RealTime Leadership

One strategy for companies continuing to invest in leadership development  during these tough times is to look for ways to reduce the cost of training. Another strategy, which I consider much smarter and more strategic, is for companies to focus on the overall effectiveness of training.  Yes, training budgets are down 11% from last year, but there is no reason why a smaller budget can’t produce more effective results.  Improving business success from training is a subject my colleague Dr. Stephen Gill has written about extensively in The Performance Improvement Blog.  

A large percentage of the time and resources invested in training is “wasted.”  That is, the learner is not able to apply what they have learned on-the-job in a way that increases the success of the business.  What is preventing the application of learning is not poorly designed learning events (although from my experience, the learning event is often blamed), rather it is what Dr. Gill calls “Organizational Factors” such as the learner’s relationship with their manager, the degree of executive support for the training program, the degree to which a company’s culture is supportive of training, and the opportunity for the learner to apply new skills upon returning to their job.

Stephen Gill has developed the 5As Framework to describe a systematic approach to improving the successful application of learning in a way that achieves business success.  Stephen and I have posted a 7 minute overview  of the 5As Framework that uses a pecha-kucha style presentation (bascially, the antithesis to “death-by-powerpoint“):

1. Alignment – helping learners understand how training, when applied, impacts business results.
2. Anticipation – preparing learners before training, so they expect success and understand the “big picture.”
3. Alliance - the critical relationship between learners and their managers – fostering a dialog and partnership for success.
4. Application - applying what was learned immediately to achieve results.
5. Accountability – measuring the business outcomes from training and communicating these outcomes within the organization.

If you are interested in learning more about The 5A’s Framework and how you can apply it at your organization to increase business success through training, you’re welcome to join us Thursday February 26th at 1:00 PM EST for a free webinar.

When the economy is shrinking and businesses are struggling, training budgets get cut back just like everything else.  However, this time companies with a long-term view on talent management are approaching things differently.  The Wall Street Journal reported this week that although training budgets at U.S. corporations are down an estimated 11%, the share of budgets allotted to leadership development is growing:

Yaarit Silverstone, global managing director for the organization effectiveness practice at consulting firm Accenture, Ltd., says the emphasis on leadership development is a departure from the past.  Ms. Silverstone says companies historically cut leadership-development programs during down-turns, but the moves backfired, prompting midlevel managers and top performers to leave when the economy recovered.  Now, she says, executives believe that without capable managers, “their ability to come through [the recession] in a healthy fashion is diminished.”

This time around, companies continue to investin leadership development programs, while looking at ways to save cost.  Estee Lauder reduced their annual high-potential training program from 120 to 60.   Philips is holding training programs near their regional campuses to reduce travel costs, and is shifting facilitation away from external consultants to internal employees. 

Another trend we’ll see more of is shifting training online, even for leadership development which has traditionally been delivered almost entirely via classroom environment.  Cannon USA is taking this approach, integrating web-tools with classroom-based instruction to deliver leadership training to new managers.

Even companies that are laying off employees are reportedly increasing investment in the leaders that remain.  Although counter-intuitive to people who look only at the cost side of investing in training, this strategy makes sense.  For a company experiencing layoffs, the leaders who remain are required to do more with less.  Now is the time to support them with training in skills and knowledge to help them lead the company successfully through a difficult time.

I was following John Byrne’s (Editor-in-Chief of Businessweek) twitter acount and he mentioned that the most popular article on Businessweek.com today is “Microsoft: Layoffs for Some, Visas for Others:”

As recently as Jan. 5, the company posted a policy proposal on President Obama’s transition Web site requesting that the government “remove caps that bar entry into the U.S. by high-skilled immigrants.” Several weeks later, on a Jan. 22 earnings conference call, the company announced plans to eliminate 5,000 jobs in research and development, information technology, marketing, sales, finance, legal, and human resources over the next 18 months, as well as thousands of contract jobs.

