only 18% have coaching. By the way, we did this study with the support of BetterUp, who's the leader in the online coaching and Democratized coaching and AIpowered coaching business. So this is certainly good news for them. There's a lot of opportunity for that. Only 15% of companies actively monitor and mitigate leader burnout, which is a huge topic because even though we've been worried about individual employees burnout and quiet quitting and retention, think about the supervisors, the managers, the leaders, the project managers. All of them are suffering from even more complexity because they're trying to deal with a fairly stressed out workforce and they have jobs of their own.
[00:03:33] Only 17% of companies are growing their leadership development budgets. That really surprised me in the 16th or 15th year of an economic cycle where we still don't seem to be justifying spending enough money on this, and only 17% have a leadership assessment or succession process. So essentially what I've concluded from this data, and having done this for 25 years, is this is a big step backwards.
[00:04:01] I mean, I remember when I entered the HR domain in the early 2000s, everybody was copying Crotonville and GE and reading books on the leadership pipeline and building leadership models and sending people to corporate universities and doing executive education and so forth. And I think a lot of things have changed. By the way, just one more thing on the motivation, then I'll talk about what we've found. So on a separate project, we looked at the HR capabilities across a large number of companies. We have close to 20,000 HR people that have gone through our capability assessment, and they assess themselves on all sorts of capabilities. One of the things they assess themselves on is their ability to develop leaders and managers. And it turns out that if you look at the 92 capabilities that we've developed in HR, and they're fairly strategic things, they're not tactical things at all. The one that has the highest statistical correlation to company growth is the ability for the HR person or HR team to develop leaders and managers. So on the one hand, while we have a lot of immaturity and lack of spending, it is the most valuable thing that we can invest in in HR. Now, I'm not saying there aren't plenty of other things to do in HR, there are, there's dozens of other things to do. But if you're not spending enough time on this, you're suffering. And let me explain the justification for that and what we've learned. First of all, there's a lot of data in the report about the behaviors and models of leadership that are growing and having the most impact. They generally have to do with several things. First of all, driving change, which has always been on leadership frameworks forever, but it's very big now. Creating energy and empowerment and engagement with people, developing people, obviously listening to people, and behaving in a way that you're a role model to others. Now that we have a workforce with four or five generations and young people, and I mean young because I'm older, but people in their twenty s and thirty s are in very senior leadership positions, they will become or they will need role models to develop themselves. Most people learn about leadership in one of two ways. They had a boss or a coach that they admired, and they learned and mimicked and copied that person because they were proud of that person and they admired that person or they learned it on their own.
[00:06:41] And I would say most of us learned it on our own with the help of some number of coaches. If you're young, if you're in your 20s or thirty s and you get thrust into a leadership role and you don't have one of those role models, or maybe you haven't had one yet, you're learning it yourself. So you may decide that your job is to hold everybody accountable and have 100 meetings and micromanage everybody. That is not a good idea, as most of you know. But you wouldn't know that if you didn't have a leadership development program around you. And that is why leadership is so important. Leadership development is your one opportunity to touch every manager, every leader in the company, to bring them into alignment on values, behaviors, corporate principles and corporate standards that you as a business, not you as an HR department believe are important, that you have studied and learned because they work for you. And that's why these models have to change every three to five years, is companies change, new CEOs come in, an innovative company becomes a more mature company and it becomes more focused on profitability. A customer centric company becomes a product centric company. A product centric company becomes a sales centric company. The government comes in and throws you a bunch of fines, all of a sudden you become a compliance centric company. I mean, not every company does all of those things at the same level of emphasis. And so I think one of the most valuable processes in leadership development is sitting down with the senior leaders and having a series of discussions about what our leadership approaches and models will be. You can't buy that out of a book. I mean, you can learn a lot from a book and you can learn a lot from others and consultants, but ultimately it's up to you. The best companies in the world have a leadership model that is unique to them. And I've visited hundreds and hundreds of companies over the years and you can tell what the culture is within the first few minutes of meeting with people and being in the company. And what you want to do, of course, is reinforce that and scale it and make it available to everybody to understand and learn. That helps you assess leaders, that helps you develop leaders, that helps you create a better employment brand. It helps you attract people. Now, one of the interesting conclusions we've come to as we look at this data is that there's a lot of history in this industry and I've read many, many books on leadership. I'm constantly reading books on leadership. I read Elon Musk's book. I read the book by Bob Iger. I mean, for most of you that are in this domain, there's lots of models to follow. And everybody who writes a book is proud of what they did. When an executive writes a book, it's usually about something good they did, not about all the bad stuff that happened. Sometimes they go through that too, and you pick up examples and ideas, and they've become icons and they become role models. Howard Schultz at Starbucks was a role model for first line leadership and empowerment and education and support and benefits for retail for a long time. I mean, you may not remember this, but when Starbucks was a young company, they were the first company that gave hourly employees a lot of benefits, including education and tuition reimbursement and other things. And I gave them a lot of credit. A lot of people copied him. I met a lot of executives at Ikea years ago, and they had a very socialistic strategy because they're Swedish approach to leadership that really works for them. They're a design centric company. They focus on the environment. They focus on beauty and cost effective design. That isn't just a product strategy, that's a business strategy. And that affects their leadership. You go to Patagonia, you hear them talking about