Changing the Currency: New Research on How Businesses Calculate the ROI of Executive Development
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Transcript of Changing the Currency: New Research on How Businesses Calculate the ROI of Executive Development
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Changing the Currency
New Research on How Businesses Calculate the ROI of Executive Development
Vistage InternationalNovember 2012
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How do businesses measure ROI on executive development efforts?
What methods of executive development are most used?
What methods are most effective?
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Who We Talked With…
• Ulrich Nettesheim, Lecturer, UC Berkeley’s Haas School of Business
• Steven Stripe, Senior Vice President of Finance, Equifax
• Katie Rials, Director of Human Capital Development, SCI Companies
What We Created… • 31-Item Survey
• August 2012
• 346 responses representing more than 175 organizations worldwide
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Some Participant Organizations
4
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State of Leadership
• Impactful leadership development directly tied to business performance
• Financial limitations continue to put competing pressure on development initiatives
• Collaboration, communication and shared vision are key area of focus
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State of Executive Development
Hybrid
Non-Traditional Executive Development
Traditional Executive Development
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Defining DifferencesTraditional Non-Traditional
Leadership Retreats Internal Peer Group Meetings
Workshops Regular Cross-functional team meetings
E-learning/Online Training Custom-designed development plans
Classroom Training Executive Coaching
University/Advanced Degree Programs External Peer Group Meetings
Off-site Seminars/Speakers Internal Leadership Meetings facilitated by external consultant
Rotational Assignments
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Most PopularTraditional Non-TraditionalLeadership Retreats Internal Peer Group Meetings
Workshops Regular Cross-functional team meetings
Off-site Seminars/Speakers Custom-designed development plans
E-learning/Online Training Executive Coaching
University/Advanced Degree Programs External Peer Group Meetings
Classroom Training Internal Leadership Meetings facilitated by external consultant
Rotational Assignments
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TDO48%
HDO*52%
Traditional vs. Hybrid
* Hybrid development organization = those that use four or more peer-based / collaborative (non-traditional) executive development methods annually
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Changing the Currency
Cutting-edge collaborative executive development methods require leaders to examine how they measure success– Financial metrics remain important– Research revealed additional metrics that
help business leaders measure effectiveness
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New Measures: 5 Key Drivers of ROI
Growth
Alignment
Collaboration
ExecutionRetention
Succession
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HDOs are more aligned to a common vision
Executives are more informed about the goals/processes of the organization
Executives share a common vision for the organization
Executives frequently work together
Across business units, goals are aligned
64%
62%
56%
64%
87%
89%
84%
85%
HDO
TDO
Q: Please describe how your organization’s approach to executive development affects the alignment between Execs and overall business strategy. (% strongly or somewhat agree)
Alignment
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HDOs are more collaborative
Collaboration is part of our company culture
Group conversations take place outside of meetings
My company has an open dialogue & common language
Business units fully support decisions made by other business units
Senior leaders are comfortable having difficult conversations
59%
78%
49%
39%
35%
73%
91%
73%
52%
55%
HDO
TDO
Q: How much do you agree/disagree that the following practices related to collaboration are exercised in your organization? (% strongly or somewhat agree)
Collaboration
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HDOs are better at resolving conflict
People rely on open dialogue & communication to discuss conflicts
There is a clear understanding of who is best positioned to solve problemss
When faced with a conflict, leaders calmly & collectively face issues
All parties relevant to a conflict are given equal opportunity to share
39%
37%
46%
43%
59%
56%
69%
63%
HDO
TDO
Q: As a whole, how effective is your organization at the following conflict resolution methods? (% very or somewhat effective)
Collaboration
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Executives in HDOs feel more ownership of the strategic direction
Executives have ownership of the strategic direction
Executive team determines the strategic direction of the company as a group
66%
66%
87%
83%
HDO
TDO
Q: How much do you agree/disagree that executives at your company feel like they have ownership of the strategic direction of the company? (% strongly or somewhat agree)
Execution
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HDOs make strategic decisions faster
Speed at which strategic decisions are made
Speed at which new initiatives are implemented
Speed of necessary course correcting
50%
40%
36%
69%
54%
56%
HDO
TDO
Q: How effective is your organization at the following: (% very or somewhat effective)
Execution
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Keys to Increased Retention
• Leadership• Aligned Rewards Systems• Culture• Development / Growth
Retention
Research did not uncover any key differences regarding retention among HDOs and TDOs. This could be an area that warrants further research.
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HDOs have greater bench strength
My organization has ready replacements for key positions
My organization is able to identify bench strength
My organization promotes the internal HiPo population
14%
27%
48%
44%
51%
71%
HDO
TDO
Q: How much do you agree or disagree with your organization’s approach to succession planning? (% strongly or somewhat agree)
Succession
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HDOs achieve better growth rates
Flat or negative growth
10% + growth
43%
11%
36%
15%
HDO
TDO
Q: Please describe the growth rate of your organization’s revenue in the last fiscal year:
Growth
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The Payoff: HDOs Better Positioned for Business Success and Stronger Growth
• Blended approach – it’s the mix that matters
• Collaborative methods build the capability of the organization, not just the individual
• Collaborative, peer-based models drive best results
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Visit us at www.vistage.com/hci to download the entire research report and for more information on collaborative,
peer-based executive development programs
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World’s Leading Peer Advisory Membership Organization
16,000 Members in 15 Countries
Vistage member companies generate nearly $300 billion in annual revenue, employ 1.8 million people worldwide, and outperform their competitors