Challenges and best practices
“Innovation at SAP…It’s the result of creative thinking on the part of everySAP employee…SAP continues to invest in the knowledge, skills, and expertise of employees worldwide.”
- Creating an Environment for Excellence, SAP 2003 Annual Report
“To achieve… all our ambitions we place great emphasis on making the most of and developing further the outstanding capabilities of our people. This is not just a current priority for us. It is fundamental to the way we have always done business.”
- Financial Statement, Cadbury Schweppes Annual Review 2003
“To achieve [our corporate goals], I believe there are… important things we need to do…Cultivate excellence in human resources and management.”
- Management Direction, Fujitsu 2004 Annual Report
Report contents
Executive summary . ..........................................4
Introduction .......................................................6
Section I – The global perspective .. …............8
o Global corporate challenges
o Global leadership development challenges and state of the industry
o Differences between European and US corporations that affect leadership
Section II – Research findings and participant data – overview .............13
IIA – Context and organisational requirements ……… 15
o The reality for leadership development professionals
o Human resources’ impact on corporate success
o Integration of leadership development with business development
IIB – Strategic issues around leadership development ........................19
o Required skills and competencies
o High-level commitment to leadership development
o Link between leadership practices and enhance financial returns
o Techniques to help gain management buy-in
o Delivery constraints
IIC – Services and operations in leadership development ....................24
o Corporate universities
o Coaching
o Mentoring
o Working with external suppliers
o New services
o Role of technology
IID – Budget and financial aspects in leadership development .................31
o Market size, structure and components
o Budget patterns - historical and future
o Budget control
IIE – Results and business impact of leadership development ................34
o Tracking the impact of leadership development solutions
o Impact metrics
o Best practices in measuring and maximising ROI
in leadership development solutions
IIF – Uniqueness, best practices and differences across Europe ..............39
o Unique programme elements
o Best practices
o Differences across Europe
Section III – Looking into the future ...........................................42
o Leadership development today and tomorrow
o Predicted changes
o Recommendations
Summary .......................................................................................................................45
Appendix section
A1 - Survey methodology .........................................................................................46
A2 - Survey participants ............................................................................................47
A3 - Questionnaire ....................................................................................................49
A4 - Bibliography and additional resources ..............................................................53
A5 - About the survey producers ................................................................................54
Executive summary
The role of leadership development in the modern corporation is evolving. Traditionally more subject to economic cycles or a particular organisation’s fortunes, leadership development activities, budgets, and its overall visibility are increasing. HR and Development professionals have asserted for many years that all corporate development, and especially leadership development, is a key driver for corporate success; management is not only listening but starting to take action and participate, invest, and make leadership development a corporate priority.
Leadership development in European organisations examines the practices in over 50 of Europe’s largest corporations. As the data shows, for leadership development professionals, there is no one single path to managing leadership development effectively in an organisation. In “best practice” organisations across the globe, the variety of practices is fairly wide, and certainly within Europe one notices clear differences as well. These regional differences are discussed in detail in the complete survey.
As we look specifically at the key findings of Leadership development in European organisations, a few themes do emerge from the survey:
• Importance of leadership development
The importance of the HR and Development functions, as well as the extent to which leadership development is blended in with the critical business development function (almost 30% of survey respondents stated that these two functions are “extremely” integrated), demonstrates a strong level of importance which is placed on leadership development. Additionally, the level of commitment at the CEO, Board, and Senior Management team is quite strong (54% cite the CEO’s commitment to leadership development as “extremely” strong). There is no doubt that leadership development is an executive management issue.
• Continued investment in leadership development
Even during the early 2000s, when much of Europe was still recovering economically, the investment in leadership development remained strong – 40% of companies experienced greater than 10% annual budget growth since year 2000. As we look out over the next few years, we see a continued pattern of increasing investments in this area (38% forecast steady investments; 53% expect budget increases.) Companies also plan to leverage internal resources more frequently in delivering leadership development, with many companies investing their own executive management in the process as both facilitators and participants.
