Providing Practical Business Value in Your Leadership Development Programs
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First, let us define what is meant by practical business value. It is achieved primarily when a learning and development program is directly-related to the achievement of one or more of the company's specific fiscal year business objectives regarding financial, operating, or strategic matters. Typically, such business objectives have a direct effect on increasing sales, improving market share, improving cash flow, reducing costs, improving productivity, enhancing customer care, fostering new product development and market introduction, improving product quality, and so on. In other words, the business.
Typically, L&D programs for lower and middle management cover only soft skills development. When L&D programs are intended for senior and upper management, they should cover the development of hard and soft skills that are directly-related and relevant to the achievement of a specific business objective.
Typical Business Objectives
Here are some examples of typical business objectives that can be featured in L&D for line management.
Financial Objectives
- To improve earnings per share from $4.50 to $4.75 dollars/share
- To increase cash flow by $7.6 million dollars
- To increase sales revenue of product “X” from $250 million to $280 million/year
Operating Objectives
- To reduce development time-to-market for product “A” by 25%
- To improve customer care to exceed industry standards
- To improve on-time delivery for product “B” from 94% to 96%
Strategic Objectives
- To develop 20 general managers who can operate a $50M/year business
- To acquire a business with a specific new technology that can be used in all our products
- To increase market share of product “X” from 20% to 22%
When approaching line management executives, recognize that their initial reaction might be somewhat skeptical because they have probably never had an L&D or HR executive inquire about such a matter before. You will likely have to pursue the matter with them several times before you receive their approval to proceed.
Why Providing Practical Business Value Is Important
Here are several reasons why providing practical business value in your L&D programs intended for senior and/or upper management is so important to improving the business reputation and influence of both the L&D and HR functions.
Recent surveys from Fortune and McKinsey highlight the viewpoint held by CEOs and top line management executives for decades that such L&D programs do not help them operate the business. In the former survey, only 10% of CEOs believed their leadership development initiatives had a clear business impact. In the latter survey, only 11% of more than 500 executives agreed that their L&D programs achieved the desired business results.
Investors, the Board of Directors, and the market hold the top line management of any company accountable for achieving certain financial, operating, and strategic business objectives every fiscal year and over the long term. Therefore, meeting or exceeding these business objectives is the top priority of the CEO and line executives. It should be the HR and L&D function’s top priority, too.
Let’s face it. The ultimate and most important customer of all L&D programs is the CEO and top-line management executives. Typically, most of them consider current L&D programs as nice-to-have to teach soft skills to lower management, but not helpful in operating the business.
Line management executives have always valued hard skills much more than soft skills because, in their eyes, they are far more predictive of job success. Therefore, if the L&D function wants to get their support for all their programs, they should develop some L&D programs for senior and upper management that cover the relevant hard and soft skills needed to achieve specific business objectives in their program.
Senior and top-line management strongly believe most L&D programs, especially those intended for middle management and higher, have failed because they (a) concentrated almost exclusively on soft skills development, (b) excluded any hard skills development, which they feel are critical to job success, (c) provided little or no practical business value in return for the amount of executive time expended on them, and (d) refrained from directly helping the leader to achieve his/her real-world business objectives and plans for which they are accountable to top management and the Board of Directors.
Line management executives believe that the hard/soft skills mix for lower management is 25%/75%, for middle management it is 50%/50% and for senior and upper management it is 75%/25%. Therefore, the subject matter content for L&D programs should reflect those mixes.
Line management executives believe that the L&D function avoids developing L&D programs for senior and upper management because their realistic problems and issues are too complex, multi-functional and multi-departmental in nature, while their solutions are seldom easy to implement.
Most line management personnel feel that HR and L&D staff like to deal almost exclusively with theoretical and administrative matters, far away from the risky and hectic real-world, practical aspects of business.
Unless the L&D function is willing to tackle some of line management’s business objectives with them, the business reputation and influence of the function, and their support of all L&D programs, will likely never improve. It is that important!
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Defining Hard Skills
Hard skills cover the job-related technical and business skills needed to achieve job success that typically evolve from the position’s primary function and the four or five key responsibilities listed in the job description. Here are some areas where hard skills, and the eventual business objectives will evolve from, for senior and upper management.
Functional Acumen – understanding various business functions (sales, marketing, product development, manufacturing, etc.) and sub functions (for manufacturing, they are production, quality control, manufacturing engineering, inventory control, etc.), along with planning, controlling and leading major multi-functional and/or multi-divisional team efforts to achieve critical business results.
Financial Acumen – understanding the company and division income and cash flow statements and balance sheet, sales volume and gross profit margins for major products, budget/profit planning and performance.
Fiscal Year Business Objectives - for the company, divisions, and key executives.
Business Strategy – understanding the company and divisional strategic plans and objectives, major product/market development plans, financial plans and contingency plans.
Executive Skills – Board and top management interaction on key business issues, stock market analysis, and analyst interaction, championing innovation and continuous improvement, consistently achieving a profitable financial results and strategic growth, establishing an effective work place culture, leadership, etc.
