When learning practitioners are gearing up to propose leadership development programs to cost-conscious C-level executives, they typically throw out some combination of the following statements:
• “We have a current leadership void.”
• “There’s an impending exodus of baby boomers. We need to develop their replacements.”
• “Our competitors have an LD program.”
But at the end of the day, those charged with greenlighting leadership development programs want to know how their investment will reduce costs or increase revenue. By these standards, the above rationales are far from compelling.
There’s one simple way learning executives can bolster the business case for leadership development programs: by using research.
For example, many studies during the past decade have severely discredited the notion that leaders always have a direct impact on performance. A 2001 Harvard Business School study titled “When Does Leadership Matter?” found that in industries where opportunities are plentiful, CEOs often have a very small impact on firm performance. Conversely, in industries where there are limited opportunities, CEOs have a greater impact on firms’ overall performance.
Then, a 2004 study titled “Top Management Team Cohesion and Superior Industry Returns,” published in the journal Group and Organization Management, suggested that while leadership has a very weak direct association with performance, leaders do indirectly impact performance. In fact, leadership behavior accounts for roughly 14 percent of a team’s overall cohesion, according to the research. When you consider that cohesion accounts for roughly 28 percent of a team’s performance, more than a quarter of a team’s output results from cohesion.
This research supports what we already know — that leadership is important — but suggests that it’s important in an unexpected way. First off, some leaders matter more than others. Second, leaders matter not in how they can singularly get results, but rather in how effective they are at developing cohesion within their teams. This information has the potential to reshape how learning professionals approach three aspects of an LD program: the participants, the competencies and the sell to decision makers.
Ideally, all leaders in a company would go through a leadership development program. But with many companies tightening purse strings, difficult decisions need to be made about the scope. Specifically, who should participate? If leadership matters more when opportunities are scarce, it would seem that leaders in profit centers with limited opportunities should have priority. The sooner they attend, the less likely they are to pass on critical business opportunities and negatively impact performance.
If what matters to a team’s performance is the leader’s ability to facilitate cohesion, then the content of an LD program should focus on building and fostering relationships with and between others.
While many LD programs address relationship-building skills in an ancillary manner, these should be the primary goals. An LD program should include activities and information that build the following competencies: fostering commitment to shared goals and objectives; helping team members understand the importance of all roles and how they contribute to the ultimate objectives; and fostering corporate and team values.
Further, leadership development courses should teach participants how to build relationships between team members, create significant shared experiences in and out of the office and provide effective social support for team members through modeling and instruction.
LD programs can be difficult to sell because of the inherent challenges in measuring their monetary impact. However, the research described above can alleviate some of that ambiguity. For example, which of the following rationales would be more compelling?
1. “We need an LD program because many of our senior executives are approaching retirement.”
2. “The cohesiveness of every team accounts for 28 percent of its performance. Let’s consider a department in which the revenue target is $100 million. If the team is cohesive, it could bring in $128 million; if it lacks cohesion, it could bring in $72 million. That’s a $56 million variable depending on the team’s cohesion. And research shows leadership accounts for about 14 percent of team cohesion.”
Numbers resonate. With a little creativity and research, learning executives can demonstrate the bottom-line impact of leadership development programs and align their departments more closely with the company’s greater business goals. And that’s a great rationale no matter how you slice it.