• ROI measurement and use of technology
Despite the high level of importance and investment in leadership development, companies examined in this survey are not measuring the return on impact of leadership as much as one might expect, especially given the importance it plays and the size of the investments they are making. Despite utilising a variety of metrics to track the effectiveness of leadership development solutions, a full 63% reported that they “never” measure leadership development ROI. Similarly, they are not using technology to a great extent, neither on the delivery side nor for programme evaluations, while their transatlantic counterparts in the US do find such use of technology very helpful and more common.
It is critical that corporations understand their own needs for leadership development (a “moving target” as new individuals and new strategies are introduced all the time) and customise in a proactive fashion a solution based on these needs. Gone are the days of having a fixed competency wheel for an organisation’s leaders and simply trying, reactively, to build skills to match against its talent model over a several year period. Top performing organisations take this proactive approach to building leadership talent, as it is now recognized that leadership development is not just a tool to help the organisation achieve its strategy, but rather a process by which it can develop a strategy in the first place.
It is equally important that leadership development professionals understand the global business drivers in their organisation, as these drivers are the basis from which all solutions are ideally designed. Development professionals no longer train leaders to have a well rounded set of skills; they develop leaders to achieve business results. The global aspects are highly relevant as leaders need to know how to manage across boundaries, penetrate foreign markets, and do so with a diverse employee base.
Finally, leadership development professionals similarly are investing in their own capabilities and knowledge of their own organisation to understand the business and not simply the training and developmental challenges to maximise their impact. There is a network of internal and external resources that leadership development professionals can tap into as they develop solutions, and although there are challenges of managing such a large and dispersed network, the resources are extremely powerful when used appropriately. Most importantly, organisations are committing their senior management time and financial capital to ensure that leadership development delivers on its promise to move the corporation forward.
Introduction
The field of leadership development is dynamic in that both the demands on corporate leaders are shifting, as are the providers of leadership development services (both internal to the organisation and external) changing their tools and techniques. Companies all over the globe are looking for an edge. As the economy proves its volatile nature, organisations need to think constantly about cost cutting, productivity enhancements, as well as top line revenue growth.
Businesses have done a good job of eliminating the excess costs of their supply chain, leveraging technology to find more efficient ways of coordinating both with suppliers and customers, as well as improving internal communication. The investments in systems that optimise hard assets over the past several decades have been staggering (inventory management systems, asset management systems, etc.), yet they are just realising the potential to manage their own workforce in systematic fashion, and the impact that proper management can have.
1
Increasingly organisations do see the strong link between leadership and management practices and corporate performance, and they are investing in a strategic fashion to improve their own management. And while many studies examine the importance of leadership development, in Leadership development in European organisations we examine the overall leadership development field, as well as look into specific findings at a select group of European based multi-national organisations. Our desire is to uncover the current activities, challenges, best practices, and trends that leadership development professionals face, by combining actual first hand responses from both practitioners and industry experts, along with leading research.
The focus of this survey is on leadership development, as opposed to exclusively examining executive and management development solutions. Although the terms “manager”, “leader”, and “executive” are sometimes used interchangeably, for purposes of this report we focus on leaders (which includes both mid-level managers as well as high-level executives) and all forms of development (open enrolment educational programmes as well as highly customized in-house activities).
In the spring and summer of 2004, DIEU, The Danish Leadership Institute and The ExecSight Institute of Executive Development conducted in-person and telephone interviews with 51 corporations (referred to as the “survey participants” in this research). A variety of quantitative and qualitative questions were asked to leadership development professionals at large European based companies.
The survey participants include individuals with professional titles such as: Head of Management Training, Chief Learning Officer, and Vice President, Executive Development. (The questionnaire is located in Appendix A3). Along with the 51 organisations in the survey, we interviewed several thought leaders and researchers on the topic of leadership development. (The complete list of survey participants 1
Source: Casserley, Dominic “Helping Britons Work Smarter,” The McKinsey Quarterly, 2004 Number 3 ” is listed in Appendix A2). In addition to the primary research, a vast collection of books, articles, and industry presentations on the topic were included in the overall research process.
Businesses often treat innovation and IT as the answers to low productivity, without changing their management practices.”
Leadership development in European organisations is divided into three parts.
Section I –The global perspective is a discussion of Europe as a whole and how it differs from its trans- Atlantic neighbour, the US, and notes similarities and differences in regional leadership development.
