Value proposition for outsourcing leadership development
Leadership in Action
An outsourcing program for
focused on driving
through engagement and
What is the Number One Concern of CEO’s Globally?
In a word, LEADERSHIP!
CEO’s are most concerned about
their ability to both improve
leadership effectiveness now and
build a leadership talent
“pipeline” that can sustain their
performance in the future. They
are even more concerned about
leadership development than
customer service or operations.
These findings are based on the 2012 Global CEO Survey conducted by PwC in
which 1,250 leaders in 60 countries participated.
The Challenge of Effective Leadership Development
If leadership development
was easy, it is unlikely it
would be CEOs’ biggest
concern. What makes it so
difficult? Why are so many
with their leadership
Training Alone is Not the Answer
Leadership training and
theories are important, but they
are not enough to improve
leadership effectiveness because
knowledge alone rarely
produces behavior change. If
newly acquired knowledge is not
put into action, leadership
effectiveness is not improved.
Three Elements are Required
An effective leadership development program should
have all three of these elements.
Knowledge of leadership theories and models should be
continuously enhanced, through seminars, workshops, and
online learning programs.
Leadership competencies, skills, and abilities are best
developed through assessment and active learning
Behavior change is required, facilitated by a coach, to
translate the leadership knowledge and competencies into
actions and higher levels of performance/effectiveness.
Blended Learning to Acquire Knowledge is Best
Most companies take the easy way out and
focus only on training programs. But these
can be expensive, keep the leader away
from their work too long, and typically
produce little or no behavior change.
Some training is warranted, but “blended”
learning (online, 24/7 learning integrated
with workshops) is the most cost/effective
way to extend leaders’ knowledge.
Assessment is Required
Ten or more years after completing college, managers
have dramatically different leadership competencies
and skills. This is why a comprehensive
assessment of leadership competencies and
skills is absolutely required so a meaningful
development program, based on
existing strengths and weaknesses, can be
Without assessment, leadership development
becomes a “hit or miss,” “one size fits all”
Coaching can Quickly Convert Potential into Actual
Performance Through Behavior Change
Executives refine and
develop confidence in new
skills and abilities through
the application of trial
behaviors and learning
from each trial.
Working with an experienced coach can maximize what is learned
from each trial and significantly shorten the time required to develop
both proficiency and confidence.
The Leadership Development Challenge
Many organizations do not possess the specialized internal
resources necessary to provide all three (assessment,
blended learning, and coaching) of the required program
areas for an effective leadership development program.
But, is there a compelling
value proposition for
these organizations to, in
essence, “outsource” their
program? Let’s see…
There is a Compelling Value Proposition for
We are recommending an
annual program of leadership
development program for six to
eight senior leaders that
development, and coaching
that can have a 6 times the cost
impact on your bottom line.
Leadership development can be
cost-effective, not just costly!
The Value Proposition for Leadership Development
Out of pocket cost
Time away from work
Greater discretionary effort
Higher levels of engagement
Better customer service
More creativity and innovation
Our Value Proposition for Building Leadership
The leadership development
program we recommend is
focused on producing higher
levels of engagement and
greater discretionary effort
across the organization
resulting from improved
Engagement and Discretionary Effort
Engaged staff members
understand and embrace
organizational objectives as well
as the strategies to achieve them,
with clear evidence of trust
based on mutual respect and a
collaborative work environment
all of which sum to produce high
levels of discretionary effort.
28% are Actively
Engaged and “in
the game” of
54% are Not
Engaged and “sitting
on the sidelines”
performing only to
keep their jobs until
retirement or a
better job comes
18% are Actively
time to time.
What Proportion of Staff Members are Engaged?
There have been dozens of research studies on this topic. What you see
below is an estimation of “typical” levels for U.S. worker engagement.
The “Want to Do” and “Have to Do” Curves
Leading by issuing orders and directives will produce only “compliance behaviors”
with little discretionary effort. While this leadership style will produce compliance,
it produces quite low levels of discretionary effort – and performance!
objective of the
recommend is to
effort of your
what is minimally
required to keep
your job up to
and mental effort in
Actively Engaged workers (28% of staff)
use high levels of discretionary effort to
achieve personal performance
objectives and to collaborate with
others to achieve team objectives.
