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What Matters™ IN TALENT MANAGEMENT Significant Happenings in Talent Management │ September 2013 Colleagues,

TALENT MANAGEMENT COURSEWARE

The HCG team took a break from writing the newsletter this past month. We’ve been on the move. Jyldyz has temporarily

Visit our website to learn more about our evidence-based

moved from the US to Bishkek in Kyrgyzstan. I worked

and integrated talent management courseware.

primarily in India these last four years and am happy to be back in beautiful Northern California. However, this time of the

IN THIS ISSUE

year I miss the festivities and delicacies India has to offer. As before, we continue to support clients globally. Between

Leader of Tomorrow: Secret Ingredients

unpacking and readjusting, I did enjoy a few days off with my

Jyldyz Djumalieva, Izabela Widlak, and Shreya Sarkar-Barney

family visiting the local parks and beaches. Hope each of you had a chance to relax and rejuvenate, as well.

The 1994 launch of Amazon.com by its founder,

This month's newsletter focuses on leadership development.

Jeff Bezos, received barely a mention by industry

In a recent global survey by the Economic Intelligence Unit

experts. Critics questioned the value of selling

43% of the surveyed CEOs expressed concern about the lack

textbooks online when one could easily buy one at

11

of leadership talent.

Coincidently, leadership development

a bookstore.

31

Nineteen years later, Amazon.com

has among the highest levels of investments relative to other

is a 125 billion dollar business empire selling online

types of development programs. There clearly appears to be

everything from books, toys and haute couture to

a disconnect between the types of investments made and the

company manufactured tablets. Bezos is one of

returns. In this issue we investigate leadership development

the 50 richest men in the world. His success is

practices that have the greatest pay-off.

attributed to a foresight about the future of the internet which disrupted the retail world. Although

This month’s Evidence Corner reviews some popular myths

not profitable until 2001, Amazon.com's customer

but have little support to warrant their use. We hope this

base has steadily grown and put many bookstores

inspires you to review your leadership development practices

out of business. Read more >

and replace them with what we know works. As always, we welcome you to visit our website and join a

The Evidence Corner

lively debate on this topic.

Jyldyz Djumalieva, Izabela Widlak, and Shreya Sarkar-Barney

Warm regards,

The leadership development industry has weathered the recession. Organizations are reporting a surge in Dr. Shreya Sarkar-Barney

spending on developing leaders. On an average,

President, Human Capital Growth

companies increased their budgets by 14% in 2012. According to some estimates, just U.S. based companies have spent $13.6 billion on leadership 5

development in 2012. With such significant investments at stake, it is legitimate to scrutinize the effectiveness of these efforts. Especially because CEOs have expressed serious concerns about having insufficient leadership capability in their organizations. In our practice, we find that businesses rely on widely available tools and common practices, to meet their leadership development needs. Read more >

LEADERSHIP DEVELOPMENT

FREE TOOL

To expand your skills in this area join the Leadership Development Course

Download a PDF form of the Leadership Development Activities by Development Phase Tool

US Office: 1091 Crystal Springs Drive Vacaville CA 95688 :: India Office: 49 Buena Monte, 37/3 Pashan Panchavati, Pune 411008, Maharashtra, India :: www.humancapitalgrowth.com :: mailto:info@humancapitalgrowth.com :: +1 707 317 7644 (US) :: +91 8197708610


extraordinary results.

Leader of Tomorrow: Secret Ingredients

14

Jyldyz Djumalieva, Izabela Widlak, and Shreya Sarkar-Barney

Transformational leaders create a compelling vision of the future that captures people’s hearts and minds. As GE CEO,

The 1994 launch of Amazon.com by its founder, Jeff

Jeff Immelt put it “Good leaders have passion...they think

Bezos, received barely a mention by industry experts.

and dream big”.

Critics questioned the value of selling textbooks online when one could easily buy one at a bookstore.

31

Nineteen

16

By connecting the vision to their people’s

values, transformational leaders evoke enthusiasm and engagement to act on the vision. They are usually able to

years later, Amazon.com is a 125 billion dollar business empire selling online everything from books, toys and haute couture to company manufactured tablets. Bezos is one of the 50 richest men in the world. His success is attributed to a foresight about the future of the internet which disrupted

drive team effort beyond what is ordinarily possible. Bezos certainly scores high in this domain. His vision for ecommerce was a trend setter that paved the way for other retailers such as Walmart, Williams-Sonoma and Best Buy. His ability to envision, inspire, and innovate has helped adapt

the retail world. Although not profitable until 2001, Amazon.com's customer base has steadily grown and put

Amazon in the face of stiff competition from sources such as eBay.

many bookstores out of business. Bezos is credited for creating an industry out of nothing. This trailblazer was

