According to several independent, in-depth studies that have been done by the Center for Creative Leadership (CCL), businesses perform better when they invest in the development of their leaders.
Findings from work by The Conference Board, Bersin & Associates and HR analytics expert McBassi & Company, among others, point to the fact that leadership development is one of the most pressing issues facing organisations globally today, and represents a great chance for HR to set up leadership development programs that are key to helping companies seize competitive advantage in their industries.
More precisely, investments in leadership development allow companies do four following things that drive sustained success:
1. Improve bottom-line financial performance. Companies that rate highly for their investments in human capital deliver stock market returns five times higher than those of companies with less emphasis on human capital. Leadership development builds capacity to reduce costs, drive new lines of revenue, and improve customer satisfaction.
Global pharmaceutical company, Boehringer Ingelheim, has successfully bolstered their bottom line because they have developed their leaders to come up with ways to reduce costs (nearly USD$2 million saved) and drive new lines of revenues.
2. Attract and retain talent. Leadership development boosts employee engagement, increases the organisation’s ability to deal with gaps in the talent pipeline, and reduces headaches and costs associated with turnover.
After implementing leadership development, KONE, a global leader in the elevator and escalator industry, has transformed its organisational culture into one that’s powered by strategy, collaboration and overall excellence – helping the company to retain valued employees.
3. Create organisational alignment. Effective leadership development isn’t development for its own sake. Organisations need a leadership hierarchy that closely connects with the business strategies and equip employees with the necessary leadership skills to implement these strategies. Leadership development allows organisations to shape the culture and strategy of business.
Financial services provider, Barclaycard, found itself facing regulatory changes and competitive pressures in a volatile global economy. It turned to CCL for the development of Barclaycard Academy which is a consistent leadership model for all business leaders that bolstered overall strategy and execution for Barclaycard.
4. Increase organisational agility. Leadership development increases people’s ability to respond rapidly in unpredictable business environments. When organisations look beyond developing senior executives and high potentials to unlock the full potential of their talent pools, agility is magnified.
Insurance company, Aviva, partnered with CCL to help develop leadership development programs (LDP) that will include a bigger portion of the employees. Such LDP approach allowed Aviva to widen their pool of leaders and forge a more nimble organisation. Ultimately, it helped them to weather the global recession.
The sooner organisations fully embrace these four reasons, the sooner they will reap the rewards.
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