Not Engaged workers (54% of staff) are
simply doing what is required to keep
their jobs. They occasionally display
some discretionary effort but they
rarely help others, , take risks and
always “stay under the radar.”
Actively Disengaged workers (18% of
staff) are either acting “retired on the
job” or disrupting the work of other
Research on the Current State of Discretionary Effort
Impact Achievement Group research states “The average
American employee feels that the effort a person has to give
in order to keep his or her paycheck is about 60% to 70% of
what they feel they could be giving.”
Leadership IQ research indicates that 72% of employees
polled admit they aren’t giving their best effort. And, in the
same study, 77% of their managers agreed.
Dr. Aubrey Daniels frequently expressed his belief that the
difference between workers doing what they must and
working as they could with maximum effort, could nearly
double their output and value to their employers.
The Impact of Discretionary Effort - Profits
Companies with high and sustainable engagement levels and
discretionary effort had an average one year operating margin that was
close to three times higher than those with lower engagement (Towers
Marks and Spencer’s research shows that over a four year period stores
with improving engagement had, on average, delivered £62 million more
sales to the business every year than stores with declining engagement.
Research from organizations representing more than five million
employees worldwide in the Aon Hewitt database showed that in 2010
organizations with discretionary levels of 65% or greater outperformed
the total stock market index and posted total shareholder returns that
were 22% higher than average; companies with discretionary levels of
45% or less had a total shareholder return that was 28% lower.
The Impact of Discretionary Effort - Productivity
85% of the world’s most admired companies believe that efforts to
engage employees and improve discretionary effort have reduced
employee performance problems (Hay 2010). A Gallup study (2006)
looking at data from over 23,000 business units has demonstrated
that those with the highest engagement scores (top 25%) averaged
18% higher productivity than those with the lowest engagement
scores (bottom 25%).
A Fortune 100 manufacturing company reported that quality errors
were significantly higher in poorly engaged/low discretionary effort
teams (DDI 2005). The RSA insurance company found that their
units with higher levels of employee engagement had 35% less
downtime between calls – in effect the equivalent of one ‘free of
charge’ employee being added to every eight engaged employees.
The Impact of Discretionary Effort – Customer Service
78% of the more engaged/higher discretionary effort employees
in the public sector felt they could impact public service delivery
positively; only 29% of the disengaged felt the same way
(Towers Watson 2007).
Work by Serco and Aon Hewitt looking at 274 Serco client
contracts demonstrated a longitudinal relationship between
employee engagement and effort versus the Net Promoter
Score (NPS), a measure of customer loyalty. Those contracts
serviced by employees whose engagement and effort had
improved over the year had NPS scores 24% higher than those
employees whose engagement had declined.
The Impact of Engagement – Retention
Replacing employees who leave can cost up to 150% of the
departing employee’s salary. Towers Perrin reports that highly
engaged organizations have the potential to reduce staff
turnover by 87%; the disengaged are four times more likely to
leave the organization than the average employee (Towers Perrin
Gallup demonstrated that in those companies with high turnover
(over 60%) those with the lowest engagement (bottom 25%) had
a 31% higher turnover than those in the top quartile.
According to Hay, companies with high levels of engagement
show turnover rates 40% lower than companies with low levels
Leadership Effectiveness can Drive
Focusing and accelerating the
development of leaders’
emotional intelligence, social
intelligence, thinking process,
facilitation, and coaching skills can
improve staff engagement and
drive their discretionary effort.
Our Leadership Development Program
Leadership Assessment Tools are
needed to focus and accelerate the
leadership development process.
A “blended learning” approach will
deliver training 24/7 through online
courses as well as through
One-on-one and team coaching will
be used to accelerate the rate of
experiential learning and behavior
All Leadership Development Elements are Required
The absence or ineffectiveness of one or more of
these elements is why so many leadership
development efforts fail to produce the changes
in leadership behaviors that are required to
deliver higher levels of engagement and
Training alone typically does not produce
behavioral change and it can be very expensive.
