Measuring ROI of Leadership Development
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Vistage presented research conducted by the Human Capital Institute to a group of HR executives at the Talent Management Alliance conference in Atlanta, GA on April 24, 2013. Research shows that leadership development programs that leverage non-traditional methods such as peer advisory groups, executive coaching, and cross-functional team meetings are far more successful in gaining alignment, increasing collaboration, executing strategic initiatives, making decisions and course corrections, resolving conflict, and more. Visit www.vistage.com/hci for more info.
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Measuring ROI of Leadership Development
- 1. Changing the Currency New Ways to Measure ROI of Leadership Development
- 2. World’s Leading Peer Advisory Membership Organization Martha Oxley Vice President, Learning & Development John Ruzicka Manager, Senior Executive Programs
- 3. “We are all astronauts.” Buckminster Fuller
- 4. • Urgency • Importance Capacity to deliver an effective leadership development that will positively drive business results in the near future.
- 5. • Tangible • Measurable Capable of observing and evaluating the impacts on the leadership culture and individual and groups.
- 6. • Reliable • Sustainable Solutions that can be smoothly executed across a variety of organizational structures and competencies.
- 7. • Efficient • Manageable Aligned with finite resources to achieve the desired Return on Investment.
- 8. • 31 Item Survey • August 2012 • 346 respondents • 174 organizations worldwide
- 10. State of Executive Development Hybrid Non-Traditional Executive Development Traditional Executive Development
- 11. Defining Differences Traditional Development Non-Traditional Development LEADERSHIP RETREATS INTERNAL PEER GROUP MEETINGS WORKSHOPS CROSS-FUNCTIONAL TEAMS E-LEARNING/ONLINE TRAINING CUSTOM-DESIGNED PLANS CLASSROOM TRAINING EXECUTIVE COACHING ADVANCED DEGREE PROGRAMS EXTERNAL PEER GROUP MEETINGS OFF-SITE SEMINARS/SPEAKERS CONSULTANT-LED MEETINGS ROTATIONAL ASSIGNMENTS
- 12. Most Commonly Used Traditional Development Non-Traditional Development LEADERSHIP RETREATS INTERNAL PEER GROUP MEETINGS WORKSHOPS CROSS-FUNCTIONAL TEAMS E-LEARNING/ONLINE TRAINING CUSTOM-DESIGNED PLANS CLASSROOM TRAINING EXECUTIVE COACHING ADVANCED DEGREE PROGRAMS EXTERNAL PEER GROUP MEETINGS OFF-SITE SEMINARS/SPEAKERS CONSULTANT-LED MEETINGS ROTATIONAL ASSIGNMENTS
- 13. TDO 48% HDO 52% Traditional vs. Hybrid HDO (Hybrid Development Organization) – uses four or more non-traditional elements annually TDO (Traditional Development Organization) – uses primarily traditional methods for development
- 14. 5 Key Drivers of ROI • Alignment • Collaboration • Execution • Retention • Succession
- 15. HDOs are more aligned to a common vision Q: Tell us how your organization’s approach to executive development affects the alignment between executives and overall business strategy. 62% 89% Executives share a common vision for the organization HDO TDO
- 16. HDOs are more collaborative Q: What did you observe about collaboration among the group before and after the new program? 49% 73% My company has an open dialogue & common language HDO TDO
- 17. HDOs make strategic decisions faster Q: How did this program enable faster decision making? 50% 69% Speed at which strategic decisions are made HDO TDO
- 18. HDOs have greater bench strength Q: How do you feel this development program has improved bench strength and succession planning? 48% 71% My organization promotes the internal HiPo population HDO TDO
- 19. Keys to Increased Retention • Leadership • Aligned Rewards Systems • Culture – Retaining the right people
- 20. HDOs achieve better growth rates 43% 11% 36% 15% Flat or negative growth 10% + growth HDO TDO Q: Please describe the growth rate of your organization’s revenue in the last fiscal year:
- 21. HDOs Better Positioned for Business Success • Blended approach – it’s the mix that matters • Builds the capability of the organization, not just the individual • Collaborative, peer-based models drive best results
- 22. Download full research: vistage.com/insideTMA or Visit the Vistage table for more information www.vistageinside.com
Notas del editor
- Vistage is in the executive development category and is the world’s leading peer advisory company. We have been helping business leaders harness the value of professionally facilitated peer advisory groups since 1957.Our leadership community includes 16,000 members, over 1,000 world-class speakers, and more than 700 Vistage Chairs (professional facilitators) across 15 countries - all of whom contribute to enhancing the lives and increasing the effectiveness of CEOs and business leaders around the world. We put together and professionally facilitate peer advisory groups where executives help each other process and solve their most critical issues and opportunities.We exist to increase the effectiveness and to enhance the lives of executives and business leaders around the worldVistage-member companies:Generate nearly $300 billion in annual revenueEmploy approximately 1.8 million employees worldwideOutperform their competitors and, on average, grow their revenues at three times the percentage growth rate after joining the Vistage Executive Leadership Programs.
