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Gauging Your Firm's Leadership Culture Index A Practical Tool for Improving Your Leadership Development Effectiveness

Originally published July 24, 2007

In our previous article, The Looming Leadership Talent Wars,  we presented the case for elevating leadership development to the level of strategic priority. A visible and measurable tidal wave of demographic changes will increasingly draw the most experienced leadership talent from the workforce, leaving both a shortage in numbers and a tremendous hole in the leadership experience pool. Organizations that fail to identify, develop and retain their best and brightest leaders run the risk of not having the resources needed to execute their business plans. Alternatively, those that adapt their culture to institutionalize the right behaviors and processes for effective leadership development stand to win in an increasingly difficult global business environment.

While our first article offered a number of practical suggestions for strengthening a firm's leadership development culture, we recognized the need for something to help identify the right starting points and to gauge the impact of improvement efforts. Our suggestion is the Leadership Culture Index (LCI) – a tool powerful enough to serve as the basis for a professional assessment, but practical enough that managers can use it to understand and evaluate their organization's leadership development effectiveness.

Breeding Leadership Development Focus into a Culture Fuels Execution

 An organization's culture is a complex, interdependent tangle of customs, achievements, values and behaviors that have developed over time and define what the firm stands for and how associates view and act in the world. While slow to change, most cultures are capable of evolving and adapting if there is good reason and a road map. The looming leadership crisis faced by organizations is reason enough to evolve, and the connection between leadership development effectiveness and organizational performance is also a strong motivator. The purpose of the LCI is to help managers develop a road map for improvement by identifying the most meaningful leadership development behaviors and challenging organizations to evaluate their activities in support of these behaviors. Ultimately, the goals for investing in this process are to strengthen the leadership pipeline, improve development support of incumbent leaders and positively impact a firm's ability to execute and succeed.

The Nine Components of the Leadership Culture Index

The LCI focuses on nine critical practices that determine an organization's leadership development effectiveness.

  1. Early identification of potential leaders is the norm. Establishing your organization as a leadership development machine requires commitment to early identification and assessment of potential leaders. Early identification sets the stage for creating development experiences that not only test individual capability, but potential interest as well. Too many promotions to leadership roles are limited by the pool of candidates expressing interest – the organization needs to take ownership of building a pool of individuals interested in leadership as a career versus those motivated solely for the perceived trappings of leadership.

  2. Top management is actively engaged in leadership development. Leadership development is not going to be a powerful component of your strategy if it is relegated to an HR initiative – all of the leadership team members must own it. What does this look like? It includes carving out time in regular management meetings to discuss projected leadership needs and potential candidates and even sharing assessments of high potential individuals.

  3. Performance expectations are clear and challenging for leaders. The “best and brightest” of an organization are not all destined to be leaders, but the leaders all must be bright, capable and hardworking. Not a “dog-eat-dog” environment, and not the overt “up or out” element found in some professional organizations, but high expectations for execution and results are the norm. Organizations that are serious about their leadership are also serious about their individual leaders. If they don’t produce the expected results – in a way that is consistent with the organization’s values – they are either reassigned or they move on.

  4. Succession planning is routine. This one may seem obvious, but it is rarely managed well. It is also the foundation of your leadership development investments, so it is worthy of a bit of elaboration.

    The serious gold in this institutional behavior is found in two areas. First, the process for identifying and routinely updating your leadership bench must be a visible, focused effort. This doesn’t mean you post potential ratings for everybody to see, but rather it becomes an ongoing routine for the management team to update and evaluate the leadership bench.

    Second, the underlying work product of a succession-planning regimen is the creation of individual development plans for each person identified. A process must be built around an on-going review of individual development plan progress or your succession plan will have little impact. While it is great to have replacements identified for key positions, a truly dynamic succession plan must take into account development needs and opportunities. There is a true symbiotic relationship here – as the development planning becomes reality, your bench strength grows.

    An important side note to developing future leaders: Make sure your incumbent leaders have a healthy perspective regarding the potential for losing high potential resources. It’s okay if good leaders occasionally leave the organization to seek new development opportunities. In our opinion, the best way to deal with this often uncomfortable or upsetting loss is to set the stage for the potential return of this valuable alumni member. Treat your departing talent in this manner, and you might be surprised how many make the round-trip back to your organization as wiser, more dedicated and diversified leaders.

  5. Feedback is expected, encouraged, taught and practiced. Great leaders rely on routine feedback to drive results and individual growth, and the more feedback is demonstrated by leaders, the more likely it is to be uniformly practiced at all levels of the organization – even peer to peer. If individual contributors are generally good at feedback, it will be one less thing to worry about when developing new leaders.