Training and coaching without assessment
sacrifices both effectiveness (developing the
wrong skills and abilities) and efficiency (delaying
behavioral change and increasing costs).
How We Produce Behavior Change
The question we are asked most
frequently about our leadership
development program is how we
are able to produce the behavior
changes that result in improved
leadership effectiveness. The
answer resides in the objectives we
set and the integrated approach we
take to achieve them.
How We Produce Behavior Change
Focus on Program Objectives
We focus all elements of our program
on improving staff engagement and
discretionary effort. Research clearly
indicates improving staff engagement
and discretionary effort will result in a
wide range of economic benefits for
the organization. Thus, we focus our
efforts on helping our clients to
develop and apply the leadership
knowledge, competencies, and
behaviors necessary to improve staff
engagement and discretionary effort.
How We Produce Behavior Change
Focus on Interpersonal Skills and Abilities
We do provide learning materials and
discussion about leadership theories
and models, but most of our effort
focuses on developing and deploying
the interpersonal skills and abilities
required to put leadership knowledge
to work. What makes a successful
leader is what they can achieve with
and through other people, which
requires advanced interpersonal skills.
We develop six complementary sets of
critically important skills and abilities.
Interpersonal Skills and Abilities
Read people by accurately interpreting the emotional
content in their faces, body language, and non-verbal
communication. This includes the ability to assess how well
other persons accept your ideas and points of view.
Connect with people, primarily through empathy, reflective
listening and then form trusting relationships that are the
foundation of work environments that feature engagement
Engage people through questioning and responding
appropriately to their ideas and emotional states.
Interpersonal Skills and Abilities
Influence the attitudes, abilities, and actions of others through
constructive communication strategies, coaching, applying
nurturing behaviors while avoiding toxic ones.
Think more effectively with others in pairs (using the Thinking
Partners method) and a by facilitating small group thinking
processes in an enriched Thinking Environment.
Shape behaviors using the principles of Applied Behavior
Analysis to implement change faster and more effectively as well
as manage performance to better achieve objectives.
Efficient and Personalized
Our development program is highly efficient
because our assessment program clearly
defines our starting point and we have clear
performance objectives in mind (engagement
and discretionary effort). Because each leader
will ultimately develop their own unique blend
of leadership style and interpersonal skill set,
the one-on-one approach we use is essential to
achieve the economic benefits to the
organization we seek to achieve. The basic
development process and performance
objectives are well-defined, but each
development journey is unique.
Annual Program Deliverables and Cost
Mayer-Salovey-Caruso Emotional Intelligence Test
360-degree test of leadership competencies
360-degree test of leadership styles/strategies
360-degree test of social intelligence
Personal leadership development plan
24/7 assess to online learning materials
One, two-day leadership development workshop
10 to 14 hours of one-on-one coaching
Team development and coaching can also be included
$9,500 to $12,000 per participant
Few organizations are satisfied with their leadership development efforts. To be
fair to the HR staff in most organizations, effective leadership development
requires the contributions of professionals with highly specialized backgrounds
and certifications – not HR Generalists or Trainers.
As a result, leadership development often involves sending leaders to expensive
off-site training programs and/or in-house workshops. These often extend
leaders’ knowledge of leadership theories, but do not produce behavior change
or drive leadership effectiveness.
Few organizations can justify employing full-time coaches to work with leaders
and most external coaches are primarily interested in maximizing their coaching
hours and revenues.
Do-It-Yourself leadership development is not cost/effective for most
organizations, so outsource this critically important program!
The Value Proposition for Outsourcing Leadership
Development Can Be 6 to 1 or Even Greater
A reasonable annual cost for our firm to provide comprehensive
leadership development services for six of your leaders is about
This should produce significant improvements in engagement and
discretionary effort because these are the what our development
program is designed to achieve. What if, as a result, we achieved
just a 10% improvement in staff productivity, a 10% improvement
in customer satisfaction, and 10% improvement in retention?
These not unrealistic outcomes from our leadership development
Could this improvement result in at least a $400,000
improvement in your bottom line? We believe so and assuming it
does, then we have a 6 to 1 value proposition.
Leadership in Action
Dr. Phillip R. Ash
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