Filling the Leadership Pipeline: To Thrive in the New Economy, Companies Must Recognize That Employee Training and Leadership Development Is an Ongoing Process That Has a Direct and Meaningful Influence on the Bottom Line

By Kristick, Jeff | Talent Development, June 2009 | Go to article overview

Filling the Leadership Pipeline: To Thrive in the New Economy, Companies Must Recognize That Employee Training and Leadership Development Is an Ongoing Process That Has a Direct and Meaningful Influence on the Bottom Line


Kristick, Jeff, Talent Development


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With the unemployment rate in the United States jumping to 8.5 percent in recent months (the highest it's been since 1983, according to the U.S. Department of Labor) the current recession is showing few signs of abating.

Many blame a lack of government oversight in key financial areas and massive breakdown in corporate governance--from the failure of corporate boards to hold executive management accountable, to the lack of solid, thoughtful succession planning within organizations--for the current economic crisis.

Unfortunately, the fallout from recent corporate failures, specifically in the finance and insurance industries, has had a trickle-down effect that has left virtually no one unscathed.

As organizations adjust to new business conditions and economic realities, they are being forced to cut costs across the board, which often means cutting critical positions, programs, and staff. To navigate through the current economic headwinds, many companies will be tempted to approach cost-cutting by wielding an ax rather than fashioning a plan.

They look to reducing headcount and downsizing their organizations without giving much thought to the skills, talent, and leadership they are losing; determing where and how those skills could add value elsewhere in the organization; or thinking about how the loss of particular skills will affect the company down the road.

Most damaging, perhaps, is that many companies will slash their investments in employee training and leadership development programs, viewing them as "nice-to-haves," rather than critical cornerstones of their business and keys to their survival during tough times.

History has shown that eliminating corporate initiatives and programs aimed at cultivating employee talent, specifically those focused on managerial and leadership development, puts organizations at a long-term disadvantage when the economy does recover.

According to Bersin and Associates, "Organizations cutting costs during the 2000 recession eliminated the very programs that provided the training and programs necessary for developing leaders. Only later would they realize that it took at least three years to rebuild their internal expertise and strategic capabilities.

Companies that consistently foster a talent-driven culture, however, have thrived despite current conditions, in great part by maintaining their commitment to leadership development programs."

Underscoring the importance of leadership development, Hewitt Associates, together with RBL and Fortune magazine, released a global leadership study in 2007 that found that leadership development was embedded into the culture of top companies. The research compared global top companies with more than 530 other organizations around the globe. The single characteristic that distinguished these companies from the others is that they made leadership a critical part of their organizational fabric.

The imperative is clear. Companies looking to emerge from the current recession stronger and better positioned to compete in the new economy must continue to invest in training and developing employees, with a goal of building a strong leadership pipeline. While it may be challenging for organizations to justify these investments right now, organizations need to recognize that long-term viability depends on a company's ability to develop strong leaders.

Who is responsible for developing leaders?

From managers to board members, leadership development should not just be limited to human resources or the learning organization. All managers are responsible for helping their employees develop to their fullest potential by continually challenging them and increasing their leadership competencies.

According to an article published in the Harvard Business Review, a part of the line manager's role is recognizing her subordinates' developmental needs, helping them develop new skills, and providing them with opportunities for professional and personal growth. …

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