Every organization will undoubtedly rate its leadership development efforts by different criteria, and what means success to one company may have little or no impact on another. Still, it is doubtful that a company would have a positive outlook on its efforts unless focused and deliberate efforts are being made. More than anything else, it is interesting to see that companies now take great pride in the investment they are making in leadership development and that these investments consistently produce results.

Historical context: Fifty percent of all companies surveyed rated the effectiveness of their leadership development efforts as either “excellent” or “good,” compared to 32 percent in 2000 (Figure A.1). This shows a general increase in activity around leadership, as well as more effective execution on leadership investment over the past eight years.

The majority of organizations surveyed indicated that their formal leadership development systems have been in place for somewhere between one and three years, while the next highest percentage of respondents indicated having practiced leadership development for twelve or more years (Figure A.2). Overall, the average age of a formal leadership development infrastructure is roughly five years.

Leadership development is a critical function to any organization, and one that has become increasingly accepted in the past decade. Although many companies have historically operated ahead of the curve and have led the way, this seems to be a newer practice for most. Relating back to the previous question, a trend can be seen in that many companies that have been practicing leadership development only within the past three years have already achieved a level of confidence in the effectiveness of their efforts, showing that results, whether formal or informal, have been seen relatively quickly.

It is largely recognized that CEO support and direct involvement are critical success factors in leadership development. Having clear buy-in from the top has an invigorating effect on leadership. Not only are practitioners typically given more leeway and more budget allocation with which to design leadership development systems, but engagement among selected leaders and managers is visibly higher when encouragement comes directly from the uppermost slats on the ladder. These data suggest that leadership development is a considerable priority among CEOs today.

Historical context: In 2008, 68 percent of companies recorded their CEOs had at least moderate involvement as compared to 53 percent in 2000 (Figure A.3). While leadership development was still a priority eight years ago, this trend has increased by a statistically significant amount in the past several years.

The results here are quite split. While many organizations recorded spending within $50,000 on leadership development, a close number also recorded spending over $500,000 each year (Figure A.4). Together these two groups represent the majority of companies surveyed.

Much of our research, through surveying and direct conversations with leadership development practitioners, suggests that one of the highest priorities, and greatest challenges, for organizations is the development of senior leaders (Figure A.5). Success in this objective is dependent on multiple actions: identifying the competencies that differentiate top leaders in a company, finding the right combination of adult learning methodologies to maximize retention, eliciting engagement from high-level employees, and instilling a culture of teaching and knowledge transfer from senior leadership positions down throughout the company.

Historical context: The data from this survey vary little from the data collected in 2000. Although the proportionality among which leaders are targeted remains the same, it has been noted that the percentage of companies that focus on executives and middle managers has increased slightly since 2000.

An effective leadership development system is based on a long list of success factors. Often the greatest challenges lie not only in identifying and developing leaders, but in facilitating a smooth integration between leadership development (LD) efforts and other functions of the business (Figure A.6). This is critical to the success of an LD system as business success relies on the ability to develop the right leaders to execute on the right strategies and corporate initiatives.

Historical context: In 2008, the majority of companies expressed four key areas where they felt their leadership development systems were the strongest: helping participants meet the challenges of a changing work environment, developing leaders, identifying potential, and building ongoing commitment to leadership development. In 2000, many of these top factors were the same; however, overall effectiveness of each individual factor was significantly lower. In addition, individuals polled in 2000 indicated that linking leadership development to business strategy was one of their most proficient areas. This was the exact opposite in 2008, with strategic alignment identified as one of the most critical challenges: 22 percent of all organizations list it as a noteworthy issue (Figure A.7).

This is most likely due to several factors. Organizational strategy has become more complex as globalization, improved technology, increased competition, and values-based or ethical business play a greater factor. In addition, the emphasis placed on linking development efforts with corporate strategy has increased, making it more of a priority among practitioners who wish to see improved results.

While many organizations have extremely robust and effective internal leadership development systems, even the most renowned learning companies often rely on external services or vendors to assist in some aspect of their leadership training. Among the most common external services practitioners use are leadership development programs, which include off-site conferences, executive education programs, training workshops, and institutes. Among the various reasons for using external development programs, many practitioners agree that putting on a leadership development program can be very expensive if handled internally and sometimes is not justifiable under budgetary limitations. Vendors that specialize in such services are able to allocate greater resources to design and execution, while spreading costs over a larger pool of participants so as to keep prices down.

