Developing Leaders

By Guy Higgins

In the US Navy, every sailor has a rating and a rate while every officer has a warfare specialty (Surface Warfare, Aviation, etc.) and a rank. (I’m much less familiar with the processes in the other armed services, so I will restrict my discussion to the Navy, although the other services have analogous approaches.) Ratings and warfare specialties categorize the person’s “technical expertise” – what they do, as an individual, to contribute to mission accomplishment. Rates and ranks reflect the leadership experience and capabilities of the individual. Every sailor and every officer is expected to continually develop both their individual expertise and their leadership skills throughout their careers – in fact, proficiency in both areas is essential for promotion. That development includes both “book learnin’” and hands-on experience.

My experience in industry is significantly different. As a “guest lecturer” presenting in a one-week course for first-time managers at a Fortune-50 leadership center (this company, like GE and some other corporations, believes in providing their managers with formal education in leadership and management), I was talking to a small group of the class members and one new manager said, “In twenty years with this company, this is the first time anyone has ever talked to me about management.” I suspect that the practice of not investing in educating “individual contributors” (employees who are not in a management or leadership position) is common in industry. Management and leadership development tends to be provided after a person is selected for a management position (sort of “Just a Bit Too Late” as opposed to “Just in Time”). There is a cost associated with developing management and leadership skills in every employee the way that the Navy does. Industry is driven by finances – companies must make a profit and the profit must be competitive in their industry if they want to draw investors. I get it. But there is a cost/benefit relationship to be considered, and I have not seen anything even remotely like a cost/benefit analysis for investing in management and leadership development for every employee.

Should industry invest in formal management/leadership development when only ten to twenty percent of employees will ever need it? I think that they should. In fact, I think that industry should make that investment even when an employee expresses no desire or intent to ever be a manager or leader. That takes me to benefits (and I’ll come back to costs later in this post). The benefits of investing in management/leadership development for all employees include:

  • The more each employee knows and understands about corporate leadership and leadership in general, the skills required, the responsibilities, and the pressures, the more likely it is that they will improve their “followership” skills. This isn’t easily measureable, but it could be a significant productivity enhancement.
  • As the industry moves more and more in the direction of a knowledge economy, management and leadership skills will be increasingly important as nearly every employee will, at least on occasion be called on to manage some resources and/or exercise some degree of leadership of temporary or even ad hoc teams.
  • As “gig-economy” behavior becomes more and more common and companies draw on niche expertise from outside the company for short-term contributions to a project or program, full-time employees who have developed management and leadership skills can and will provide the flexibility to lead niche providers.
  • Employees who have expressed no interest in becoming a leader or manager may change their perspective as they gain experience, and investing early in developing those skills will pay off as new managers/leaders can exercise them immediately on promotion.
  • Investing in developing leadership and management skills for all employees sends a significant signal that the company values their employees and the careers options available to those employees. This can also contribute to employee engagement.
  • In contrast to “Just-a-Bit-Late” education, company leadership will not be compelled to accept the risk that an employee, newly promoted to management, will make an expensive error from lack of knowledge or experience.

What about costs? Good question. Let’s look at costs that will include, but not necessarily be limited to:

  • Developing the curricula for both blue-collar and white-collar jobs
    • The “book learnin’” portion of the curricula
    • The practical experience
  • Monitoring individuals’ actual progress through the curricula
  • Establishing policies regarding professional advancement/promotion
  • Enforcing advancement/promotion policies
  • Developing policies and procedures for blending “outside hires” smoothly into the organization (something that the Navy has not done since WW II but which it is now considering for certain highly technical specialties)
  • Providing overhead funding to pay for the “book learnin’” portion of the curricula (the hands-on experience should, as in the Navy, be reaped as part of the direct-cost work done by each employee)
  • The time spent by organizational managers/leaders to mentor their subordinate managers/leaders/employees and provide them with routine and timely feedback (something they should be doing in any event)

Those costs are not trivial and could be as much as 40 hours per employee per year for the formal education component of the curricula (although each individual company can establish what that annual allocation would be – the lower the annual allocation, the longer it takes for an employee to develop useful knowledge and skills).

Do these benefits offset the costs? I can cite some anecdotes, but I have no actual data, so I want to consider this from a probability perspective – I’m not going to go into the messy specifics of the probability calculations – and I’ll look at two scenarios in which a new manager or leader can, through lack of management/leadership skills or knowledge, make errors that cost the company money.

  • A new manager can make leadership errors that make an employee dissatisfied with the company or increase an employee’s dissatisfaction, leading to that employee’s leaving the company. According to Chron.com, the cost to replace an employee can run from 150% of salary to 250% of salary (that’s the admin costs in addition to whatever the new employee will be paid). This is likely to be a relatively common problem and could easily see six figure errors occur more than once a year – even in comparatively small companies.
  • A new manager or leader can make a serious mistake that leads to a crisis. Examples might include any of the following (and many others):
    • Authorizing a direct report’s use of a company social media account which could allow the direct report to make highly embarrassing and costly posts (this occurred in the case of a major appliance manufacturer)
    • A failure to emphasize safety procedures leading to an accident involving multiple failures (the chemical disaster in Bhopal India)
    • A failure to accurately report the inadequacy of allocated resources (this can, obviously apply to any leader or manager, but a new manager or leader is more likely to feel pressure to perform – particularly if they’ve had zero prior experiences or formal education in the ethics of leadership) resulting in the waste of significant company resources.
    • A failure to recognize the importance of strict enforcement of company policies regarding sexual harassment (since that’s a topic in the news now) leading to the new manager minimizing an incident involving one of his subordinates and then finding it on the nightly news the next day.
    • A new manager could authorize his team to access the Internet through a non-corporate ISP (say from home) and open the company up to loss of IP worth a significant fraction of company earnings. For folks who think that no one would do that, it’s important to understand that two thirds of all hacker penetrations into organizational networks are the result of employee errors (appallingly, over half of all people who get phishing emails at work open them and two thirds of those click on the attached link).

Will any of these happen if all employees aren’t provided with leadership/management development education and training? Perhaps not, but the cost of any one of these major incidents could easily dwarf the cost of the development training for several years. While lesser incidents have lower costs, they are more likely. A crippling incident may rarely occur, but the costs could be devastating while the lesser incidents have lower individual costs, but occur more frequently.

Is it reasonable to train all employees in management/leadership? That question is identical to, “Is it reasonable to carry insurance for the company?” It’s a leadership decision to purchase insurance and it’s a leadership decision to invest or not invest in developing management and leadership skills in company employees. I think that companies would benefit from educating all employees in management and leadership.

Thoughts?

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