Ladder leading nowhere

By ASHLEY CAMPBELL

You pride yourself with being an enlightened boss, committed to helping staff climb the ladder of success while you grow your own leaders.

Key employees regularly attend courses on everything from communication skills and coaching techniques to strategy and financial analysis, and a company-wide 360-degree review programme ensures everyone's working together. You've got this leadership development thing sussed, right? Wrong.

Unless you can prove that all that effort is enhancing company performance you're probably throwing your money away and your potential leaders are climbing to nowhere in particular.

Even worse, you could be decreasing your company's value.

But don't just take my word for it, listen to people who've crunched the numbers. In their book The Human Capital Edge, Watson Wayatt directors Bruce N. Pfau and Ira T. Kay give the cold, hard facts.

"The [Watson Wyatt] Human Capital Index research showed that companies using multisource feedback [360-degree review] have lower market value. Peer review is associated with a decrease in a company's value by 4.9 per cent, and allowing employees to evaluate their managers is linked to an even more detrimental effect, lowering market value by 5.7 per cent. Taken together, these practices are linked to a very serious 10.6 per cent decrease."

Or how about this from Jack Zenger, Dave Ulrich and Norm Smallwood from the American Society for Training and Development: "Leadership development programmes have traditionally operated on the hope that if they could increase executives' competencies and knowledge, that would over time enable them to produce better results on the job," they write in their article, The Fundamentals of Leadership Development.

"But the link between what took place in most leadership-development programmes and participants' performance on the job was tenuous. The organisers of such programmes hoped that the participants would build that bridge, but the research hasn't confirmed that it ever happened."

Let's take the second one first. If you're a typical company spending 2 per cent of payroll on training and development, you want to know you're getting something back. But how can you know if you never measure the results? And how can you measure the results if you don't clarify what you expect staff to learn and how they should use that learning in the workplace?

You're not alone if you haven't taken those steps. The learning and development manager of a large New Zealand financial services provider admits that her company until now simply hasn't known how much it spends on leadership development or what return it's been getting on that spend.

The problem is twofold, she says. The company's never broken down its training spend to see how much, for example, goes on induction training and how much goes on leadership development.

And when it comes to the latter "the business units have looked after themselves and sourced their own management and leadership development".

That's all about to change. The company is getting serious about ensuring that any learning and development is applied in the workplace and produces measurable results. It's so serious that it's spent the first seven months of forming a company-wide leadership development programme on one fundamental step - which it is determined to get right.

"We are getting really clear about why we are doing learning and development. What are the principles that guide our learning-related decisions? How do we go about allocating resources and budgets?

"We are going to get rigorous around the need for learning needs analysis and evaluation."

The state sector is also getting serious about setting objectives and measuring results.

Last week it launched a new leadership development programme that will take another $9.8 million of Government money over four years to, according to the press release, build "a group of managers of the required quality and diversity to meet the future needs of the Public Service".

Added to existing money, State Services Commissioner Michael Wintringham estimates the total cost of the programme over that time will be about $16 million - and you don't spend $16 million without wanting to know if it's worked.

"The taxpayer puts money into this stuff to get results," he says.

It's no good sending people on courses to learn to be good communicators, good managers, good designers unless you have answered the question "for what?" says Wintringham.

And once you know for what, you can check that it's actually happened. For example, he says, on the macro level the programme should ensure that whenever a public service chief executive's job comes up there's a large pool of diverse, but well-qualified applicants for the State Services Commissioner to choose from. If that doesn't happen within three or four years, questions will be asked.

On the micro level, every entrant into the executive leadership programme will have an individualised development plan, detailing gaps in knowledge and experience and opportunities to fill those gaps through mentoring, training, secondments, academic programmes and courses.

The individual's chief executive will play a part in drawing up that plan and Wintringham says that after every development opportunity the chief executive will ask "Is this person any different? Has this person developed new skills, a new level of confidence and ability to act more independently?" Again, if the answer is "No", questions will be asked.

And this, says Stewart Forsyth of FX Consultants, is one of the reasons much training and development money is wasted - the company fails to demand results and follow up.

Too often, he says, a glossy brochure promising to teach all you need to know about interview techniques, disputes resolution or some other indispensable leadership skill crosses a managing director's desk and he thinks "I'll send Joe on that," makes the booking, writes the cheque and forgets about it.

"How do you know that the things they are training in are actually going to be relevant to what they do back at the office?" Forsyth asks.

And, just as importantly, "how do you get from the insights that are gathered from these courses to actually using them?"

For a start, he says, you need to coach Joe before that course, along the lines of "Let's look at two or three things that we'd really like to change as a result of this investment in you. And the reason we'd like them to change is because it would be good for you, good for your staff and good for our clients."

And if that conversation happens in the context of drawing up a development plan, it takes any perceived personal criticism out of the process.

Then you need to establish what Joe's going to do when he gets back, how you're going to measure his achievement, and how you're going to help him achieve it. Which means more than a cursory "How did the course go?" on the day he returns.

This is also where those 360-degree reviews - commonly used at managerial level and above - could be going awry. Pfau and Kay give several reasons why they can be harmful rather than helpful. These range from such obvious negative influences as staff taking the opportunity to grind an axe to failing to enforce consequences for poor performance, so no one takes them seriously.

But another reason, says Forsyth, is that they can actually be demotivating. "You spend a couple of seconds looking at the stuff that looks good and the rest of the time thinking 'how could people be so cruel?'."

The company needs to help individuals through this, he says, identifying where they are falling short, how that actually affects the company (and if it doesn't, it shouldn't be part of the review), set priorities for change, develop plans to make it happen and let people know how that change will be measured.

Suddenly, instead of being personal criticism that cuts to the core, the review becomes an opportunity to identify training needs, enhance skills and make a positive impact on the company's results.

And if the purpose of training and development isn't to have a measurable impact on the company's results, why are you spending time and money on it?

Leadership Development Centre

FX Consultants