saving the planet. You go to salesforce, and it's a culture of sales. Sales and marketing, sales and marketing. When I was at Deloitte, there was a sort of a hybrid culture between selling and customer service. I would say it was probably more selling and less customer service. But they both went together, of course, in a consulting firm. And it goes on and know, Apple innovation, Microsoft time to market productivity, product excellence, on and on and on. You get to decide what those things are. And if you don't have a model yet or you're in the process of redoing it, you should do your own research by looking at the high performing groups and high performing individuals in your company and talking about what it is about them that we want to exemplify and build that into the model. And the model can be simple or complex. Some companies hire PhDs and do a lot of complex modeling to develop a leadership model. We talked to a government agency that had a, I don't know, 60 or 70 dimension leadership model that they statistically created. We encouraged them to simplify that, by the way, but they did. They had that for a while. Or you can have very simple ones. I know at Novartis they've been focusing on curiosity. At Microsoft, they've been focusing on growth mindset. Companies that have had product problems have a focus on quality, et cetera. So I'm not going to tell you what the right model is, but I'll tell you what seems to have worked. Now, once you've developed that model and get an agreement on what it is now, how do we use it, how do we institutionalize it, and what we talk about in the report. And I think a lot of, you know, but I'll just remind you is that this is a never ending, very continuous process of discussion, of storytelling, of development, of feedback to review these principles and hold people accountable. If you really want to build a great leadership program, the leadership principles should be part of the performance management process for everybody.
[00:12:46] If innovation is your number one thing, people should be evaluated and developed based on their ability to innovate and create and develop or implement new ideas, ditto for any of the other areas. It isn't something you kind of put into a course and throw it out there and hope everybody gets it. There has to be feedback. There has to be discussion. When something doesn't work, when somebody underperforms, when somebody does something dysfunctional, use the leadership model as a tool to coach them, to give them feedback so they're hearing reinforcement around the concepts and values that you've created. That's a really valuable process because when your company has a problem and every company has problems, a product is late or a competitor beats you to market or it'll be a bad quarter or something happens, you're going to fall back on that. You're going to fall back on that leadership model, and you're going to be tested on how well you really believe it because you're going to want to do a lot of knee jerk reactions that may be very emotional, but you want to fall back on that leadership model because it will sustain your long term growth. Now, in the book that I wrote, that I know a lot of you have read, but I encourage you to read it because there's a lot of discussion in there. One of the words in the title is enduring. And I think what confuses people about leadership is they read a book about Elon Musk. They see these rocket ship companies, literally, that he's created, these trillions of dollars of values created, and they think, well, here's a guy who's a scientist, an engineer, maybe not the most socially aware person, but in fact, he's very hard on people based on the way that book reads. But he's an incredible innovator. And they say, oh, let's do that well, or you pick the role model you like, let's copy that person. Well, that's usually not a good idea because the number one issue in business is sustainability over a long period of time. And I don't mean environmental sustainability. I mean business sustainability. The reason business is so interesting and the reason business is so much fun for me and hopefully most of you, is that it's constantly changing. And whatever you're doing today, the product, the service, the offering, the systems, the procedures, it's going to take time to get them to stick. You're going to have to develop and iterate on them, and something's going to come along and mess them up. There's going to be a new technology. There's going to be a new competitor. There's going to be a new industry change and you're going to have to endure. And a lot of companies I think the last statistic I read was that 85% of the companies in the S and P 500 disappear within 15 years. They're gone. They get bought or they get acquired or they go private and they endure in some fashion. But the companies that I admire, the ones that have been around a long, long time, a lot of them have very, very stable tenured executives. You look at Walmart and even companies like IBM, which are a little bit different, but they have leaders that have been around a long time and they know what the values are of the company. They have lived them, they have created them, they have witnessed them, and they know that those values stand the test of time. There are no rights and wrongs. My experience in all the research that I've done is that in every single market that any of you are in, there are multiple ways to approach. You can be the product innovator, you can be the company with the best whizbang gadget. Your gadget has more features, more capabilities, and is more advanced than everybody else. Your product, your service, your food, whatever it is, and then people will buy it because of that. Or you can be the low cost provider. You can have a product or service that's just about as good as everybody else. Maybe not as good, but it's cheaper, it's easier to implement, it's more cost effective. Or you can be the customer intimacy company, where your products are good, they're useful, they solve the problem. But you provide services and engagement and support to your customers at an exceptional way. And I'm not saying you don't have to have a good product to do that, but that's a different business model and you will put your costs in a different place. Or you can be the fastest moving company and you can change all the time and you'll attract new markets faster, but you may get behind on some of the old markets. So you can pick any of these positions in your industry as a leadership team. And it'll change because when you merge or acquire another company, you may become a more stable, service centric company because your market hasn't been growing. And then you're buying an innovator and now you have another group of leaders that are different. So your leadership model has to adapt over time and it has to be built with a sense of endurance. Now, a couple of the other things that we discovered in the report, one of the things that I don't think people think enough about is that in this day and age, where we have four or five generations of people working in one company, we're all leaders. And this idea that we're all leaders is a nice phrase, but are you really living by that? Are you really developing people? Are you teaching them? Are you giving them stories on how to lead?