Historical context: Our 2008 results show that 73 percent of organizations polled send leaders to external leadership development programs (Figure A.8), while in 2000 only 61 percent reported doing so. This change is likely due to several factors. First, internal leadership development efforts have become more complex and more long term, while offering a greater range of learning methods and resources. The increased use of varying methodologies such as business simulations, action learning teams, coaching and mentoring, multirater assessments, and job rotation have decreased the amount of resources spent on internal programs. At the same time, the market for leadership development has increased, leading to a greater supply of renowned programs spanning private, academic, and nonprofit sectors.

One of the first steps in designing a leadership development system is to identify the variables that make up the ideal leader—the competencies that are most critical to success in the organization. Because every organization is different, each one rates leaders by different criteria. Based on our polling, the clear top priorities among practitioners were strategic thinking, communication, relationship building, and talent development, with strategic thinking being the most prioritized competency by a wide margin (Figure A.9). This coincides with the previous findings suggesting that aligning leadership development with organizational strategy remains one of the biggest challenges for practitioners. Beyond strategic thinking, the emphasis rests on some of the softer aspects of leadership such as communication, inspiring trust, and building relationships. This shows an increasing level of value placed on the aspects of charismatic leadership and illustrates that many organizations have a need for more leaders with the emotional perception and maturity to lead successfully.

The lack of emphasis placed on some of the more role- or context-specific competencies such as financial management, business/technical knowledge, or networking/organizational savvy is an interesting trend. It makes sense, though, when compared to previous findings on the populations targeted for leadership development. Most organizations polled had a focus on senior leaders, whose responsibilities are traditionally less geared toward task management and more toward strategic design, vision, and organizational leadership qualities.

Formal selection processes for high-potential employees are a staple of a robust succession plan. While many of the organizations polled showed confidence in the effectiveness of their development efforts, only 46 percent reported formal processes for selecting those with high potential (Figure A.10). One possible explanation is that the majority of populations targeted for leadership development are senior leaders within their respective companies. Many organizations that do not have tremendous budgets for leadership development find effective ways of preparing their senior leadership teams, but do not get the chance to expand their efforts to less tenured populations within the company.

Historical context: Since 2000, the percentage of organizations that invest in formal high-potential selection processes has increased by a significant amount: from 34 percent to 46 percent.

This is one of the more highly contested subjects in leadership development, as it is unclear which practice is considered to be best practice. Many organizations believe that sharing information on an employee’s high-potential status as a leader will likely increase that person’s engagement in development efforts and improve commitment to the organization. However, other practitioners attest to the notion that employees who are informed of high-potential status will be more likely to become complacent, demand greater compensation, or brag to colleagues. The reality is that the effectiveness of this approach is dependent on the organization itself and its unique culture.

Historical context: Although the percentage of those who do not inform individuals of their high-potential status is quite high in 2008, at 76 percent (Figure A.11), the rate was even higher in 2000, at 81 percent. Not only have organizations become more liberated in their leadership development practices over the years, but development efforts geared toward those with high potential are becoming increasingly common. It is likely that the frequency at which high-potential people are selected and informed of their status will increase in the future.

Often 360-degree assessments are considered to be the most comprehensive and accurate form of assessment, factoring in multiple raters including peers, managers, and direct reports. These results can be tied directly into another aspect of leadership development by contributing to the formation of an individual development plan and serving as the foundation for one-on-one coaching efforts.

Historical context: Since 2000, the practice of 360-degree assessment has become much more central to the leadership development process. Our earlier survey showed 34 percent of participants rated 360-degree feedback as important or very important, compared to 59 percent in 2008 (Figure A.12). This is closely related to the increasing popularity of one-on-one executive coaching, which has fast become a staple in many leadership development systems.

One of the most challenging tasks in designing a leadership development system is choosing the best suite of adult learning methods. A number of methodologies are considered to be best practice, but designing a system is much more than throwing together a hodgepodge of best practices. Practitioners must design their leadership development efforts around the unique aspects of their organizations, such as their mission and values, employee demographics, short- and long-term strategies, and budget. Not only that, but in a system that incorporates multiple methodologies, each has to complement the others so as to create a seamless and consistent system.

Among the most widely leveraged development formats, participants in 2008 identified 360-degree feedback, leadership development programs, facilitated discussion, individual development plans, and team building (Figure A.13). This shows a general leaning toward more hands-on methods (360-degree assessments, facilitated discussion, team building) and customized solutions (individual development plans). Certainly over the past few years, organizations have taken part in a general shift away from well-worn approaches such as executive M.B.A. programs and accelerated promotion in a move to stay on top of the innovation curve. Meanwhile, leadership development programs remain a high priority for their variety and relative cost-effectiveness.