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Designing an Effective L&D Program
In such a program, you should teach the relevant soft and hard skills together within the practical context of the leader’s current business objectives, plans, strategies, challenges, and risks. By doing so, your L&D program will provide practical business value to top-line management and the HR and L&D functions will gain their respect as an equal business partner. Here are the key steps involved:
- Uncover line management’s financial, operating, and strategic business objectives for the current fiscal year. It is best to do so just before or right after the start of the fiscal year.
- With line management, determine which business objective or two that will require new or improved skills to implement.
- With line management, identify only the new or enhanced hard and soft skills that are relevant to achieving the specific business objective.
- Design and implement the training program subject content that teaches and intertwines both skills in relation to the business objective.
It is important to emphasize that these L&D programs should teach leaders how to intertwine the hard and soft skills the way they exist in the leader’s real business world. The key point here is that you cannot effectively teach soft leadership skills in a vacuum devoid of their associated hard skills. The subject matter content for such a program can be developed and presented with the assistance of inside and outside experts who would be working directly with L&D staff. These experts can be found in consulting firms, business school staff, business authors, and other industry/functional sources.
An example would seem appropriate here for a General Manager who is operating a business with sales revenue around $200 million per year. He/she has a business objective to increase sales by 15 percentage points over last year, which is primarily based on the sales of an existing product with greatly enhanced functionality that gets to market two months ahead of schedule.
The relevant hard skills for this program might be to fully understand the advantages of the new product’s functionality, to train sales personnel how best to sell those features into the existing or new customer base, to achieve the desired delivery performance through improved project management and to enhance customer service on the new product’s typical service issues. The relevant soft skills for this program might be to build trust among sales employees in the new product’s improved functionality, to achieve better teamwork and coordination between field sales and customer service, and to improve remote employee working effectiveness.
Teaching Both Hard and Soft Skills Together
Connecting the teaching of the soft skills directly with the teaching of the hard skills needed to achieve a business objective will greatly elevate line management’s appreciation for the value of both skills.
The practical business value of such L&D programs will be recognized by line management executives as a pragmatic way to help them achieve many of their other business objectives to which they are accountable to the CEO and Board of Directors.
Providing practical business value in an L&D program will clearly demonstrate the ability of the HR and L&D functions to be an equal business partner to its line management peers.
Since line managers are taught how to implement the relevant hard and soft skills together in a realistic business setting, they are far more likely to apply those skills again in the future.
With the improved reputation of some L&D programs to cover the relevant hard skills as they relate to a specific business objective, line management support for these programs, and interestingly those who deal solely with soft skills, will be greatly enhanced.
By achieving practical business value, line management leaders and their superiors will value their time spent on all such L&D programs as being much more worthwhile than previously existed.
The company and organization’s ability to achieve some of its important business objectives and strategies will be greatly enhanced.
L&D Function Implications
Being able to effectively support such L&D programs requires several strategic, staff and budgeting changes that can easily be achieved over a period of a few years. Here are some thoughts to consider:
Is developing such an L&D program easy? No.
Will developing such a program cost more? Yes, likely about 20% to 25%.
Will it take more time to develop? Yes, likely about 25% to 35% because much of the subject matter content will have to be developed from scratch. However, there are some generic programs covering these skills that can be purchased, amended, and reused as needed.
Does it require a more business-like mind set for L&D management and staff? Absolutely.
Does it require some members of L&D staff to have line experience and capabilities? Yes.
Should the L&D staff be realigned to possess a balanced skill set of both hard and soft skill development? Yes.
Final Word on L&D with Business Value
In most companies, HR and L&D are considered administrative functions, which, unlike all other functions, do not have a direct effect on achieving the company’s fiscal year business objectives or strategic plans. Because of this both functions are valued the least and have comparatively less influence than other functions. This is primarily because HR and L&D management have little or no practical business experience or knowledge in the details of how the business is operated.
Historically, the L&D function has primarily concerned itself with developing soft skill programs that are intended for lower levels of management. Unfortunately, senior and top management do not value these programs in any meaningful way that directly helps them to effectively operate the business. For the most part, they consider these programs as nice-to-have for first-level supervisors.
Meanwhile, shareholders and the market hold the Board of Directors, the CEO, and top management accountable for achieving specific financial, operating, and strategic business objectives every fiscal year and over the long term. Achieving these business objectives is always their top priority. It should be the HR and L&D functions’ top priority, too. After all, the CEO and line management executives are the ultimate customer of all L&D programs.
The clear path forward for the L&D function is to help facilitate the achievement of some of the company’s key business objectives with L&D programs that upgrade the relevant hard and soft skills needed to accomplish them. The only meaningful way to do so is by teaching both hard and soft skills together within the pragmatic context of the leader’s real-world business objectives, plans, risks, and challenges.
The L&D function should not be avoiding the development of relevant hard skills because the subject matter content is unknown, difficult to learn, complex in nature, not present within the skill set of current staff, too expensive, and so on. L&D management should face this challenge head-on, so it can greatly improve its contribution to the company’s financial and strategic success.
If L&D management wants their ultimate customers to respect the practical business value of their programs, while simultaneously improving its reputation and influence as an equal business partner, they should accept this challenge and seize the opportunity to connect some of their L&D programs to one or more business objectives. This major paradigm shift can be realistically accomplished by tackling a few such L&D programs every fiscal year.
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