Ignite! Newsletter—June 2012 Article
Making the Business Case for Developing Your People
Leadership development training is a smart, prudent investment that drives economic value and bottom line results. But if people perceive that senior executives don't care about development then—guess what—development will not be a priority in the company.
Scott Blanchard, principal and EVP with The Ken Blanchard Companies®, found this out the hard way when his company lost a critical long-term account. An ongoing contract was terminated overnight when a new senior leader removed the entire learning and development department. As Blanchard tells it, “I was shocked and couldn't understand why such a decent company could behave so stupidly. It caused me to do a lot of soul-searching to make sense of what happened.
“I began to explore what caused some organizations to see and believe the tangible value of investments in training while others didn’t. I soon found out that the attitude of senior leaders was a determining factor. When we had top management support, the relationship was strong; and when we didn't, we were on shaky ground.”
With that in mind, Blanchard set out to build a business case that would satisfy even the most hard-nosed executives. Working together with Dr. Drea Zigarmi, Blanchard poured over years of studies looking for the connections between leadership and organizational performance. The result was the publication of The Leadership-Profit Chain in 2005, which clearly established the link between the quality of an organization's strategic and operational leadership and the organization’s overall financial vitality.
The research found that strong strategic leadership coupled with exceptional day-to-day operational leadership skills best correlated to strong financial performance. This was corroborated in a subsequent study the company conducted into Employee Work Passion. That research found that when employees perceived opportunities for meaningful work, growth, autonomy, and collaboration combined with fair working conditions, connectedness, task variety, clear performance expectations, and feedback, they had subsequent intentions to stay with a company and perform at high levels.
As Blanchard explains, “When leaders take the time to invest in a person it sends a signal to the employee that this is a place where the employee can build a long-term career. In addition to making a good living, they think, ‘Working here is going to help me improve my skills, improve my marketability, and improve my life over time.’”
Taking a situational approach
For Blanchard, diagnosing where an individual employee is at with their career, task, job, or project is a key factor in creating the competence and commitment that people are looking for. For more than 30 years his company’s Situational Leadership® II curriculum has looked at the different leadership styles people need at different stages in their development. It is a partnership model that helps a leader create greater clarity on goals along with a framework for the day-to-day coaching that leads to high levels of performance.
To help senior executives better understand the stages of development, Blanchard uses several graphics when he makes presentations.
As he explains, “An employee’s level of competence and commitment develops over time any time they start a new role or a new task. The first graphic I use shows how Competence for a new task starts out low, while Commitment or enthusiasm for a new task is high. This characterizes Development Level One (D1), which we call the Enthusiastic Beginner. (See Figure 1.)
Figure 1: Commitment and Competence Development
“This honeymoon period is followed by Development Level Two (D2), which we call the Disillusioned Learner stage. At this stage, Commitment drops dramatically as the new learner quickly realizes that the job or task is more difficult than they first anticipated.
“With proper amounts of direction and support, employees will move into Development Level Three (D3), which we call a Capable, but Cautious, Performer; and then finally they will reach Development Level Four (D4), Self-Reliant Achiever. This stage features high levels of Competence and Commitment and it is the place where an employee really impacts the bottom line.”
Understanding financial impact
To help senior leaders understand the financial impact of moving people efficiently through the different development levels, Blanchard leads an exercise to create a graphic representation of the net economic contribution of a person at each stage. (See Figure 2.)
Figure 2: Net Economic Contribution at Development Levels
“The group typically identifies that at the D1 Enthusiastic Beginner stage, the company is investing in the employee and not getting a lot in return except for enthusiasm,” says Blanchard. “At the D2 Disillusioned Learner stage, the group identifies that the net economic impact is still negative as the employee continues to learn their new role and at the same time battles low levels of morale.
“It's only when an employee enters into D3 that the group identifies that the company will begin to see a positive impact from the work of the employee. But the real value happens when the employee develops to D4. This is where the group anticipates an exponential increase in bottom-line impact from an employee who is highly engaged and is highly competent in their work.”
Development level distribution on critical tasks
The goal for any organization is to successfully move people from a beginner stage through the inevitable dip and finally on to the more positive D3 and D4 stages. Most of the senior leaders Blanchard works with are surprised when they assess where their own people fall into each of the different development categories.
Blanchard asks them to consider a typical employee in their organization and the key goals or critical tasks they are asked to perform as a part of their jobs. “Most people are highly accomplished at some aspects of their job, decent in others, disillusioned with a few aspects, and just getting started with the new tasks if they are in a healthy, growing organization.
“What's important to remember is that development level is task specific, and just because you're dealing with someone who is a long-time employee, that doesn't mean that they're automatically an expert on any new role they take on.
“That's a common mistake. It's very possible for a long-time employee to have a brand-new task that has been assigned to them. Now, even though they are a veteran employee, they are actually an Enthusiastic Beginner on the new task—and may quickly become a Disillusioned Learner.
“Managers and supervisors need to be constantly monitoring and evaluating the development levels of their employees on all of the different tasks they are responsible for—and then providing the right levels of direction and support to move people efficiently from the lower levels of development to the higher levels.”
Most senior leaders are surprised when Blanchard shows them the typical distribution he’s seen in the organizations he works with. In those organizations, the distribution is generally stacked up at the D2 and D3 levels. (See Figure 3.)
Figure 3: Typical Task Development Levels
“If you operate with 75% of your people at a D2 or D3 level, you are going to have very anemic financial performance and low levels of passion and engagement,” explains Blanchard. “This is exactly what we are seeing in today’s work environment. The result is an organization operating at 65 to 70% of potential. In our research into The High Cost of Doing Nothing, the impact of this untapped potential is costing the average organization over $1 million per year.”
Leverage development levels effectively
For organizations looking to manage development levels effectively in their own organization, Blanchard has some encouraging recommendations.
“Speed is your friend. It creates momentum and stability. When employees stagnate, bad things happen.
“When people start off as Enthusiastic Beginners it's important that you grab a hold of their momentum and enthusiasm and prepare them for the inevitable Disillusioned Learner stage. It will come, so it's important to acknowledge it, make it OK, and help people push through it. When you get to the Capable, but Cautious, Performer stage remember that you just don't stop there. That will only get you lackluster financial performance. Instead, push through to a place where employees become Self-Reliant Achievers.
“Whenever there is great performance in an organization, there is also great leadership. It's always the human element. The best organizations get this. When you ask them why they are number one, they will always point to the quality of their people and how they work together. When you go to less successful organizations they are always focused on something else.
“The best companies invest in their employees, supervisors, managers, and senior executives alike. They know that people are the key to bringing plans to life and creating a sustainable advantage for your organization. Take time to develop your people. It's one of the best investments you can make.”
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