Seven Steps for Effective Leadership Development

An Oracle White Paper June 2012

Seven Steps for Effective Leadership Development

Seven Steps for Effective Leadership Development

Introduction ....................................................................................... 1 Leadership Challenges in Business ................................................... 3 Elements of Leadership Development Programs ............................... 5

1. Determine the Best Leadership Style for Your Organization ...... 7 2. Identify Current and Potential Leaders Within the Company ...... 7 3. Identify Leadership Gaps ......................................................... 11 4. Develop Succession Plans for Critical Roles ........................... 12 5. Develop Career Planning Goals for Potential Leaders ............. 14 6. Develop a Skills Roadmap for Future Leaders......................... 15 7. Develop Retention Programs for Current and Future Leaders . 18 Conclusion ...................................................................................... 19

Seven Steps for Effective Leadership Development

Introduction

The importance of business leadership is well articulated by this observation: A good leader can make a success of a weak business plan, but a poor leader can ruin even the best plan. That's why developing effective leadership by using a consistent talent management program at all levels across the organization can return significant business value. To identify, attract, fill, and retain corporate leadership talent, companies need leadership development programs focused on hiring strategies, employee development, and career and succession planning. Currently companies are not well prepared to fill vacancies in their leadership roles. A 2008 study found that only 36 percent of the surveyed companies felt prepared to immediately fill leadership positions, as shown in Figure 1.

Figure 1. Companies are not prepared to fill leadership roles.

The impending retirement of the baby boom generation and the crisis in leadership during the economic recession have further elevated the importance of leadership development in the eyes of the boardroom and shareholders.

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Seven Steps for Effective Leadership Development

Companies face two major challenges in finding and developing leaders. They need to identify qualified candidates to fill current and future leadership roles, and they need to develop a comprehensive leadership program to cultivate and develop the leaders of tomorrow. In the past, leadership development was focused on only a few individuals in the organization. First-generation systems to assist with leadership development were siloed and/or hard to use and were not widely adopted. Companies needed a system-enabled way to unify methods of assessing and selecting leaders, executing programs to develop skills, and measuring the success of these programs. Now technology can be deployed to extend these practices across the enterprise and down into all levels of the workforce. This white paper explores leadership challenges and highlights the elements of a successful leadership development program that uses technology to support processes and practices.

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Seven Steps for Effective Leadership Development

Leadership Challenges in Business

From Enron to the prime loan mortgage crisis to AIG, leadership scandals a few years ago caused an erosion of confidence and a tremendous loss of faith in leadership of companies around the globe. In a Harvard Business Review poll, 51 percent of those surveyed said they had diminished confidence in business leaders at non-U.S. companies and 76 percent had less confidence in U.S. business leaders.

Figure 2. There is a tremendous loss of faith in the leadership of companies around the world.1

In addition, building and retaining good leadership has been cited as a major area of concern. In the "2008 IBM Global Human Capital Study," more than 75 percent of the survey respondents identified building leadership talent as their current and most significant capabilities challenge.

Figure 3. This graph shows the responses to this question: "Which are the most significant capability-building challenges facing your organization today?"2

1 Harvard Business Review, June 2009

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Seven Steps for Effective Leadership Development

Even with the economic downturn, management and executive roles remained among the top five positions employers were having the most trouble filling around the globe as of 2009. This was consistent with the previous year's findings.3 The overall talent shortage has also led to challenges in leadership development, according to a global Taleo Research4 survey, which found that more than 80 percent of the 930 companies surveyed stated that talent shortages were hindering their leadership development efforts.

Figure 4. Global talent shortages hinder leadership development.

Filling the ranks of leadership positions will be an increasing challenge as the baby boomers retire. According to PricewaterhouseCoopers (PwC) Saratoga's "2008/2009 Human Capital Effectiveness Report," 19 percent of managers and 29 percent of executives are eligible for retirement by 2015. This anticipated baby boomer drain should raise a big red flag and propel succession planning to the front lines in the quest for future success.5

2 "2008 IBM Global Human Capital Study" 3 "2009 Talent Shortage Survey," Manpower. Note: This survey of nearly 39,000 employers across 33 countries and territories gauged employers' ability to find the talent they needed. 4 Taleo was acquired by Oracle in June 2012. 5 "Human Capital Effectiveness Report 2008?2009," PwC Saratoga

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Seven Steps for Effective Leadership Development

Figure 5. PwC found that 19 to 30 percent of executives and managers were eligible to retire by 2015.

The recession may have postponed retirement for many baby boomers, but this is just a temporary stopgap. Although these delays have bought companies time to create succession plans for their leaders, delivering on leadership development programs to fill these ranks will be a critical challenge in the next one to three years. So how do we recognize leadership potential and distinguish a good leader from a good manager?

Successful organizations need both leaders and managers, but there are fundamental differences between a manager and a leader. Whereas leaders influence, inspire, and drive people to a common goal, the role of a manager is to keep the day-to-day operations of an organization running smoothly. Employee development must reflect these differences and provide development of both sets of skills.

TABLE 1. FUNDAMENTAL DIFFERENCES BETWEEN THE ROLE OF A MANAGER AND A LEADER

MANAGERIAL FUNCTIONS

LEADERSHIP SKILLS

Plan and budget

Create vision and excitement

Coordinate, control, and execute activities

Set a direction and motivate and inspire people to follow

Organize and staff

Align people

Work within existing structure

Build new relationships and structures

Leadership is about influencing people so that they come to share common goals, values, and attitudes and work more effectively toward the achievement of the organization's vision.

? David Bartram, SHL, 2002

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Seven Steps for Effective Leadership Development

Elements of Leadership Development Programs

Major talent management functions all play a part in a comprehensive leadership development program and can be well supported by a unified talent management technology platform. These functions include

? Recruitment, to source leadership talent

? Assessments, to evaluate leadership capabilities both internally and externally

? Performance management, to monitor and make course corrections in developing leaders

? Succession planning, to avoid future leadership gaps

? Career planning, to enable employees to understand their leadership options and set development goals

? Development, to create a roadmap to fill skills gaps

A successful leadership development program begins with the alignment of leadership development with company strategy and an understanding of the type of leadership style(s) needed to execute that strategy. A continuum of steps positions an organization for current and future leadership needs.

TABLE 2. LEADERSHIP DEVELOPMENT CHECKLIST

STEPS

CHECKLIST FOR LEADERSHIP DEVELOPMENT

1

Determine the best leadership style for your organization

2

Identify current and potential leaders within the company

3

Identify leadership gaps

4

Develop succession plans for critical roles

5

Develop career planning goals for potential leaders

6

Develop a skills roadmap for future leaders

7

Develop retention programs for current and future leaders

6

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