1/3 of your training budget should be spent on developing leaders for boosting corporate performance

“Great companies spend an average of 32% of their training budget on leadership development.”

 – Brandon Hall’s leadership survey

The highest Return On Training Investment (ROTI) comes from helping your managers sharpen the leadership skills they need to boost your corporate performance. That’s because effective leaders inspire others to respond innovatively to the opportunities and threats posed by volatile operating conditions. They are able to retain staff and motivate them to serve fast-changing market needs better than your competitors. They guide the hundreds of decisions made every day in every department at every level. Effective leaders are thus at the heart of your organisational success. Theymake a huge impact on your bottom line. And they sharpen your competitive edge in today’s fiercely competitive commercial world.

However, leadership has also been described as one of the least understood concepts from a practical perspective. Many researchers have stressed that the existence of several flawed assumptions concerning leadership often interfered with the attempt to understand what leadership was all about. Research suggests that leaders cannot achieve superior and lasting business performance by using a specific leadership model or following a predetermined set of steps.The purpose of this article is to help you maximise ROTI through leadership training geared to boostingcorporate performance intoday’s turbulentworld.

Relevance of leadership

Leaders govern the performance of their followers. 60% of employees in a survey said the way their supervisors treated them influenced their level of motivation and how well they did their jobs. And 75% of workers who voluntarily left their jobs did so because of their bosses – not their position or the company. Demographic shifts also require leaders to inspire and manage an increasingly diverse workforce in terms of gender, nationality, ethnicity, religion and age.

The flattening of organisational structures in response to fast-changing conditions has created the demand for leadership skills at every level. Leaders must help their followers become co-leaders by empowering them to make operating decisions within agreed guidelines, without waiting for approval from higher levels of management. The main obstacle to leadership development is the absence of a simple model that is easy to understand and apply in daily work situations.

Position- vs. character-based leaders

Not having a clear leadership model led to the proliferation of position-based leaders where people at higher levelsof management were positioned as leaders, without considering their ability to inspire and lead others. This has been one of the biggest obstacles to corporate success. Today’s volatile markets and turbulent operating conditions have created the demand for leadership skills at every level. 

Corporate top and bottom lines are increasingly made at the front lines. That’s because front liners are in close touch with changing market conditions and competitor activities. This requires character-based leaders who adopt a leader’s attitudes and behaviours, regardless of their hierarchical position in the organisation. That’s why great companies spend about 32% of their training budget on leadership development with the aim of becoming learning organisations.

Scarcity of leaders

Developing new leaders is the No. 1 talent challenge facing organisations everywhere. 86% of companies rate it as urgent or important. A shortage of leaders is one of the biggest barriers to organisational growth around the world. The main underlying reasons are a lack of leader behaviour measures and inadequate content in leadership development programs. A key obstacle is the absence of a practical model for understanding and developing the leadership skills needed in today’s VUCA world.

VUCA is an acronym (Volatile, Uncertain, Complex and Ambiguous) coined by the American Military to describe extreme conditions in Afghanistan and Iraq. In today’s comparable business world, leaders can no longer ensure organisational success by following any predetermined model or set of steps. What is missing is a simple conceptual framework that leaders can use in their daily work to guide and inspire their followers to higher levels of performance in an unpredictable business world.

Leadership skills for a VUCA world

Instead of trying to reduce uncertainty, leaders now need to proactively engage with uncertainty. This requires higher levels of leadership agility. We have to leave the old way of thinking with its over-dependence on the logical mind. We now need to balance logical thinking with intuition for making bold decisions under VUCA conditions. This requires leaders who have the agility, dynamism and responsiveness to understand the broader issues and make decisions whose outcomes cannot be guaranteed. 

Leaders in today’s business world have to respond quickly to unpredictable changes caused by markets, consumers, competitors, technology, politics, economics, society and the environment. They need to shift focus from reactive problem solving and planning aimed at reducing uncertainty, to engaging with uncertainty through proactive decisions based on intuition and analysis. They can’t automatically rely on past solutions. Instead, they must place increased value on new concepts and solutions that have only a high probability of success.

Managing vs. Leading

Being a leader is very different to leading a team or activity. Managers lead from the front. Managing means to being in charge and taking direct responsibility. In sharp contrast, leaders lead from the back. They guide and inspire others to reach higher levels of success through strategic responses to unexpected changes. They nurture new concepts that pave the way for future success, while recognising the underlying nature of business uncertainty. 