Bezos also shows signs of transactional leadership which is

back in the news with his recent purchase of the Washington Post. The troubled journalism and print media industry is slow to change and likely to be a tough

more operationally focused. Employees describe him as a micromanager with an obsession for details. This borders on transactional leadership, a moderately effective leadership

turnaround candidate. It is yet to be seen how Bezos

style, but it also shows signs of derailment behaviors.

reinvents The Washington Post. Many regard Jeff Bezos as the Steve Jobs of today's business world. He certainly

Transactional leaders influence employees’ performance by controlling rewards and punishments. Transactional

is well suited for this thorny job!

leadership serves an important role because it sends a clear When asked what makes Amazon.com successful, Bezos indicated "...long-term thinking, customer obsession, and a

message to employees about the performance expectations and addresses performance issues at hand. However, this form of leadership does not build long-term commitment.

22

willingness to invent". When we look deeper into his

Micromanagers also have a tendency to disempower their

attributes, he is an astute business leader with extreme

employees. Their pursuit for perfection can lead to fatigue.

ambition, extraordinary vision and a tenacity to win. Employees describe Bezos as one with a relentless pursuit 28

to get things right, and maniacal when it comes to details.

He is unusually good at inspiring a results-oriented culture that experiments and innovates.

13

According to some accounts, Amazon.com has among the most stressful work cultures in the tech-business 23

high attrition rate.

8, 27

and a

Examples of great leaders such as Bezos

highlight that even the most successful ones don't have it all. To the extent that the leader's style permeates into the organizational culture, like all human beings, Bezos has some learning to do. Let’s take a look at the core competencies of transformational leaders and why they are so relevant today. Leading change This competency can be defined as gaining employees’

The value created by Jeff Bezos is uncontroversial. If any

commitment to the need for change. To do this effectively

business could find one like him, they would be creating

leaders have to demonstrate a willingness to embrace

astronomical value. But how does his leadership style

change, and candidly communicate the impact of the

compare with what is known about leadership

change. The vast majority of organizations are facing

effectiveness? Bezos embodies many of the

changing economic conditions and a need to adapt their

characteristics of transformational and transactional

business models rapidly.

leaders. Global studies show that while transactional

to proactively respond to new challenges becomes essential.

leaders can be effective, transformational leaders deliver

17

In this context the leader’s ability


Develop future talent

Evidence Corner

Transformational leaders provide employees with

Jyldyz Djumalieva, Izabela Widlak, and Shreya Sarkar-Barney

opportunities to develop new skills, take on additional responsibilities, and grow professionally. Even during the

The leadership development industry has endured the

recession the war for talent has continued to intensify,

recession. Organizations are reporting a surge in spending to

6

especially in emerging economies. This is why leaders of

develop leaders. On an average, companies increased their

tomorrow will need to have an eye for spotting, growing

budgets by 14% in 2012. According to some estimates, just

and retaining talent.

U.S. based companies have spent $13.6 billion on leadership 5

development in 2012. With such significant investments at

Foster creativity and innovation This leadership competency involves a portfolio of behaviors such as (a) creating conditions for the exploration of new ideas, (b) promoting cultures that

stake, it is legitimate to scrutinize the effectiveness of these efforts. Especially because CEOs have expressed serious concerns about having insufficient leadership capability in their

rewards developing and implementing new solutions, as

organizations. In

well as (c) choosing experimentation in favor of low risk.

our practice, we

Most organizations seem to be challenged when it comes

find that

to innovation. In a McKinsey survey, 84% of leaders

businesses rely on

indicated that innovation was extremely important.

widely available

However, only 55% felt their companies are better than their peers at innovation.

tools and common

25

practices, to meet Way Forward

their leadership

The skills which comprise the core transformational

development

leadership competencies are currently in the highest

needs. But

demand. A 2011 DDI survey of 1,897 HR professionals

popularity can

and 12,423 leaders from 74 countries put transformational

sometimes be

leadership in the top five critical skills globally.

6

misguided. Next, we will contrast

Unfortunately, the skills gap in this area is significant and 1

common beliefs

has been documented in several studies.

(myths) with what rigorous studies have shown to work. A Surveys show that major corporations are spending an

word of caution - some of these may surprise you and cause

average of $7,000 toward the development of a high

you to rethink your own strategies!

5

potential leader, yet there is a perceived lack of leadership talent.

