Why the Leadership Industry is Broken

3 minute read
The leadership industry is an ever-growing, multi-billion dollar industry – there is no shortage of books, podcasts, workshops/programs or conferences dedicated to training and improving leadership skills and abilities. And, it doesn't appear to be slowing down anytime soon either, as according to a recent survey of 300 HR leaders conducted by the Centre for Creative Leadership (CCL), 57 percent of companies are planning on maintaining their budgets for leadership development in 2020, and 40 percent actually expect to spend more this year (we know, hard to believe given the pandemic)!
 
For many organizations, investing in leadership development isn’t just a “nice-to-have,” it is critical to gaining a competitive advantage. For instance, in a 2015 survey of 300 global leaders, the CCL discovered that organizations investing heavily in leadership development initiatives actually experience 20x higher employee retention than their counterparts. Furthermore, in 2012, Deloitte surveyed and interviewed market analysts across the globe and found that 80 percent deemed companies with effective leadership teams as preferable, and indicated that they would give them a premium valuation. On average, results showed a premium of 15.7 percent for particularly effective leadership (and a discount of 19.8 percent for ineffective leadership) across companies. Finally, the survey found that senior leadership effectiveness was ranked as the second most-used criteria by analysts to judge company success. 
 
While it seems as though everyone can agree on both the importance of effective leadership and the need for organizations to invest in developmental initiatives to stay competitive, there appears to be mounting evidence that leadership development initiatives are failing. Despite the billions of dollars being poured into these efforts, we are still seeing gross ethical misconduct, high CEO turnover, and prevalent workplace bullying (most notably, an example from Canada). Additionally, according to a 2017 survey by McKinsey & Company, only 11 percent of the 500 global executives surveyed agreed with the statement that “their leadership-development interventions achieve and sustain the desired results.” 
 
So, why is it that so many leadership development efforts appear to be failing? Some argue that it is due to the structure of training initiatives. For instance, typical leadership training initiatives in organizations often involve workshops spanning one or two days, and include highlighting some key learnings and take-aways for leaders to incorporate into their leadership “toolkits.” However, the transfer of this learning into practice is often where things begin to unravel. For instance, according to research from McKinsey & Company, adults often retain only 10 percent of what they learn in a classroom context, suggesting that much of what is learned in these short training opportunities is lost quickly after. Furthermore, from what we know about habit formation, adopting a new habit requires not only learning about the importance of a behaviour or skill and how to perform it, but also practicing applying it in the real world, and taking the time to reflect on what was done well, and what could be improved.

It appears that an over-reliance on workshops, motivational speakers, or other traditional learning formats, combined with a lack of accountability mechanisms in place for leaders to track and report their progress, ultimately sets leadership development efforts up to fail. While structure alone is not responsible for all shortcomings of leadership development efforts (we also address the importance of incorporating context and empowering leaders with strategic self awareness here), it seems to be an important one. 
 
In any case, the industry isn’t changing tomorrow, but some are slowly awakening to the disillusionment. Our best advice before selecting consultants, coaches, or programs is to ensure efforts are grounded in three key criteria:
  1. valid and scientific assessment
  2. Behavioural development (preferably with ongoing experiential learning)
  3. Some sort of accountability mechanism
All, or any of the listed, will enhance the probability of a stronger engagement with lasting results.


This work has been funded by Viewpoint Foundation.

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