Last year, companies spent almost $31 billion on leadership development programs according to Deloitte’s 2016 Global Human Capital Trends report. Despite so much capital being invested into leadership, programs were dominated by superficial, ineffective solutions.
Deloitte’s report, “The New Organization: Different by Design,” revealed a major finding: If leaders are instead taught how to learn instead of what to learn, they would be able to stay relevant in the current, extremely changeable business environment.
Anthony Abbatiello, global leader for Deloitte Leadership and a principal in Deloitte Consulting, said businesses need to bring back the science behind leadership or run the risk of limiting their ability to be successful. “Companies need to understand the business needs and the environment of what is required of them today and in the future.”
Although there has been a 10 percent spike in leadership investment since 2015, one in five companies still have no leadership programs at all. The number is even less for millennials; only 7 percent of companies have accelerated programs for members of the incoming workforce.
“Most organizations haven’t been able to tie the investment in leadership to a return on investment,” Abbatiello said.
He said it’s difficult for companies to steer away from a sharp focus on program ROI, but in order to be successful, they should instead look at the ROI for the business from this capital investment. Companies that do so are seeing a 15 percent equity premium on their stock. “Change is hard, but leadership can be a top resource much like channel strategy, product design or new product development.”
Statistics also showed 89 percent of executives surveyed rated the need to strengthen organizational leadership as a top priority but were still stuck in traditional corporate models. The study introduced a new organizational leadership model that examines a “network of teams,” where companies empower a group of people to work on projects; unlike the traditional model where people come together but disband once the project is complete to tackle other assignments.
The report results showed that the traditional pyramid model for development cannot keep up with business demands and change. “There has to be an idea of identifying potential — those that have the ability to develop leadership quality faster than others. It allows companies to find hidden gems in their existing organization,” Abbatiello explained.
It may take a while for businesses to rethink how they invest in leadership. For instance, many still invest heavily in executive coaching, which can be a powerful tool, but companies must find out the most effective way to use that tool once they have it. A leadership tool “is much like holding a map but navigating in the dark,” Abbatiello said. “The map is pretty much useless if you can’t see where you’re going.”