Does Management & Leadership Development Generate ROI?

Research from the Chartered Management Institute (CMI) Reports that 43 per cent of Managers Consider their Line Manager to be Ineffective or Highly Ineffective.

In contrast, high performing organisations, including High Growth Companies, report higher levels of line manager effectiveness. The CMI report, The Business Benefits of Management and Leadership Development claims that eighty per cent of managers in high performing organisations report that their line manager is effective or highly effective compared with 39 per cent in low performing organisations. This means that there is considerable scope for improving the effectiveness of managers and organisational performance in most organisations.  The question is what is the best way of developing them?

CMI’s research identified 26 different types of development activities that are commonly used by organisations. Whilst on-the-job training is one of the most commonly used methods, managers rated accredited learning and qualifications as having the most impact on their management abilities. Professional bodies’ qualifications were viewed as particularly important at the early stages of a management career with MBAs being more significant later in a manager’s career.

The research also showed that the types of development that are seen as most effective depend on management level, age and gender. On-the-job experience is seen as effective by managers at all levels, but more senior managers are more likely to see external conferences, networks, workshops and short courses as more effective. Professional bodies’ qualifications and management and leadership programmes delivered by external providers are seen as particularly effective for those at more junior levels.

One surprising finding is that coaching, either by line managers or external practitioners, appears in the top five most effective types of management and leadership development for women but not for men. Coaching by external practitioners is identified by over half of CEOs and senior managers as something they wish they had received earlier in their careers.

Unsurprisingly, different management and leadership development activities develop different competencies: for example management and leadership programmes delivered by external providers are strongest for developing teams, whilst a business school qualification such as the MBA is particularly strong for developing strategic awareness.

The top five motivations for investing in management and leadership development all reflect a business-outcome focused approach to management and leadership development. They included:

  • To achieve organisational objectives (62 per cent)
  • To manage change more effectively (49 per cent)
  • To improve managers’ performance (47 per cent)
  • To increase competitive advantage (46 per cent)
  • To support business growth (41 per cent)

The research also highlighted the need for CEOs and Board Directors to take responsibility for ensuring that leaders and managers’ skills and capabilities, at all levels, are effective and that their skills are aligned to the organisation’s strategy. The high performing organisations in the study had a clearly differentiated and strategic approach to management and leadership development.

Commenting on the research, Exponential Managing Director, John Moore said, “To gain a return on any investment (ROI), especially leadership and management development, it is essential to understand what you are trying to achieve. In the past, too many organisations and too many Government funded schemes have focused on activity or inputs rather than outcomes and the ROI. In the UK and many parts of Europe, we are seeing Governments putting a greater emphasis on supporting fast or high growth companies without much attention being paid to developing the managers charged with the responsibility of delivering the growth. Now is the right time to think more strategically about the knowledge, skills and techniques managers need to implement growth plans and the best way of meeting those needs. If you think about what Einstein said we need some new thinking”.

Einstein said, “The thinking that caused today’s problems are insufficient to solve them”.

Here is a set of key pointers highlighted by the CMI research about improving individual and organisational performance through management and leadership development:

1) Senior managers in high performing organisations show commitment to management and leadership development which means:

  • Being clear about the organisation’s leadership ‘brand’ and what is expected of all managers and leaders
  • Challenging senior leaders on their commitment to developing managers at all levels of the organisation
  • Providing role models at the highest level with CEOs and senior managers  demonstrating their personal commitment to learning
  • Considering networking with other organisations to co-commission management and leadership development and share best practice.

 2) Effective managers need to be able to achieve high levels of employee engagement by:

  • Developing management capability and core competencies and knowledge of management practices through formal learning such as qualifications
  • Providing bespoke development solutions which are aligned to specific skills and competencies, learning styles and career stage
  • Using coaching provided by either line managers and/or external coaches
  • Ensuring managers are able to have effective career conversations to help align personal aspirations with the organisation’s goals and values

3) High performing organisations spend more on management and leadership development which means:

  • Providing sufficient resources and commitment to development, even during tough times because development is a long-term strategic investment that feeds the leadership pipeline for years to come
  • Aligning management and leadership development to the business plan and targeted at managers’ specific development needs rather than generic needs

4) Management and leadership development has a bigger organisational impact when aligned with organisational and HR strategy which means:

  • Ensuring management and leadership development supports the talent pipeline
  • Considering the financial benefits of growing your own leaders who understand the culture from the ground up rather than buying in new talent
  • Undertaking long-term workforce planning rather than short, ad hoc skills training
  • Developing HR and learning and development practices to support management and leadership development procurement, design, application and evaluation
  • Not offering development for its own sake, instead identifying specific needs and where organisational aims meet individual career aspirations

 5) High performing organisations evaluate management and leadership development to a greater degree which means:

  • Being very clear what success looks like and defining the critical success factors
  • Aligning management and leadership development to organisational performance measures to support the development of hard evidence of return on investment (ROI)
  • Assessing managers against success criteria before, during and after the development intervention
  • Being flexible and using evaluation data to improve management and leadership development interventions for even greater impact

“I think that for most organisations aspiring or already seeking fast growth, the key is to develop the simple, clear strategy and then to execute the strategy effectively – for many organisations, the problem is not the strategy, but its execution and that is why investment in the management team is imperative” concluded John Moore.

http://www.managers.org.uk/sites/default/files/u28/Business%20Benefits%20MLD%20Exec%20Summary.pdf