- Common Currency in Executive DevelopmentPiloting, navigating, or participating in leadership development; Relying on infinite resources at this time, in this space; Know if our mechanisms are not functioning and kept in good order, they will cease to function
- We discovered additional common currency in our own organizations as well as those in our research…that we Were driven byUrgency and importance…we all seek the capacity
- That we all seek executive development that is both…
- That we share the quest to find solutions…
- That our choices must be carefully made and managed…aligned
- 31 Item SurveyAugust 2012346 respondents, representing 174 organizations worldwideKey objective: how do you measure ROI of executive / HiPo development?
- Hybrid approach allows a company to continue with effective traditional methods, but embark on non-traditional methods of applied learning to maximize return on investment.HDO = Hybrid Development Organization – use four or more non-traditional methods per year, combined with some traditional methods.
- We began our mission to seek solutions by exploring the components that make up executive developmentTraditional executive development methods have not been phased out.Some companies have integrated a larger number of non-traditional methods to supplement, reinforce, and maximize investment in traditional methods.Learning (traditional) vs. Doing (Non-traditional, collaborative)
- Next, we pinpointed the components that proved to be the most commonly used in achieving executivedevelopment goals and aspirationsIt’s not surprising that internal peer group meetings and cross-functional team meetings are used most often as they represent a low-cost, high-impact, method for aligning teams. Peer group meetings provide a forum for open dialogue where group members can present challenges and collaborate on solutions. Vistage members speak often about the broadened perspective and new ideas they get from their groups because it allows them the opportunity to think differently based on the input they get from their peers.These methods also offer participants an opportunity to implement their own solutions, which they are then committed making work for their organization because they were part of the process.
- Slightly more than half the organizations surveyed are taking a blended approach to executive development,.52% of respondents are Hybrid Development organizations or HDOs, meaning they use at least four or more non-traditional methods for executive development annually, in conjunction with various traditional training methods. HDOs make best use of all methods for exec development
- Changing the currency of ROI for Exec Development:Financial return on exec dev efforts is important and 2011 research reinforced this is an area organizations continue to struggle in measuring.We conclude that while the dollars and cents of ROI of exec dev is an important metric, that we may need to also change the mindset around the measurements and currency of exec dev ROI.This year’s research sought to better understand what other areas of the business that executive development influences and confirmed that there are 5 key metrics that exec development drives which effect the success and bottom line results of organizations (Alignment, Collaboration, Execution, Retention and Succession)
- Executive Development efforts in HDOs drive Alignment and Shared VisionNearly 90% of execs in HDOs share a common vision (compared with only 62% for TDOs)
- Greater collaboration is a key outcome for orgs who are taking a blended approach to exec dev. Across a variety of measures, HDO’s outperform TDO’s in this area:It’s engrained in their cultureIt extends beyond formal team meetingsThey have open dialogue and common languageBusiness units supportive of each otherTen Principles of a Collaborative OrganizationFocus collaboration on business resultsAlign organizational support systems to promote ownershipCreate higher standards for discussions, dialogue, and information sharing (formal mechanisms in place, such as facilitated peer group meetings)Foster personal accountability
- HDOs are making strategic decisions faster, implementing faster, and course-correcting faster.Covey’s Four Disciplines of Execution:Focus on the wildly importantAct on the lead measuresKeep a compelling scoreboardCreate a cadence of accountabilityDiscipline 1 is about what to do; Discipline 2, how to do it; Discipline 3, what success means; and Discipline 4 (which circles the others), an ongoing cycle of accountability that drives success.BENEFITS OF IMPLEMENTING THE 4 DISCIPLINES OF EXECUTIONClarifying the goals, priorities and organizational directionAll employees at all organizational levels know what they need to do to achieve wildly important goalsEvery team identifies the most important activities that will lead to achieving those goals and focus on themEvery leader has at his/her disposition simple and proven system for building mutual accountabilityEmployees have mutual accountability within the teamExecution of each individual becomes transparent and as such can be rated or improved
- HDOs are 30% more prepared with ready replacements for key positions51% vs 27% can identify bench strengthHDOs are 23% more likely to promote the internal high potential population
- Our research did not uncover any key differences regarding retention among HDOs and TDOs (likely due to the positioning of the questions around retention). – This could be an area that warrants additional research.However, “Organizations that have exceptional leadership development offerings likely have increased retention. If you are getting the best development and potential in reaching your goals as a leader in business, you’re probably going to stick around longer.” – Ulrich Nettesheim, Haas School of Business (UC Berkeley)Harvard Business Review, May 2010 “How to Keep Your Top Talent”“High performing and extremely talented people do not quit their jobs – they quit their leaders. Influential leaders are essential in every organization for hiring exceptional talent, retaining exceptional talent, and releasing that talent throughout the organization to produce high levels of performance excellence.”The idea of better leadership development programs leading to retention is especially important among high potential leaders, as new attitudes about loyalty to one’s employer / organization have emerged and continue to evolve.
- Impact of stronger execution is seen in financial performance. While differences are narrowed, slightly more HDO’s realized 10%+ growth and significantly fewer realized flat or negative growth.
- Key takeaways:HDOs Better Positioned for Business SuccessRespondents leveraging a blended approach that includes collaborative and peer-based development methods are experiencing the best results across a variety of measures. This approach enables organizations to build the capabilities of the entire organization, not just development of individualsROI is being realized in five key areas of: Alignment, Collaboration, Execution, Retention and Succession
- Questions?