As a result, while many areas of HR have seen budget cuts over the past years, investments in leaders and talent has actually increased. According to a recent study undertaken by the Corporate Executive Board’s Corporate Leadership Council among 291 HR departments, 70% of HR departments across Europe have increased investment in leadership and talent development.
Yet despite this increased investment, the majority of organisations are failing to create leaders with the skills required today, and the ready pipeline of successors needed tomorrow. Our research found that just 19% of heads of HR reported that their leadership programmes are delivering the leadership capabilities that their organisation needs to execute on their strategy. Even fewer, 15%, believe that their programmes are creating a robust pipeline of future leaders, with just 13% of identified successors thought to be ready for their next role.
Hence the real problem for many HR organisations today is not whether adequate investment is being made in talent and leadership development, but how to achieve better returns on investments already made. In fact, our study shows that many HR organisations struggle with an overly complex set of talent and leadership programmes that have competing priorities with their business units and functions.
Our analysis found that when organisations are able to increase the effectiveness of their talent management programmes they can increase the number of their future business leaders able to achieve future revenue, profit and service delivery goals by up to 22% in comparison to those organisations with ineffective programmes.
So what characterises these organisations’ talent management programmes in helping them to create capable leaders? According to our study, this comes down to three key elements:
Firstly, greater integration of leadership and talent management programmes against the business strategy. Over half of organisations believe that their leadership and talent management activities are poorly integrated with their business priorities. In contrast, best practice organisations are building talent management programmes based on a focused assessment of leadership risks and priorities as part of the firm’s business strategy planning. Our study found that improved alignment between leadership capabilities and business challenges can improve leadership effectiveness by 34%.
Secondly, measure and track real, business-relevant changes in leaders’ activities and behaviour. Today, organisations predominantly assess the success of their leadership development programmes based on programmatic measures, for example, how many leaders have been through the development programme. Such metrics seldom relate to business outcomes, hence best practice organisations focus on measuring real change in leaders’ behaviour and how it impacts the success of the business (for example leaders’ risk taking behaviours or their customer orientation).
Finally, achieving greater integration across talent management programmes and with other HR activities can have a positive impact on the effectiveness of leaders. More than 55% of organisations today suffer from poor coordination and integration across existing talent management programmes and activities. Organisations which successfully integrate their leadership and talent management initiatives can improve the future performance of their leaders by up to 35% compared to those organisations with ineffective integration.
These three elements that characterise the most effective talent management programmes with the greatest impact on future leader outcomes point above all to the importance of having one integrated leadership strategy that can guide, focus and prioritise the often many uncoordinated and competing programmes and activities that exist across many organisations today.
Christoffer Ellehuus (pictured) is managing director of Corporate Executive Board’s Corporate Leadership Council
