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Feed the Leadership Pipeline

In February, I heard a CNBC broadcast where Larry Bossidy, retired CEO for Honeywell, defended the anemic level of corporate investment, both physical and human capital. The Bossidy explanation was a caution for CEOs. The very next speaker was Steve Liesman, CNBC’s senior economist, who complained about GDP growth being only 2 to 2.5 percent for the foreseeable future thanks to a lack of productivity growth.

I find it nearly incomprehensible that we should expect better productivity growth when corporate leaders refuse to invest in the physical and human capital that produces that productivity. Meanwhile, the cash piles up around the world to the point where there are now negative interest rates across Europe. We are hording cash at the detriment of our future.

We are fighting the last war in our corporate board rooms. Today, money is not a scarce resource. The scarce asset today will have the biggest effect on organizational performance exactly as this mantra states: “Our people are our most important asset.” This common refrain is as true now as it ever was, and will become more so in the future. The confluence of population demographics and technology guarantee it.

This is good news for the learning community. Good leaders are becoming a scarce resource, which means there will be an increase in demand for accelerated learning as baby boomers retire at a rate of 10,000 per day.

There are significantly better ways to develop the leadership pipeline than those currently being deployed. With a few notable exceptions, senior leaders primarily use learning as a tactic, not a strategy, and it’s up to learning leaders to reverse the tactic and strategy positions in their organization’s culture.

I mentioned notable exceptions, and I’d like to share one that I’m personally involved with. The client is a Fortune 100 company that my strategic initiatives team works with to deploy an education program at the beginning of the leadership pipeline. The targeted learners are department supervisors — the first step from individual contributor to corporate leader. This focus is at the opposite end than the traditional executive C-suite succession plan. 

The initiative consists of two three-creditcourses delivered fully online and fully qualified foracademic credit. Though a critically important organizational program, it is not mandatory. Participants in the courses “opt-in.” That is, they put their hands up and volunteer to enroll in the courses. They do this by using their corporate tuition assistance benefit to pay for a portion of the enrollment cost.Because the supervisors have skin in the game, they are motivated to opt-in, too.

The courses in this initiative cover management and leadership, and are designed to produce measurableorganizational performance improvement in current supervisory roles. Essentially, this skills development positions learners for senior leadership consideration.  

Bellevue University’s Human Capital Lab is measuring the effect of this intervention on organizational performance. The analysis measures hard financial parameters using sophisticated multivariant statistical tools. The comparison is between the organizational outcomes produced by the supervisors completing the courses and compared with a randomly selected match set of peer supervisors. Your chief financial officer would love these hard numbers. But the financial analysis of the effect on organizational performance is not the only story worth telling.

The really big challenge for every organization is the middle- to upper-level leaders 10 and 20 years from now. The layoffs and high unemployment driven by the 2008 financial meltdown produced workforce reductions that stripped future leaders from the pipeline. The exit of the baby boomers will contribute to the leadership drain for many years to come.

Without a development strategy, there simply will not be enough experienced leaders left to man the guns. The leadership pipeline development strategy has to take place now, not 10 years from now when the real crisis is upon all of our organizations.

By opting-in today, high performance supervisors are taking the first steps in their development — acquiring the development and future learning they need to be the senior leaders in the next decades. That is a strategy.