Why the Leadership Industry Is Broken

July 2020

The leadership industry is an ever-growing, multi-billion dollar industry; there is no shortage of books, podcasts, workshops/programs or conferences dedicated to training and improving leadership skills and abilities. It does not appear to be slowing down anytime soon either, as according to a recent survey of 300 HR leaders conducted by the Center for Creative Leadership (CCL),1 57 percent of companies are planning on maintaining their budgets for leadership development in 2020, and 40 percent actually expect to spend more this year (we know, hard to believe given the pandemic!).

For many organizations, investing in leadership development isn’t just a “nice-to-have” but is instead critical to gaining a competitive advantage. For instance, in a 2015 survey of 300 global leaders,2 the CCL discovered that organizations investing heavily in leadership development initiatives actually experience employee retention 20x higher than their counterparts. Furthermore, in 2012, Deloitte surveyed and interviewed market analysts across the globe and found that 80 percent deemed companies with effective leadership teams as preferable, and indicated that they would give them a premium valuation.3 On average, results showed a premium of 15.7 percent for particularly effective leadership (and a discount of 19.8 percent for ineffective leadership) across companies. And finally, the survey found that senior leadership effectiveness was ranked as the second most-used criteria by analysts to judge company success.

While it seems as though everyone can agree on the importance of effective leadership and the need for organizations to invest in developmental initiatives to stay competitive and retain top talent, there appears to be mounting evidence that leadership development initiatives are failing.4 That is, despite the billions of dollars being poured into these efforts, we are still seeing gross ethical misconduct,5 high CEO turnover,6 and prevalent workplace bullying7. Additionally, according to a 2017 survey by McKinsey & Company, only 11 percent of the 500 global executives surveyed agreed with the statement that “their leadership-development interventions achieve and sustain the desired results.”8 

So why is it that so many leadership development efforts appear to be failing? Some argue that it is due to the structure of training initiatives.9 For instance, typical leadership training initiatives in organizations often involve workshops spanning one or two days, and include highlighting some key learnings and take-aways for leaders to incorporate into their leadership “toolkits.” However, the transfer of this learning into practice is often where things begin to unravel. For instance, according to research from Mckinsey & Company, adults often retain only 10 percent of what they learn in a classroom context, suggesting that much of what is learned in these discrete training opportunities is lost relatively soon after.4 Furthermore, from what we know about habit formation, adopting a new habit requires not only learning about the importance of a behaviour or skill and how to perform it,10 but also practicing applying it in the real world, and taking the time to reflect on what was done well and what could be improved.9 It appears that an over-reliance on workshops, motivational speakers or other traditional learning formats, combined with a lack of accountability mechanisms in place for leaders to track and report their progress, ultimately sets leadership development efforts up to fail. While structure alone is not responsible for all shortcomings of leadership development efforts, it seems to be an important one. 

These exact challenges are what inspired us to create Monark. At Monark, we've combined psychology and behavioural science-based learning with a community of practice, to offer a scalable, self-led, and integrated leadership development solution. Using assessment, micro-learning, on-demand support, and engaging reminders, we emphasize the application and practice of new learnings into the flow of work, and allow our users to get real-time, in-the-moment feedback so that they can continue to evolve and grow (something you just don't get in a classroom). The result is leadership change that employees can feel, managers can track and organizations can compete on.


References
1. Leading effectively at Center for Creative Leadership. (2021). Investing in Leadership Development During Economic Downturn & Recession. Retrieved from https://www.ccl.org/articles/leading-effectively-articles/new-research-on-leadership-development-during-global-crisis-and-economic-downturn/
2. Center for Creative Leadership. (2016). Driving Performance: How Leadership Development Powers Sustained Success. [White Paper] https://www.ccl.org/wp-content/uploads/2016/05/driving-performance-white-paper-center-for-creative-leadership.pdf
3. Deloitte. (2012). The leadership premium: How companies win the confidence of investors. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/global/Documents/HumanCapital/dttl-hc-leadershippremium-8092013.pdf
4. Gurdjian., P, Halbeisen., T, & Lane., K. (2014). Why leadership-development programs fail. Mckinsey Quarterly. Retrieved from https://www.mckinsey.com/featured-insights/leadership/why-leadership-development-programs-fail
5. Miner., E. (2020). As companies reopen post-pandemic, it is critical that they foster a speak-up culture. Reuters Events. Retrieved from https://www.reutersevents.com/sustainability/companies-reopen-post-pandemic-it-critical-they-foster-speak-culture
6. Todd., S. (2019). Why CEO turnover in 2019 is so damn high. Quartz at Work. Retrieved from https://qz.com/work/1727662/why-ceo-turnover-in-2019-is-at-a-record-high/
7. Forum Research. (2018). 1 in 2 Canadians have experienced bullying in the workplace. Retrieved from https://poll.forumresearch.com/m/post/2900/bullying-2018/
8. Feser., C, Nielsen., N, & Rennie., M. (2017). What’s missing in leadership development? Mckinsey Quarterly. Retrieved from https://www.mckinsey.com/featured-insights/leadership/whats-missing-in-leadership-development
9. Levy., A. (2018). Why Leadership Training Doesn't Work. Forbes. Retrieved from https://www.forbes.com/sites/forbescoachescouncil/2018/02/23/why-leadership-training-doesnt-work/?sh=5734b22f77a4
10. Lally, P., Van Jaarsveld, C. H., Potts, H. W., & Wardle, J. (2010). How are habits formed: Modelling habit formation in the real world. European journal of social psychology, 40(6), 998-1009.