Our just-released 2012 Bersin & Associates Leadership Development Factbook® shows that U.S. companies have increased leadership development spending 14 percent over 2011 levels to an estimated $13.6 billion in 2012.
This is a huge increase, bringing the average spending per leader to impressive levels:
On what are organizations spending $13.6 billion? We believe U.S. companies will invest those funds in developing a new breed of leaders, creating more comprehensive solutions, hiring additional leadership development (LD) staff, and acquiring tools for identifying and developing future talent in-house.
In addition to increased spending, there has been a shift in spending further down the leadership chain as companies focus on developing all levels of leaders, especially their high-potential talent, to remain competitive. Although companies traditionally have invested heavily in senior leaders, today, senior leaders consume only 22 percent of an organization’s leadership development budget. That is lower than in prior years, as more money is spent on all leader levels and spent disproportionately on high-potential leaders.
Leadership Development Budget Allocations
(Refer the executive summary of the LD Factbook for more information).
High-potential leaders are the pulse of our organizations. They are critical to ensuring that businesses meet their goals today, tomorrow, next year and the following. Increasingly, executives are realizing how important this group is to corporate competitiveness. Mars, one of the world’s largest food manufacturers, is investing in leadership development to strengthen its high-potential talent across regions. To advance high-potentials’ careers to senior leadership positions, individuals are encouraged to have business unit experiences beyond a singular region or function. This diversity of experiences promotes the level of agility required to succeed in a global marketplace.
Dow Chemical is another example of an organization investing in high-potential development. Dow’s high potential leadership program incorporates a customized blend of coaching, on-the-job experiences and formal classroom learning commensurate with an individual’s career stage. The program has served both to develop individuals and to channel talent into diverse opportunities – resulting in new ideas and creativity which improve the organization’s ability to achieve business goals.
In addition to data that support development of high-potential leaders, we can find data everywhere that point to alarming turnover and attrition rates as well as deficits in leaders’ skills. This substantiates the need for organizations to commit to development of all leaders, not just high-potentials. Consider this public sector turnover information shared in the Washington Post on November 5, 2010:
Or this private sector turnover data as shared by Mercer in October 2011:
- In 2012, 32% of employees are "planning on leaving" their employers, vs 19% two years ago.
- Only 55% of employees believe their employer is a sound "long term" place to work vs. 65% over the last three years.
- People under the age of 35 are twice as likely to be looking for new work as older workers.
—-Mercer October 2011
Or this skills deficit article published by the Financial Times:
As we discuss in our leadership development and succession management research, there is a growing imbalance in leader bench strength and skills across the world. Employers now realize they have to build skills internally via tailored development solutions that emphasize experiential and collaborative activities with less time devoted to formal learning – the 70-20-10 model of development.
Today’s 70-20-10 leadership development solutions point to a whole new approach to leadership development – one which builds a "continuous learning environment" – informal and on-the-job, mobile, social and some traditional classroom learning all blended together over months. The organizations we showcase in our Leadership Development Factbook demonstrate some of the most exciting, business-integrated, performance-driven leadership development solutions I have ever seen. The effort to build those solutions can be intense; the payoff is more intense in stronger leadership capabilities, reduced employee turnover, and better financial and business performance.
Go to http://marketing.bersin.com/LDFactbookMB.html to learn more about our 2012 Leadership Development Factbook. And, please join us on August 21st at 2pm ET/19:00 BST for an online webinar Developing Your Leaders: How Much Should You Invest to learn more about our leadership tools, self-assessments and benchmarks in spending, staffing, resource allocations and delivery methods so you can optimize your leadership development.