  6. Individual development plans are prepared for all associates. Individual development plans that encompass personal as well as professional development are powerful tools, but many organizations do not have a routine for preparing and reviewing them. Most often, these are a component of the performance review process. No matter how you establish this routine, the important points are that managers must be held accountable for developing people (not just replacement leaders) and there must be a means to regularly refresh these plans. The individual development plan is also a great place to articulate a suggested career plan that includes the stated interests of the subject.

  7. Leadership development is included in the strategy plan. Leadership development must be identified as one of a firm's top three or four strategic priorities, with the same level of focus, ownership, collaboration and evaluation typically reserved for the new market, new product, or M&A priorities. Changing demographics and an increasingly complex competitive landscape demand that people leadership must be an area of focus and investment. You don’t need your own company college, but you can start the process of institutionalizing sound development practices that have little out-of-pocket expense but pay huge dividends.

  8. Assignments are engineered for developmental purposes. Astute organizations and leaders realize that on-the-job experiences are powerful development opportunities. This doesn’t necessarily mean jobs are created to provide these experiences, but careful planning will help assure that you can take advantage of them when they are available. Training classes and seminars have their place, but challenging assignments, particularly outside an individual’s direct area of expertise, can profoundly hone leadership capability.

  9. Access to senior management coaches and mentors. Peer networks are powerful tools for newer leaders, but they don’t hold a candle to the benefits of wisdom and experience available from senior managers. While some organizations have extensive formal mentoring programs, it does not have to be any more complex than ensuring that your senior leaders seek out and interact with their more junior colleagues on a regular, individual basis.

Rating your Culture

Now that you have insight into the nine components of the Leadership Culture Index, the next step is to put the tool to work. A formal approach to assess an organization’s culture generally involves the proverbial “objective third party” to reduce bias and manage a thorough data-gathering process. However, in our experience, considerable benefit can be gained through a grassroots approach with managers self-scoring, then pooling and averaging their results across each component. This less formal process succeeds by drawing attention to leadership development and encouraging robust discussion around components that earn low scores.

Each of the statements that follow is tied to a component of the LCI and is scored using a three-point scale. In the self-scoring process, we suggest that managers ignore a cumulative score and instead focus on the average score for each component. (In a formal study, weightings would be established and a total index score calculated and interpreted.)

Leadership Culture Statements

  1. We have the processes in place to identify and assess potential leaders well ahead of the point in time that they are ready for promotion.

  2. Leadership development is a frequent, recurring agenda item for our top management team.

  3. Performance expectations are clear and challenging for leaders.

  4. Our organization has a formal succession plan program in place, and it is actively managed to remain current.

  5. Feedback is expected, encouraged, taught and practiced in our organization.

  6. Individual development plans are in place for all associates.

  7. Leadership development is a specific component of our strategy plan.

  8. Assignments are engineered for developmental purposes.

  9. Less experienced managers have access to senior management coaches and mentors.

Rating Scale

1 = We don’t do this, or we don’t do it well.
2 = We sometimes do this, or we do it well.
3 = We routinely do this, and we do it well.

Using the Results

While the ratings are subjective, it is our experience that group scoring tends to result in agreement on both areas of weakness and strength. We encourage teams to discuss both individual and average ratings, and to work toward agreement on rating each leadership culture component and developing action plans where needed.

Interpreting the Ratings

  • For items receiving an average score of 1-1.75, immediate action is required. Don’t delay implementing solutions in order to develop the perfect approach – (just) act sooner versus later and adjust as needed.

  • For items receiving a rating of 1.76 to 2.5, look for ways to increment your routines. Shoot to make them more consistent, visible or robust, depending on your circumstances. Find ways to measure your results and establish an ROI.

  • Items receiving a 2.6-3 should not require direct action, but you should find ways to monitor your activity in these areas to assure you stay on track and achieve the results you desire.

The Take-Away

The first step in establishing an effective leadership development culture is recognition that this is a priority. A wise man once indicated that there are only a few ways to truly improve results in an organization, and people are at the center of all of them. It's impossible to flip a switch and move overnight from poor to great at developing leaders, but it is possible to improve immediately without breaking the budget or creating massive new infrastructure. Establishing leadership development as a discussion topic is critical to driving improvement, and the Leadership Culture Index is a great tool for starting the discussion. Turning discussion into productive action is your responsibility.

Next:
Leveraging feedback as a powerful leadership tool. Recent research identifies feedback as the number one self-described weakness of many leaders. In this article, Petty and Petro offer practical suggestions for creating a feedback culture and learning to leverage this skill to drive performance.

SOURCE: Gauging Your Firm's Leadership Culture Index

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