What we are witnessing here is yet another innovative human resource strategy for dealing with the economic downturn.  Companies like FedEx are reducing pay and benefits rather than laying off employees.  Now we see Microsoft laying off (presumably) domestic employees while lobbying hard to expand the number of visas they can hand out to foreign workers. A cynical person might conclude that Microsoft’s motivation is purely profit driven, seeking to replace highly compensated domestic employees with less expensive foreign talent.  My hunch is that the problem is much deeper and more complicated; namely that the company has a surplus of employees with certain kinds of skills (finance, HR, marketing) while at the same time it has a scarcity of employees with unique skills (probably computer programming).

Let’s face it, the market for talent is quickly becoming a global market.  The Internet is accelerating this trend, making it easier to find the best talent and engage that talent to provide value for our companies.

We can look at this trend from the perspective of the employee and the employer.  From the employee perspective, a global market for talent means that every employee must continually upgrade their skills to remain viable, and they must seek to continually add value to customers to remain relevant.  From the employer perspective, a global market for talent cuts both ways; it opens up new pools of talent in places like China and India, but it also lures away talent to companies willing to pay more or offer better opportunities.

All of these trends point to the increasing importance of employee engagement. An organizational culture that attracts and retains the best minds in its industry will become one of the key competitive advantages for businesses over the next ten years.  But that will not be sufficient for success.  The organizational culture must also engage the best and brightest to continually innovate in a way that adds increasing value to customers.

Trust in business is falling like dominoes all over the economy.  Just think back over the past year.  Last year, Bear Stearns collapsed and was purchased by JPMorgan Chase for a pittance, leaving its stockholders and creditors facing steep loses.  Dock a few points from the trust barometer.   After all, Bear Stearns wasn’t some fly-by-night operation (or was it?).  It was one of the major Wall Street investment banks.  Around this time, business leaders started asking themselves, ‘if Bear Stearns can fail, who else is vulnerable?”

As 2008 rolled along, we learned that even U.S. homeowners with good credit were falling behind on their mortgages and failing to pay their credit card bills.  Foreclosures increased rapidly.  Dock a few more points from the trust barometer.

Remember all of the Collaterlized Debt Obligations(CDOs) that securitized mortgages, sliced up the risk and were sold off to investors around the world with AAA ratings from Moody’s and Standard & Poor?  Well, the credit rating on those CDOs was really more like junk bond status then AAA.  Dock a few more points from the trust barometer.

Over the summer, in rapid succession, Fannie and Freddie Mae are taken over by the government, Lehman Brothers fails and banks charge exorbitant rates when lending to each other.  By September, even the banks didn’t trust their own kind.  Dock a few more trust points.

Most recently, in December, Bernie Madoff, a former Chairman of the NASDAQ (think about that for a moment!) reportedly admitted to regulators that his investment management firm was really a $50 billion ponzi scheme.  Now watch the trust barometer fall like a rock.

At the World Economic Forum in Davos this month, Richard Edleman unveiled his annual Trust Barometer and as you might guess, trust has hit an all-time low in the U.S.  To make matters worse, it had recently hit highs in the U.S. just last year. 

Trust is the lubrication that makes the economy work.  It is essential for business to transact.  However, trust is also important inside an organization.  In fact, it is the central ingredient for employee engagement.  The degree to which an employee has trust in senior management or their manager impacts the degree of commitment and discretionary effort that employee is willing to make to the organization. 

Even if the senior leadership at your organization isn’t behaving like Enron or Bernie Madoff, the overall low level of trust in business can drag down everyone.  If revenue and profit are slipping, that can erode trust as well.

The best way to combat low trust is to communicate.  As Richard Edleman says in this interview at Davos below, this is no time for CEOs to be withdrawing into their shells.

In a recent interview in business week, Gamal Aziz, the CEO of MGM Grand Hotel & Casino, talks about the challenge of keeping employees engaged during times of economic crisis.  Mr. Aziz’s response is almost identical to Richard Edleman; he says the key is communication.  The most important task for senior leadership at MGM, especially during difficult times, is keeping employees updated on what’s going on.  Even if it is bad news, employees want to know the reality that the hotel is facing, the strategy that is employed to confront the hotel’s challenges, and the progress the hotel is making.  When trust is low, start communicating.