Companies Have Been Neglecting Their Leadership, And It Shows
This week we launched a two-year study of corporate leadership programs, and the results are staggering. Despite the pandemic, inflation, pressure for hybrid work, and a highly competitive labor market, companies have been neglecting their leadership development. And as our research points out, this can have a very negative impact on performance.
Let me make it simple: of all the things we spend money on in HR, leadership development is the most important. We actually correlated HR investment areas against business growth and surprisingly, leadership development scores the highest. In other words, companies that focus on developing leaders (not just promoting them) far outperform their peers.
Why is this so important? Because when you talk about leadership, discuss the behaviors and principles you value, your company becomes stronger, more focused, and more aligned.
What is a “leadership model?” Well it takes many forms, and I won’t belabor you with examples, but it’s your opportunity to decide what you value. Are you a company focused on sales and revenue generation? (Deloitte was run this way.) Or are you a company focused on innovation and product leadership (Apple runs this way). Or are you a cost-cutting value-based organization (Walmart, Target) or rather focused on client service above all (Four Seasons)?
And then it goes further. Do you value individual achievements and competition? Or do you value collaboration and teamwork? Is your company an “up or out” culture or are you a company that develops people? And how do you want to manifest these principles in behaviors?
You get to decide.
And every one of these decisions has a different effect. In our company, for example, we value client service as our top priority. This means our analysts, consultants, and service teams take client calls above all other activities. It’s ok to miss a company meeting if you’re with a client, and we all talk about our clients’ issues so we always focus on their needs. I used to work for a company that was revenue-focused, and they behaved differently.
How Bad This Has Become
I’ve now done four studies like this (one in 2005, one in 2009, one in 2015, and this one in 2023), and this study actually surprised me. The level of maturity, investment, and focus on leadership has really declined. Look at the data:
* Only 25% of companies believe their leadership development is delivering high value to the company
* Only 24% of companies say their model is “up to date” or “highly relevant”
* Only 11% of companies embrace mentoring and only 18% give coaching to managers and leaders
* Only 15% of companies take care of leaders and actively monitor and mitigate leader burnout
* Only 17% of companies are growing their leadership development budgets
* Only 17% of companies have a succession management and leadership assessment process
* Only 26% of companies feel ready for an unplanned or emergency CEO replacement
* Only 12% of companies score in the top level of the JBC maturity model.
And when we looked at spending on leadership, the numbers were similarly disappointing. More than 60% of companies spend less than $500 per year on management and leadership development (per person). Honestly I think we spend that much on coffee these days.
Why has this occurred? I think it’s pretty simple: CEOs and CHROs have been so worried about the pandemic, employee burnout, quiet quitting, and reskilling that they somehow “forgot” about their leadership. And now we see books, articles, and pundits waking up and telling us “leadership teams are in crisis.”
And there’s something else going on. Leadership is now everyone’s job. The new employee or first line manager who’s leading a project to save money or analyze the sales team is now a leader. What education, training, and perspectives have you given this person?
As the CHRO of Marriott told me a few weeks ago, the only way Marriott can grow is to make everyone in the company a leader. And this means investing in leadership development for front-line employees, location managers, cleaning staff, and regional managers – not just high potential leaders in headquarters.
Why This Matters
It’s easy to write off leadership development and say it’s just a “nice to have.” Well that’s simply not true. If you don’t talk about leadership, bring leaders together, and set in place a set of behaviors, values, and skills for your leaders, the company sits on shifting sand. As one of our analysts put it to me years ago, when things get bad the only thing you have left is the leadership culture. And if you haven’t been taking care of it, well, you just drift.
I’m not saying leadership development is easy. It’s actually quite tricky, in fact. There are thousands of books, courses, and vendors selling you models, tools, and content. And most of them have lots of good research underpinnings. What really matters is not just “buying one,” but rather looking at them and deciding what models and values work for you.
And there’s another important value here. When you decide to refresh your leadership model, build a global program, or democratize leadership you now open up the door for discussion. If you’ve read “Hit Reset” by Satya Nadella you know how he essentially “discovered” the broken leadership behaviors in Microsoft, and set out to fix them as his first priority. Today that company is one of the most valued organizations in the world and I’d venture to say it’s all about their refreshed leadership model.
The other thing this does is give you a way to attract, retain, and develop people. Once your leadership model and program is solid, people flock to your company for work. Ambitious young people are looking for a company that helps them grow – they’re looking for mentors, coaches, and role models. If you don’t talk about these issues, value them, and constantly reinforce them, these people may go elsewhere.
Our new research really decodes this topic, and we can show you our leadership maturity model and dozens of case studies to learn from. In all the topics you discuss in HR and management, take some time to talk about your leadership. You’ll be glad you did.
Thank you to BetterUp who supported this comprehensive study.
(Download the executive overview here.)
Human Centered Leadership (Certificate Program In The Josh Bersin Academy)