Leaders and their teams must work closely together to consolidate the present successes of their organisation while creating its future. Leadership is not about motivating and cheering others on. It’s all about pointing others inward so they recognise and develop their vast inborn leadership potential by recognising and eliminating their self-imposed limitations arising from demoralising past experiences and disappointments. 

Misconceptions about leadership

We assume that good leaders can guide their teams to higher levels of success under all conditions. And that successful leadership is just a matter of adopting a specific archetype of leader and acquiring the associated attitudes and behaviours. Books and articles that promise a reliable path to good leadership assume that the specific set of skills they recommend can sustain the success of teams and organisations under most conditions. 

These assumptions may have been true under stable conditions in the past. But, in today’s VUCA world, successful leadership requires complex decisions made under fast-changing conditions, whose results are influenced by unpredictable external factors. This requires the deployment of our full range of analytical, creative, and intuitive skills, instead of the rational skills that may have been sufficient under predictable operating and market conditions.

Ineffective leadership development 

Despite their good intentions, many companies look in the wrong places for insights into developing leaders.Too often they are guided by books and articles that promise a consistent path to leadership development. Numerous business books and articles have proposed different blueprints for leadership. These include popular models such as servant leadership, transactional leadership, and transformational leadership. At first glance, many of these concepts and models look entirely credible. 

However, leadership development based on such conventional concepts assumes that business success follows predictably from implementing a few key steps. In promoting their behavioural models of leadership, their authors ignore that in today’s business world, success is the result of decisions made under conditions of uncertainty and shaped in part by factors totally outside our control. Research suggests that about 75% of organisations find their leadership development programs are ineffective. 

“The leadership development paradigm that many companies follow is simply not delivering what is expected and necessary.” – Global Human Capital Trends 2016.

How to develop leaders?

Conventional extrinsic leadership competency models typically cover behavioural descriptions under 6 to 16 or more headings. A recent literature review identified as much as 69 leadership traits. This traditional path to leadership is overwhelmingly complex and mostlyimpractical. Moreover, it is based on the wrong assumption that developing a predefined set of competencies can produce leaders who are effective under all conditions. 

Any given set of actions by leaders will not lead to predictable results due to the fundamental nature of business uncertainty. Leaders need the competency and communication skills to constantly guide their followers in new strategic directions. They have to exercise managerial control while encouraging innovation. They have to be assertive and forceful at times, and supportive and enabling at other times. They need foresight and flexibility to lead their teams through unchartered territory.

“Most leadership development programs focus narrowly on day-to-day operational issues” – Pamela Babcock

A holistic approach to leadership

We assume that a group must have a leader to help followers accomplish objectives effectively. However, in advanced ancient civilisations (such as 8,000-year old Mohenjodaro and Harappa in the Indus valley), no governing bodyseemed to have supervised others in some hierarchically organised structure. Everyone was commitment to safeguarding the wellbeing of the tribe. Intrinsic leadership development is founded on this holistic principle. It sharpens our vast inborn creative, intuitive and analytical skills that can cope with very complex situations. 

In tribal cultures, everyone was intrinsically self-motivated. They developed their inborn qualities in their areas of work to overcome obstacles and sustain tribal growth. This concept of organisation-wide intrinsic leadership is increasingly relevant in today’s VUCA world. Leaders must guide and inspire themselves and others to reach higher levels of successby unleashing their intrinsic motivation that comes from within them.

Identifying leadership competencies

Only about a third of respondents in a survey thought their companies effectively identified future leaders. 82% of the time, the candidate with the right talent for a job was not chosen. As hierarchical command-and-control gets replaced by flatter structures that enable organisations to succeed in a VUCA world, leadership skills have to be described in unconventional terms such as passion, energy, creativity, empathy and mindfulness. 

While analytical left-brain skills are essential, the less tangible right-brain competencies such as creativity and intuition enable leaders to help their followers manage unpredictable change. Leaders who have acquired such wide-ranging qualities possess the wisdom for driving organisational success. 

Context is another critical component of successful leadership. A brilliant leader in one situation does not necessarily perform well in another. Focusing on context means equipping leaders with a smaller number of skills that will make a significant improvement to their organisational performance.