Section II - Research findings and participant data provides a detailed look into
the survey participant responses, both in aggregate and by specific country groupings.
Section III - Looking into the future examines the future of leadership development, and provides a sense of what services we can expect to see more of in the years to come.
Summary
As the modern organisation is more and more dependent on people assets to perform, the stakes of the corporate training and development function are higher than ever before. At the same time the leadership of people as an increasingly important resource is becoming evident across regions, industries, and individual organisations, and leadership development’s strategic role is increasing beyond where it is today.
Section I demonstrated that although the global corporate challenges are similar on both sides of the Atlantic, Europe and the US have unique approaches to leadership development, which have at its roots cultural, political, and social factors. In section II we examined in great detail the specific activities, perspectives, and regional differences of leadership development in Europe.
The common thread, globally, is that the ”stakes” are higher than ever before. Leadership development, if done properly and effectively, can serve as a driver to move an organization forward. Leaders who do not have sufficient leadership development activities in their organisation risk falling behind on both a personal and organisational level relative to their peers, as there are now many well funded and managed solutions. Leadership development professionals need to lead by example and seek out new learning within their field, try new techniques, and relentlessly monitor the impact their activities are having. The process of developing people who lead the people is one of the most important corporate activities that exists.
Appendix section
A1 - Survey methodology
Leadership development in European organisations was designed by DIEU · The Danish Leadership Institute and ExecSight in the spring of 2004. A list of potential organisations to be included in the survey was compiled, and interviews were scheduled subsequently. The interviews were conducted in person and over telephone conference calls covering questions in five basic categories: Background, Strategy, Operations and Services, Budget, and Impact and ROI. In most cases, the individual interviewed was the top manager responsible for the
design and delivery of executive education solutions, such as the Head of Management Development or the Director of Management Training.
Supporting the findings from the primary research are research articles and management journals, from specialists in the leadership development field and business press.
In total 51 organisations across 9 different countries were included:
• Belgium 2
• Denmark 7
• France 7
• Germany 9
• Luxemburg 1
• Norway 1
• Sweden 1
• Switzerland 5
• United Kingdom 18
The quantitative data from the interviews was analysed, including averaging the scores, grouping the respondents into country-specific bundles, and performing correlation assessments. It is noted that the sample size for the survey of 51 organisations does not represent a statistically significant group of the Global 1000 corporations for whom the data in this report is intended to benefit most. Averages, regional groupings, and correlations are conducted within this limited sample size as a basis for discussion rather than to state definitive patterns.
A2 - Survey participants
AGA A/S Region North Europe Manager – Competence Management
Alcatel Senior Advisor, Alcatel University
Allianz Head of Leadership Development
AstraZeneca AS VP Learning and Development
Aviva plc Management Development Director
Belgacom E-HR Senior Project Manager
Boots Talent Manager, development and design of leadership development
British American Tobacco Head of Leadership and Culture
BMW Management Development
BP VP Executive Development
Cadbury Schweppes plc Group Organisation Effectiveness and Development Director
Carlsberg Breweries International Development Manager
Coca Cola Enterprises Ltd. Head of Leadership Development
Credit Agricole HR Development – Institut de Formation du Credit Agricole
Credit Suisse Manager International Leadership Programmes
CSC Consulting Group A/S Development Manager EMEA
DaimlerChrysler Services AG Chief Learning Officer
Danisco A/S Head of Executive Education
Danfoss A/S Head of Danfoss Management Institute
Danske Bank Vice President, Head of HR Development; Head of Training
Dell Computers AG HR Director for Consumer Division
Deutsche Bahn AG Managing Director, DB Akademie
Deutsche Bank AG Head of Customised Leadership Development Solutions
Dixons Stores Group Director Management Development
EIB – The European Investment Bank Senior Advisor, Head of HR Training Unit
Egmont Corporate Vice President, Human Resources; HR Consultant
Ergo Programme Manager, Ergo Management Akademie
Fujitsu Services Head of Organisation and People Development
HBOS Head of Leadership Development, Retail
Honeywell Vice President Human Resources EMEA
Hewlett-Packard Human Resources Director UK/Ireland; Learning and Development Director; EMEA Workforce Development Team
IBM Europe HR Director Learning
Lafarge Head of Management Programmes Lafarge University