11

This alludes to an alarming scenario of high

investments with minimal returns and a significant risk

Myth 1: Although a charismatic leadership style is effective, it cannot be taught.

exposure. Replacing ineffective and unnecessary practices with just a few high efficacy drivers of leader development

Fact: This myth is a remnant of the “Great Man� leadership

can most certainly turn around this dire situation. Our

perspective prevalent in early 20th century that stipulated

course on leadership development is especially designed

that leaders are born, not made. Few professionals in the

to give you the models, steps and tools to pick the high

field will argue that innate traits and leadership behaviors are

impact solutions. In the Evidence Corner we highlight

both important. However, there are many beliefs about what

some of the common myths around leader development

behaviors are effective and how they can be developed.

and uncover the secrets of what works based on our review

Situational leadership training, because of its wide

of the research.

availability, is commonly used. However, studies show that it is mainly effective with less experienced employees.

12, 30

Charismatic leadership, a form of transformational leadership has emerged to be more effective cross-culturally. What's exciting is that researchers have isolated the components of charismatic leadership and successfully trained managers in adopting a charismatic leadership style.

2


Myth 2: Emotional intelligence is the key to developing

the employee's self-esteem. In light of this evidence, the

leaders

quality of the feedback far outweighs the quantity.

Fact: The use of Emotional Intelligence (EI) tests for leader

Myth 4: Best tools for leadership development are well

development has become extremely popular. It intuitively

known and widely available.

makes sense that leaders need to be capable of regulating their emotions and building strong relationships with others.

Fact: Most common leadership development initiatives start

However, the current fad of measuring leaders on EI does

with an assessment. There are over 2,500 assessment

not have a strong scientific backing. There are conflicting

products on the market and only few of these have known

models of emotional intelligence, some measure it as a

relationships to leader effectiveness.

coachable dimension while others treat it as a fixed trait

shelf products lack sound theoretical backing .

that cannot be altered.

7, 32

Such a confusion can be

10, 26

Many of the off-the26

It is still the

case that unqualified hiring managers and HR professionals

troublesome for developing leaders. Do you leave out

continue to purchase, administer and interpret psychological

those low on emotional intelligence or treat them as a high-

assessments. Based on this, we strongly recommend

potential who can be developed? To add to the confusion,

ensuring that your chosen assessments are aligned with

studies show that emotional intelligence correlates highly

Standards for Educational and Psychological Testing and

3

with intelligence. It correlates so highly with cognitive

Principles for the Validation and Use of Personnel Selection

ability, that it’s unlikely to be measuring anything new.

Procedures. More importantly the professionals making decisions based on the tool should be qualified.

What is more predictive of leadership success is metacognitive thinking which is the ability to monitor, evaluate and self-regulate one’s thinking, feelings, and actions. Focusing on meta-cognitive thinking has many benefits. It addresses a leader's self awareness about their feelings, emotions, and ways of thinking. Most importantly, leaders who are self aware understand how their emotions impact their decisions. In studies, meta-cognitive thinking was found to explain between 6 to 22 percent variance in 24

leadership effectiveness.

Myth 3: All feedback is good and more feedback is always better. Fact: In the past decade, there has been widespread adoption of 360 tools for development and performance management. Conventional wisdom suggests that any

Myth 5: Leadership cannot be measured, it is an intuitive judgment.

leadership development activity is seen as incomplete without a feedback loop. Additionally, any increase in the amount of feedback is always preferable. However, a review of the published research found that feedback can 21

backfire. After reviewing a large number of studies on feedback efficacy, the researchers, Kluger and Denisifound that over a third of the time feedback interventions resulted in decreased performance! That’s right – a negative return on investment!

Fact: Many believe that leadership is a deep internal characteristic that can be felt but not measured or described. This creates a dilemma for those building leadership development programs and also for those charged with demonstrating the efficacy of such efforts. While there are still many unknowns about leadership, we have come a long way in isolating a handful of effective leader behaviors and characteristics. We now also have accurate measures of attributes that influence leadership effectiveness. Here's a

It turns out that feedback works when it is task specific and clearly demonstrates the gap between the standard and the performance. Feedback becomes debilitating as soon as it

list showing the strength of relationship between key individual attributes and leadership effectiveness:


Individual attribute

Link to effectiveness Defined as a leader’s competency to develop a compelling vision, link followers’

Transformational leadership

sense of self to the vision, challenge followers to take ownership of their work and be an inspiring role model. Here's a list showing the strength of efficacy between transformational leadership and important leadership outcomes. Overall leadership effectiveness = .44

20

Leader job performance = .26 Organizational performance = .27 The "Big Five" personality traits account for about 15% in leader effectiveness. Personality

18

Conscientiousness =.16 Openness to experience =.24 Emotional stability =.22/ Neuroticism = -.24

Instrumental leadership

Task-oriented leader behaviors (i.e. Job related technical/professional) are positively related to overall leader effectiveness and account for 33.3% of variance.

Meta cognitive ability

Defined as ability to “think about thinking”, this ability was directly linked to leader effectiveness and found to explain 6 to 22% of variance.