Historical context: The most significant change that can be seen from 2000 is in the use of two methodologies: coaching and distance learning. First, the use of internal and external formal coaching efforts has increased by 7 and 18 percent, respectively, while the use of internal and external informal coaching efforts has increased by 10 and 14 percent, respectively. On average, internal coaching efforts are more widely used in 2008; however, we see a larger incremental increase in the use of external coaching as more and more companies are becoming well known for their success in aligning with external coaching vendors in a way that complements their individual strategies. Meanwhile, internal coach training methods have become more effective and more accepted, yielding increases across the board. Fueling the flames of coaching are new and innovative methods such as Marshall Goldsmith’s FeedForward approach, which has seen enormous acceptance among internal and external coaches.

Like coaching, distance learning use has increased over the years—this one more dramatically. In 2000, our surveys showed that none of the companies polled were formally engaging in distance learning compared to 18 percent in 2008. First and foremost, we see a wide acceptance of technology-enabled blended learning methods over the years. In addition, our conversations with various leaders and organizations show that distance learning broadcasts can be an effective foundation for facilitated team-building interventions. Finally, the spreading global distribution of many companies demands the use of remote or virtual learning methods in lieu of face-to-face team interaction. It would not be surprising to see a further increase in the use of remote or technology-enabled learning methods in the future.

The results in this case are fairly consistent across the board. Among the methodologies most frequently selected, most represent best practices that have been widely accepted but remain difficult to execute (Figure A.14). Cross-functional rotation is a frequent challenge for practitioners who have difficulty extracting their leaders from existing roles in which responsibilities and demands are high. Exposure to the strategy planning process is a development tool widely heralded, but generally possible only with high levels of commitment from the top. Exposure to key executives can be a challenge as long as these key executives remain inaccessible.

However, when comparing results from 2000 to 2008 in all aspects of the survey, one overwhelming trend is that leadership development continues to become a high priority for organizations in all industries around the world. Senior commitment continues to increase, as well as engagement among target leaders. The sacrifice of committing one’s time to personal development and the development of others becomes less and less unbearable, and it is safe to say that the hump that stands in the way of incorporating many of these growing methodologies will shrink.

At the same time, practitioners are getting better at what they do. It can be seen from the data that they are becoming more selective of traditionally used models such as executive M.B.A. programs and accelerated promotion, and instead are focusing on tailored development methods that fit carefully selected competencies for their business and their leaders such as one-on-one coaching and individual development plans.

Among leadership competencies in the workplace, two categories stand out: strategic alignment and emotional intelligence. The corporate scandals of the late 1990s have had a great effect on the business world, causing companies to become more attuned with their unique and uncompromised value systems. Concurrently increasing competition has forced organizations to adopt carefully crafted strategies and focus on niche markets. Together these factors encourage leadership development to move in a direction that focuses on alignment and strategic capability: building the next generation of leaders with those who are home grown, devoted to the culture and values of their respective companies, and who have the broad strategic focus to lead their organizations toward new market opportunities.

At the same time, the focus on softer skills such as communication and relationship building shows a new perspective on leadership development. Practitioners have a clear line of sight to results that are less tangible and less measurable, such as improvements in charisma and emotional perception. Many see the leader of the future as the person who can craft a vision, communicate it effectively, and exude the trust and authenticity necessary to rally others to become invested in its completion.

Over the next decade, we anticipate a further rise in leadership development budgets. Much of this will undoubtedly be spent on technology, particularly given the rate at which organizations are switching their focus to the globally dispersed playing field. Use of 360-degree assessments and feedback will also continue to rise as younger generations of leadership talent come in with a greater desire to learn and develop themselves. Coaching efforts will see an increase. Vendors and global coaching networks will continue to expand and improve their offerings to provide the best partnership possible to their clients. Meanwhile, companies such as PepsiCo and HP lead the way in leaders-teaching-leaders approaches: maximizing the teaching capability of internal executives to create a sustainable and completely internal cycle of learning from one generation of leaders to the next. This will continue to evolve, and with it will be a further increase in the use of formal internal coaching efforts. Finally, we anticipate a greater rise in the development of leaders at all levels, from senior leaders down to high-potential people, with unique attention given to the development of women and global leaders.

We have seen leadership development rise consistently over the years. New generations of employees come to work expecting their organizations to invest in their development, and at the same time organizations place more emphasis on the capability of high-performing leaders and leadership teams to stimulate growth. As the need for talent becomes greater and global competition becomes tighter, organizations will respond. We have already seen companies like General Electric and Procter & Gamble lead the way. More organizations will follow suit by developing efficient and sustainable systems for leadership development.