A new model for leadership training

This article introduces an intrinsic leadership development model that maximises your ROTI. It sharpens the two essential skills needed for managing change: Wisdom (knowing what to do next under VUCA conditions) and Skills (being able to do it or get it done by others). These two essential leadership skills are developed using a holistic six-dimensional foundation of leadership and a five-step framework for leadership skill development. This new approach helps people at all levels sharpen the inborn leadership skills they instinctively use to guide their families to success.

This model blends modern management science with ancient wisdom. It nurtures leaders with high emotional intelligence and high mental, emotional and physical energy. It develops their analytical, creative and intuitive skills for making complex decisions in an uncertain business environment. It empowers them to make judgements based on their knowledge, experience, insights and intuition.

“Sufficient management talent exists in every company” – Randall Beck and James Harter.

A six-dimensional leadership foundation

Leadership training conducted by the Intrinsic Leadership Academy is based ona six-dimensional holistic foundation for leadership skill developmentsymbolised by:Heart (intuition, empathy and caring for all living beings and the environment); Mind (concrete, abstract, emotional and spiritual intelligence); Body (physical, mental and emotional energy); Passion (emotional fuel to achieve outstanding results); Focus (resilience to reach difficult goals despite setbacks) and Health (natural health under stressful working conditions).

By developing the skills symbolised by these six holistic dimensions,anyone can become a leader by improving their inner soft skills (physical, mental and emotional energy for greater self-confidence) and outer soft skills (for empathising with and influencing others).

A five-step framework of leadership skills

Leadership training programs conducted by the Intrinsic Leadership Academy use a five-step framework for developing practical skills: Leadership Foundation (Heart, Mind, Body, Passion, Focus and Health); Emotional Intelligence (understanding and managing negative emotions); Coaching and Mentoring (unleashingvast inborn human potential), Creativity and Innovation (nurturing creativity for focused innovation); SpeakingandPresenting (speaking clearly and influencing others).

This framework covers all the practical skills leaders require to guide, inspire and help others to break through their self-imposed limitations and achieve the highest levels of success – under favourable as well as unfavourable market and operating conditions. 

A two-day workshop on leadership

The Ceylon Chamber of Commerce has recognised that,due to the lack of practical leadership training geared to improving organisational performance, the rich corporate resources including the vast human capital available in Sri Lanka are not being fully exploited. This has a negative impact on both corporate health and national competitiveness in the increasingly turbulent and fiercely competitive local and global arena.

In response to this national need for practical leadership training for boosting organisational performance, the Ceylon Chamber of Commerce is organising a two-day workshop based on the above six-dimensional foundation and five-step framework. It will be held in Colombo on Wednesday 31 October and Thursday 1 November from 8:30 a.m. to 5 p.m. For registration, please call 011-558 8877/558 8880, or email [email protected] or [email protected].

Policy recommendations

Corporate polices needed to nurture a new breed of leaders who can boost organisational performance are summarised below. 

1. Use the six-dimensional foundationand the five-step framework for developing practical leadership skills.

2. Provide leadership training to a broader group of managers who influence organisational performance. 

3. Create an entrepreneurial culture to support the empowered leaders produced by leadership development.

4. Reward leadership behaviours that proactively lead to performance improvements, without condemning failed efforts.

These policies provide a blueprint for creating learning organisations that can thrive even under difficult conditions by unleashing the vast leadership potential lying mostly untapped within every manager at every level.

Conclusions

The purpose of this article was to simplify and synthesise the overwhelmingly complex aspects of leadership training into a simple and holistic six-dimensional foundation and a five-step framework for skill development. It is based on the proven premise that everyone can sharpen the vast inborn leadership potential within them, which they instinctively use to guide themselves and their families to success – despite numerous difficulties and setbacks. 

Helping your managers sharpen the leadership skills they need to boost your corporate performance will yield the highest Return On Training Investment (ROTI). This justifies the spending of one-third of your training budget on practical leadership skill development. 

(Dr. Asoka Jinadasa is a UK Chartered Engineer with a US PhD in Business Strategy. He has won 4 global awards for leadership and human capital development, and made keynote speeches and presentations at 15 international conferences in 7 countries. He founded the Intrinsic Leadership Academy with Lean Six-Sigma expert AroshaJayasundera. Their 8,000-word website provides a wealth of insights into leadership development including the references quoted in this article: www.intrinleaders.com.)