Common objections of mid-market companies to investing in leadership development programs reflect real constraints and concerns. These companies do not have many hierarchy levels and often rely on informal processes for talent management and development. But it’s important to overcome objections, because the data shows a clear correlation between superior talent planning and business performance. The author presents five ways to design leadership development programs that work. By following these steps, you can free up time, build institutional capacity while developing individual skills, and create a thoughtful plan for moving your organization forward.
Developing managers and leaders in mid-market companies is a very different challenge than large companies, for various reasons. In my work, I hear these three most often:
- Lack of Resources: “We cannot afford to send our emerging leaders to business school. “
- Perceived lack of time: “We don’t have the staff to send our leadership / management teams off site.
- I’m not sure if it’s a good choice: “We don’t use Amazon here, and I don’t see how the leadership programs I hear about can solve our problems.”
We cannot simply dismiss these objections; they reflect real constraints and concerns. At the root of all three is the fact that mid-market firms are, by and large, sparsely managed. They don’t have many hierarchy levels and often rely on informal processes for talent management and development. And every leader, from CEO to bottom, has a full plate of day-to-day responsibilities and little ability to take on tasks that don’t move the day’s work forward.
But it’s important to overcome the objections – mid-market companies will benefit immensely from leadership development programs, and not employing them can cost them dearly. Designing and delivering the right program doesn’t have to be out of reach.
Data from the National Center for the Middle Market shows a clear correlation between superior talent planning and business performance. But while leaders rate themselves high in their ability to identify and evaluate their best performers, they give themselves poor marks in four critical areas addressed by leadership development programs: succession planning, senior development. potential, identifying retention risks and mapping and filling skills gaps.
In two decades of developing and delivering leadership development programs, primarily for mid-market companies, I have learned several lessons about how to design programs that work.
Design the program to solve urgent problems. Of course, leadership development is an investment in the future, but it can also solve immediate problems. What appears to be a resource constraint – too little money, too little time – can go away if properly framed.
We worked with a healthcare technology company that was growing so rapidly that senior management resisted a development program for emerging leaders due to lack of time. It took me about three months of coaxing by myself and the HR manager to finally convince the CEO and CTO to give it a try. We started the program by focusing on one of their most pressing needs: removing bottlenecks by giving managers the skills to take charge of their bosses’ projects, freeing up time for leaders. Investing in leadership development has actually freed up more time than it costs.
Focus on scaling, not just growing. Growth and scale are not the same. In general, we think of growth in linear terms: a company adds new resources (capital, people or technology) as its turnover increases. In contrast, scaling occurs when incomes increase without a substantial increase in resources. Understanding this distinction has helped the healthcare technology company see leadership development in a new light.
Together, we have developed two matrices. The first, an empowerment matrix, matched the acquisition of skills against the ability to take on new responsibilities. The second showed the capabilities of the leaders of each department as well as the capabilities of the company as a whole. Together, the two executives helped senior executives see how to align leadership development investments with the most pressing business growth needs, which allowed management to reduce the time they spent overseeing. (work in the company) and increase the time they spend leading (working to deals).
In the first six months of implementing these two frameworks, productivity increased by 30%, and in a recent conversation with the CEO, he said that they are now starting to have a scalable model. Once the workload in the business was significantly lightened, we rolled out the rest of the program, which has helped the business exceed its revenue targets for the past three years.
Train in the real world as well as in the classroom. Mid-market companies are rightly reluctant to “pull people out” in order to grow. We encountered this problem while working with a Northeastern discount retailer that was experiencing exponential growth. This growth was straining every aspect of the business, from IT and logistics to merchandising and store management.
We worked with their internal learning and development team to create a program for high potential leaders around the real issues facing the business. Working with successive executives of emerging leaders, we created groups that chose the specific challenges the company was facing, researched and developed solutions, and presented them to the management team. We then supplemented the project work with class discussions about the leadership principles they were discovering and applying.
This hands-on approach to leadership development, often used in large firms, is less common in the mid-market but, ironically, is more valuable there, as mid-market firms rarely have a “back-up” management capacity to take advantage of. new initiatives – everyone has a day job. Cleverly designed leadership development programs can in fact build this kind of capacity, building institutional capacity at the same time as it builds individual skills.
Make sure the students win too. With flatter hierarchies and leaner structures, mid-market companies have fewer promotions to distribute than larger companies, so it’s important to link a leadership development program to internal career opportunities.
At the retailer, the growth was so rapid and the internal management pipeline so insufficient that the company had to seek outside the majority of new executive hires. The leadership development program has turned the tide. The cross-cutting projects exposed students to executives they might not otherwise have encountered – with overwhelmingly positive results: all former students in the first class of the leadership program were promoted to vice president and au- above, and the majority of new executives are now internal promotions, although they have grown from just over 200 stores at the start of the engagement to over 1,000 stores today.
Transmit culture as well as skills and frameworks. The mid-market is full of companies run by founders whose cultures are key parts of their relationship with customers. As businesses grow, these cultural traits tend to be diluted by the process. The process may be inevitable; dilution is not. Bring leaders into the classroom to teach, give presentations by academics or outsiders, and most importantly, tell stories. Just because a business is mature doesn’t mean it has to lose its character.
Once you are ready to start developing your leaders, where do you start your research? Executive MBA programs at large universities can be great, but their cost, time commitment, and focus on typical big business challenges can make them a less than optimal choice for the mid-market. Most community colleges have continuing education programs that feature programs or workshops that can help. But if you want something that’s right for you, start by reaching out to your network and find out what has worked best for them. Remember, the most important consideration is that the program you choose is suitable for an organization like yours.