[00:18:19] I have children in their thirty s and both of them have been in leadership positions at different points in time and they haven't gotten a lot of leadership development from the companies they worked for. And I'm sort of a little bit sad about that. Of course they're still not that old and so it'll happen later. I had the good fortune at IBM in the 1980s to have the chance to learn a lot about leadership from leaders and through more formal processes. I think we need more of that. I think you'd be surprised how a leadership development program, which feels like a waste of time to many people, has massive payoff. Massive. Because you get connections, communication, alignment. You bring people together who need to work together, who may not have time to work together. You teach people about things going on across the organization and you have to bring people together face to face. Virtual programs work great for fundamentals and business topics and background in education and research. But the actual development of people takes face to face. Your leaders should be teaching, not just listening. Your leaders have to take this on as a responsibility, one of their jobs. We should be holding leaders accountable for their own personal development so they feel that they're not just delegating this kind of stuff to somebody else, but they're holding it responsible too.
[00:19:46] And we have to be highly inclusive. If your company was founded by white men or black women, whatever it may be, and that group of people have decided amongst themselves how they want the company to run. Well, that's probably not a good idea, because the company will become more diverse over time and we have to respect the fact that a more diverse workforce will require a more diverse set of inputs into the leadership model. That includes diversity in promotion, diversity in the leadership team. You don't want to have all the men running sales, all the women running HR. I mean, that tends to happen anyway. But we've got to try to push ourselves not to do that kind of stuff. Generational diversity, those are all part of leadership. Know, I talk about a little bit in the article that I wrote about Marriott, the CEO of Marriott who's a brilliant guy, I talked with him a couple weeks ago when they came out of the pandemic and their hotels were basically empty. He and the CEO and the CFO got together and said, this is a cris. I mean, we can't train people how to deal with this pandemic and cleaning things and getting people back in the office into the hotels and wearing masks and all that. We got to empower them. And so they built a highly decentralized leadership at all level development program and culture and they're growing like mad again. And it's been really good exercise for them. And Marriott's been around for more than 100 years. So this is not their first time doing leadership development, but they reinvented it again. And I think when you're staring into the stock market and you're finding that your company is not performing well, it isn't a bad idea to look at your leadership model and see if it's taking you where you want to go. I mean, nobody wants to play with their leadership model when things are good and then when things are bad, nobody has time. So I think of this as an investment, and in some sense you have to sniff out when the time is right and work on it, whether it feels like a good investment of time or not, because it is a fundamental foundational part of running a company. The other thing I'll mention about leadership is it is a tool for recruiting. It is a tool for attracting great people. When your leadership model is clear and evident and written down, people will come to you because of that, and people will select away from you when they don't fit. And that makes your recruiting, your talent magnetism stronger. You'll attract the types of people that you really want to bring to the company. That happens during the interview process usually. But even the recruiters will want to know what's in the model because they're going to need to talk about it with people at different levels when they come into the company too. Okay, the one more thing I want to say about leadership development is for better or worse, this initiative is oftentimes owned by the head of training. And I'm not sure that's always the best idea. In some companies, the woman or man or person who heads leadership development is a director or a senior person. In talent management, sometimes they're in the learning function. This is actually a complex role because we're talking about succession, we're talking about selection, we're talking about performance management, we're talking about development, we're talking about culture. The leadership development program actually crosses all of those domains. So wherever you decide to locate it, what I just want to suggest is don't think of it as a training program. It is development. There's a difference between training and development. Development means it's an ongoing conversation and training process. It isn't just a course or a program to complete. So give the person or the team that's working on this enough access to the senior levels of the organization and enough span of control so that they can operate globally and you can use your investments in this area. Well, there are lots of consultants that are really good at this. There are lots of experts. I'm not going to list them on the podcast. And we would be more than happy to help you assess your leadership program against this model. We have a maturity model. We have a really successful assessment. Now, given that this is the fourth time I've done this, I've been through it a lot, and we'd be happy to help you with it. And I also want to thank BetterUp. BetterUp is a very, very successful, fascinatingly, innovative company in coaching. They decided they wanted to help us with this because they do a lot of work in leadership development too. And so we'll be doing a lot more discussions and roadshow of workshops on this for all of you. I encourage you to take a look at the research, join our corporate membership if you want to get under the covers and get involved in reinventing or rethinking your leadership program. And in the meantime, I just want to encourage you to put some attention in this area in the coming year because it will pay off. Thank you very much. You guys talk to again sooner. Sam. Sam.
