Leadership in Action
An outsourcing program for
focused on driving
through engagement and
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.
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