Businesses have been heavily investing in leadership development for many years. Forbes estimates leadership training has become a $366 billion global industry. Yet, according to the same Forbes survey, only 7 percent of CEOs believe their companies are building effective global leaders, and only 10 percent believe their leadership development initiatives have a clear business impact.
Despite the universal understanding that organizations depend on effective leaders, executives are understandably pressed to justify spending critical resources — time, people, and money — on leadership development, especially in difficult economic times and amid an uncertain global economy. As a result, budgets for Learning and Development (L&D) in general, not just in leadership development, are getting dialed back if not cut altogether.
There’s a dilemma here. We know the cost of poor leadership is devastating to an organization. So how do we develop leaders in a way that doesn’t strain the L&D budget, while still having the desired positive impact on objectives that matter most to the organization?
A New Approach to Leadership DevelopmentGone are the days when organizations could afford to take leaders away from their work to attend leadership workshops or dedicate significant amounts of time to online learning programs. It is time for an integrated approach to developing leaders — an approach that’s efficient, effective, and directly impacts bottom-line business results.
That’s why progressive organizations are investing in the future of leadership development through a digital Applied Leadership approach, which builds leadership skills throughout the organization in the flow of work. This sort of integrated approach to Applied Leadership Development addresses two of the biggest shortcomings of traditional leadership development:
- Lack of access: Traditional leadership development has only been available to a select few, which has limited its impact.
- Ineffectiveness: Traditional learning fails to be put into practice.
What Is Applied Leadership Development?
Applied Leadership Development is the ongoing process of introducing leadership best practices in the flow of work. This modern approach to leadership development is powerful because it allows employees to learn new skills and immediately apply them. Additionally, their learning is continually scaffolded and expanded over time, because the approach integrates learning opportunities directly into the space where employees work every day.
5 Smart Ways to Invest in Leadership Development
Here are a few ways to develop leaders in the flow of work to meet the immediate demands of your business strategy without dramatically impacting your L&D budget:
- Invest in a Culture of Leadership
Many leadership programs fail to deliver ROI because many organizations have traditionally only invested in leadership at an executive or managerial level, rather than across the entire organization. In an effort to save costs, most organizations would focus their investment in leadership development on executive coaching or managerial leadership.
The top-down approach to leadership development is no longer effective because the need for flat, agile organizations requires leadership to be developed throughout the organization. Smart organizations don’t take a one-size-fits-all approach to developing leaders, but rather understand that leadership happens in different contexts. Those organizations are committed to developing a leadership mindset throughout the entire organization.
While not everyone is a leader in terms of their role, everyone needs to be able to speak and understand the “leadership language” of the organization. Individual Contributors (ICs) should know the basic fundamentals of self-leadership within their roles, regardless of their desire to develop their career as a team leader or executive. Leadership happens in different contexts throughout the organization. An organization therefore requires different types of leadership development initiatives, depending on the context your people are leading in — self, one-to-one managerial, team, or executive.
- Invest in a Common Leadership Language
One of the mistakes many traditional leadership development initiatives make is having a variety of leadership languages based on levels of leadership within the organization. When executives speak only in a language of strategy, and managers use a different language learned from their one-to-one leadership training, there can be major gaps in communication by the time work is being done by individual contributors. Different leadership languages in an organization creates a disconnect between employees' work and what the organization is trying to achieve strategically.
Having a common leadership language, anchored in a consistent performance process across all contexts of leadership in the organization, helps individuals, managers, team leaders, and executives readily assess and respond to common performance needs and goals. It tears down silos of work and creates better alignment toward what matters most to the organization.
- Invest in Leadership as a Subscription
Having a common language is especially important when establishing a culture that builds leadership competencies throughout the organization. It isn’t cost-efficient to buy one leadership development program at a time, whether it is a traditional face-to-face workshop or an online learning course.
Today’s L&D professionals need to justify costs now more than ever, and having one price point for your entire leadership curriculum has been a major shift in the leadership development market. Moving to a solution with one price point for all of your leadership development needs makes more sense in a Software as a Subscription (SaaS) economy — whether it is following a learning journey through an offering like LinkedIn Learning Leadership courses, or subscribing to an All Access Pass for your chosen leadership curriculum provider. Leadership as a Service (LaaS) isn’t just a flashy trend. It is a wise way for savvy L&D buyers to make a strong business case for continuing to develop leaders during tight times.
Some progressive organizations are taking it a step further. They are ensuring their leadership development curriculum is bundled with other software needs, like goal-setting, performance management, onboarding, engagement, and recognition, as well as with the larger Human Resource Information Systems (HRIS) and Learning Management System (LMS) of their organization.
- Invest in Applied Leadership Development Through Performance
One of the major flaws in many leadership development initiatives is the lack of application to real work. Traditional and even some modern approaches to leadership development take leaders out of their regular workflow to either attend a workshop or work their way through an online learning curriculum.
But leadership is a verb. It’s something that needs to be practiced. It’s not just something that can be understood conceptually from a book, workshop, or online learning course. For that reason, to retain and master new skills, learners need to practice and apply skills they are learning in real-time.
Progressive organizations are turning to Continuous Performance Management (CPM) solutions that embed leadership theory directly into the software tools they use on a regular basis. This allows leaders and individuals to have meaningful conversations about performance goals that reflect best practices in the organization’s leadership language.
Most leadership development programs emphasize helping people set goals and align them to organizational strategy. When leaders set goals with their team members, they can use those goals to regularly assess their team’s needs. They can respond through conversations that not only encourage progress on those goals but meet the psychological and developmental needs of the people pursuing them. Effective conversations, quality feedback, and timely recognition for good performance are where effective leaders can have a greater influence on work experience and business results.
- Invest in Leadership Intelligence Through Applied Leadership Analytics
Another problem with traditional approaches to leadership development is the lack of proof of how they directly impact the organization's bottom line.
Traditional leadership surveys are a good start, but they are limited to uncovering people’s perceptions about leadership rather than delivering quantitative data on how leaders are actually performing relative to the organization's leadership model.
Developing leaders through CPM, however, allows organizations to practice leadership in the flow of real work while creating real-time data on leadership behavior. Leadership performance dashboards can indicate how often leaders are having one-to-one conversations with the people they are trying to influence. Dashboards also help leaders analyze their own behavior and give coaches talking points for their next session with a leader.
Smart organizations go beyond engagement or pulse surveys, by aligning CPM data with traditional data sets. This creates a deeper level of leadership intel on how well leaders are doing at creating a culture of leadership. The organization can also use this type of mixed-method analysis and dashboards to get a clear picture of the pipeline of leaders in their organization.
Making Wise Investments in Leadership Development
A bear market offers one of the best times to invest, according to a recent Forbes Advisor article. While others pull back, the savvy investor moves forward wisely, with time-tested and proven methods that yield results no matter what the circumstances are.
Can your organization really afford to stop investing in leadership development? Not altogether. Instead, move to a 21st-century leadership development initiative that aligns to solve several business challenges through a modern Applied Leadership solution. Investing in Applied Leadership Development delivers two big benefits: It creates a culture of leadership through a performance management software solution, and through one price point, it allows L&D and executive leadership to make one investment that meets several core needs at one time — Strategic Execution, Goal Setting, Performance Management, and Leadership Development.
Want to learn more about inspiring better performance at your organization? Download our e-book, “How Continuous Performance Management Leads To Profitability.”