Nordea Head of Executive Development
Novartis Pharmaceuticals Head Corporate Learning; Programme Director
Pearson plc Management Development Director
Rhodia Human Resources Development Director
SAP Global Head of SAP University
Siemens AG Head of Management Learning
Steria Group HR Director; Head of Training and Development
Suez Suez University
Swiss Re Senior Advisor Leadership Development; Head of Leadership Academy
Tetra Pak Director Tetra Pak Academy and Global Training and Development
The BOC Group Organisation Development Director
UBM Interim HR Director
UBS Managing Director UBS Leadership Institute
Veolia Environnement International Training Development Director
Visa Europe Head of Organisational Development
Vodafone Director of Global People and Management Development
Volkswagen AG Executive Director of Volkswagen Coaching
Zürich Financial Services Executive Development Manager
Industry Expert Interviews
Yury Boshyk Co-Founder and Director Global Executive Learning
Della Bradshaw Journalist – Business Education Financial Times
Roland Deiser Founder Corporate University Learning Network
Udo Dierk President ConEdu
Barry Leskin President TMC
Peter Lorange President IMD
Mark Nevins President Nevins Consulting
Blair Sheppard President Duke Corporate Education
A5 - About the survey producers
DIEU · The Danish Leadership Institute
DIEU ·The Danish Leadership Institute is one of Europe’s largest leadership development organisations and was founded more than 30 years ago. DIEU provides customized leadership and management development solutions from its offices in Copenhagen, Brussels and London.
DIEU has an excellent reputation for tailored, leading edge executive development solutions in both the private and the public sectors, making a beneficial impact on individuals and the organisation, all the way down to the business bottom line. Client collaboration, flexibility and choice with a consistently high standard of delivery are DIEU’s key differentiators. DIEU
operates a well-tested, unique business model, which works through long-term partnerships with its clients and suppliers.
DIEU has a permanent staff of 110 people including in-house consultants, client directors, project coordinators and administrative staff. We work with a worldwide network of more than 350 business psychologists, leadership consultants and business school professors.
In addition to collaborating with experts with a proven track record worldwide, DIEU has its own competency centres within its main business areas including business psychology, strategy, project management and surveys.
As an organisation, DIEU practises what it preaches, and won the European Quality Award in 1999 and was named the Best Place to Work in Denmark in 2001. Recently DIEU has been recognised as Business to Business Superbrand in 2005.
For more information, please contact Jørgen Thorsell, Senior General Manager on +45 45176000 or by email at jt@dieu.com or visit our website on www.dieu.com.
ExecSight and The Institute of Executive Development
The ExecSight Institute of Executive Development is an association of individuals from global companies who manage their organisation's executive development programmes, as well as recognised experts who advise, publish, and speak on industry topics. The Institute currently has over 600 members from 42 countries throughout the world and provides a common communication and collaboration platform for practitioners, service providers, and academics in executive development. Institute members share a common goal of furthering the collective knowledge of executive development best practices to help improve this highly strategic area of business activity.
There are four key components to the Institute’s services. The Directory is a master listing of all members, and provides the ability to find other members by name, organization, or geographic area. Second, there are informal Networks which are special interest groups of executive development topics or geographic focus. Next, the Resources section contains online archives of key articles, books, and research in the field of executive development, some of which is available for instant download. Finally, the Events section contains a robust collection of Internet-based seminars or “webcasts” which feature an industry luminary and are free of charge. Collectively, these services enable the members to design, deliver and evaluate highly effective executive development programmes rapidly for their organisations.
The Institute is led by Executive Director Scott Saslow, who is a researcher, publisher, speaker, and consultant in the executive development field. Saslow has authored dozens of articles on executive development, which appear in publications such as Chief Learning Officer Magazine, The Centre for Creative Learning’s Leadership in Action, ASTD’s Leadership Newsletter, Strategic HR Review, is on the Editorial Board of the Academy of Management’s Learning & Education Journal and is the author of two extensive research reports on the executive development field. For more information, please contact Scott Saslow, Executive Director or visit www.execsight.org.
© 2004, DIEU · The Danish Leadership Institute and Institute of Executive Development
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