Cognitive ability

24

Measures of this ability consistently predict leader effectiveness. Based on metaanalytic studies the strength of the correlation is roughly around .24.

Proactive personality

4

19

Leaders with a proactive personality tend to take on themselves the responsibility to find and solve problems. In recent studies, such leaders have been found to be significantly more effective (average correlation of .33) in reaching unit performance targets.

9

So there you have it, a quick primer on what works in leadership development. If these issues inspired questions about your leadership development practices, please reach out. We love thorny challenges and will be happy to contribute with our best thinking.


References: 1.

American Management Association (2011). Best Companies Pursue Global Leadership Programs. New York, NY (PRWEB), May 23, 2011

2.

Antonakis J., Fenley, M., & Liechti, S. (2011). Can Charisma be taught? Tests of Two Interventions. Academy of Management Learning & Education, 10(3), 1-23.

3.

Antonakis J. & Dietz J. (2010). Emotional intelligence: On definitions, neuroscience, and marshmallows. Industrial and Organizational Psychology: Perspectives on Science and Practice, 3(2), 165-170.

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Antonakis, J., & House, R. J. (2004). On instrumental leadership: Beyond transactions and transformations.

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Bersin & Associates (2012). Next-generation leadership development: SkillSoft’s evolving portfolio exemplifies the changing nature of leadership programs. Research Bulletin, 7(4)

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Boatman, J., & Wellins, R. S. (2011). Global leadership forecast 2011: Time for a leadership revolution. Pittsburgh, PA: Development Dimensions International.

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Cherniss, C. (2010). Emotional Intelligence: Toward clarification of a concept. Industrial and Organizational Psychology: Perspectives on Science and Practice, 3, 110-126.

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Cook, J. (2011). Facebook, Amazon staffers are the most stressed: Google, Microsoft are the best paid. Geekwire. Retrieved from http://www.geekwire.com/2011/facebook-amazon-staffers-stressed-google-microsoft-workers/.

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Crossley, C. D., Cooper, C. D., & Wernsing, T. S. (2013). Making things happen through challenging goals: Leader proactivity, trust, and business-unit performance. Journal of Applied Psychology, 98(3), 540-549.

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Daniel, L. (2005). Use personality tests legally and effectively [electronic version]. Staffing Management, 1.

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Economist Intelligence Unit (2012). CEO Perspectives. The Economist. How HR can take on a bigger role in driving growth.

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Graeff, C. L. (1983). The situational leadership theory: A critical view. Academy of management review, 8(2), 285-291.

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Hogan, R. & Hogan, J. (2001). Assessing leadership: A view from the dark side. International Journal of Selection & Assessment, 9 (½), 40512.

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Howell, J. M., & Avolio, B. J. (1993). Transformational leadership, transactional leadership, locus of control, and support for innovation: Key predictors of consolidated-business-unit performance. Journal of Applied Psychology, 78(6), 891.

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House, R. J., Hanges, P. J., Ruiz-Quintanilla, S. A., Dorfman, P. W., Javidan, M., Dickson, M., & Gupta, V. (1999). Cultural influences on leadership and organizations: Project GLOBE. Advances in Global Leadership, 1(2), 171-233.

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Jørgensen, H. H, Owen, L., & Neus, A. (2008). Making change work: Continuing the enterprise of the future conversation. Somers, NY: IBM Corporation.

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About Human Capital Growth Human Capital Growth (HCG) provides consulting and technology-enabled products and services in evidence-based talent management. It has bases in the US and India, and operates globally through its partnership with the Global Alliance for Performance Improvement (GAPIconsult.com). Clients include Fortune 500 organizations, small and medium size organizations and not-for profit institutions. HCG has recently brought to market a first of its kind innovation - a multi-level courseware and certification on integrated talent management delivered through a cutting edge learning platform. For more information visit www.humancapitalgrowth.com. What Matters™ Human Capital Growth’s What Matters™ series distills the most impactful drivers of talent management practices, packages them for ready use and makes then available as courses, tools, webinars and podcasts. All resources can be accessed through our cloud-based social learning platform and includes mentor support. Our content experts, guided by their cross industry experience, have reviewed several hundred peer reviewed journals articles, top university research, and expert opinions, to bring to you a shortlist of what works in talent management. Talent management professionals can benefit from having access to the right tools and resources for all their client needs, and have the peace of mind knowing that relying on What Matters™ solutions delivers results. Graphic Design: Manasa Bharadwaj, Vinutha P. Image courtesy of stockimages and Ambro at FreeDigitalPhotos.net

©2013 Human Capital Growth, Inc. All rights reserved.

What Matters in Talent Management-September 2013  

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