How CEOs can think differently about their training and development budget
Professional development has helped many CEOs position themselves on the path to success. But to reach that finish line, companies will need to keep that road paved for leaders in every lane.
Companies thrive when entire teams share goals and work together using a common vernacular to solve problems. And as the Great Resignation has highlighted, the key to developing and retaining a successful team is ensuring that employees at all levels feel invested in — and valued by — their companies.
We spoke with two Vistage Chairs to learn how successful CEOs are redefining training and development budgets to build stronger teams of direct reports, managers and high-potential individual contributors.
The difference between training vs. development
Training is critical to teaching an employee the day-to-day skills needed to get a job done. But it’s distinct from development. You can’t train leadership skills or critical thinking from a manual. Development is richer, deeper and much longer lasting.
“It used to be that a company would give an employee a desk and computer to do their job. Now, much of what people do at work involves empathy and being that relationship leader,” said Carol Steinberg, who chairs a variety of Vistage groups for CEOs, key employees, experienced managers and emerging leaders. “How many people get promoted because it’s simply time for them to move up, but they haven’t developed broad leadership skills required in their new position?”
Steinberg said that it is no longer enough to send managers to one-off conferences or recommend the occasional book. Taking a fragmented approach will not build a team of extraordinary leaders. Development takes time and discipline. It needs to be part of a larger strategy, one that takes a comprehensive approach and supports the company’s vision. Done right, it pays dividends.
“There is evidence that if the CEO makes growth a cultural imperative, they’ll outperform companies that don’t,” said Peter Schwartz, an award-winning Vistage Master Chair and Best Practice Chair. “Statistics tell us that only 25% of leaders will ever make that shift, but for those who do, they’re best-in-class in their whole industry. It should be a strategic imperative for any business to have a leadership development plan in place.”
Consider all levels of management
A comprehensive approach to development also means looking deeper into the organization. “It can’t just be the CEO on a development path. The leadership team needs to grow at the same pace as the CEO,” Schwartz said.
This is particularly true for CEOs who have ambitious goals and need a deep bench of well-rounded leaders who can execute. That makes ignoring the middle problematic.
Companies break in the middle when there is a disconnect between the visionaries in the C-suite and the managers leading the company’s teams, Schwartz said. It is difficult to execute a vision if those doing the work don’t understand the vision or do not possess the core competencies to see them through.
“A lot of my CEOs join their Chief Executive groups because they think they want skills and knowledge. Then they begin to realize, ‘It’s not skills and knowledge, it’s about how I think about the problem itself,’” he said. “That’s development, and that’s what they want for their leadership teams.”
Be Strategic About Who You Develop
As national data points to the need to provide career development opportunities, Steinberg cautions against the urge to panic-train people.
“In the Great Resignation, CEOs may become more reactionary. They think, ‘People are leaving. I heard I need to offer them training, so I’ll get them training,” she said. “They may not consider the benefits of specific training plus development to the organization, to the employee and to the CEO. They’re not looking at it in its totality.”
Rather than rubber-stamp any proposal for seminars or training courses that come across their desks, strategically oriented CEOs are sizing up their teams to determine whom to develop and for what roles.
“Two CEOs in my groups just sponsored four and five people respectively in Vistage’s Advancing Leaders programs because they realized, ‘If I don’t pay attention to the leadership at that level, getting them tuned up, it’s going to be tough going,’” Schwartz said.
“We want to give people a growth path, but the role of leader is more complex, and they don’t have any clue how to go about it, suddenly they’re breaking glass all over the place,” he said. “Maybe they were a great accountant, but now they are leaders of accountants, and it involves a more relational skill than the technical skill that got them promoted. Both of the CEOs recognized that if they were going to scale the organization, they would have to scale the leadership team.”
Anecdotally, Schwartz and Steinberg said that companies that invest in developing their leadership team saw minimal turnover in the last year. And surveys by the Work Institute about retention have called out poor career development as the No. 1 cause of turnover for more than a decade.
“At the kickoff of every one of my Emerging Leaders and Advancing Leaders groups, I say, ‘You are here because you have been identified as a high-potential employee in your organization. I don’t take people who are broken and need to be fixed,’” Steinberg said. “Right away, they sit up. They are happy to be recognized. They want to make an impact.”