Fourteen billion dollars. That's how much U.S. companies spend annually on leadership development, according to McKinsey & Co. Despite these significant investments, 30 percent of U.S. companies report a lack of "enough leaders with the right capabilities" to capitalize on business opportunities, McKinsey said.
And it's not just the corporate world that is struggling with leadership development: Whether you're an entrepreneur building your first team or a small business owner, you need to understand good leadership. So, why do leadership-development programs fall short; and what, if anything, can businesses do to develop the effective leaders they need?
I sat down with Jessica Parisi, CEO of the consulting firm BTS USA, to discuss effective leadership development. BTS advertises itself as a global professional services firm supporting businesses with strategy execution, leadership development and sales transformation."
And, as the company's principal, Parisi said she's strived to build BTS's reputation on people-first talent development. That's the opposite of the traditional approach some consulting firms take: emphasizing strategy and process rather than a company's constituents.
Parisi, who has been with BTS for over 13 years, added that she is attuned to the pitfalls of traditional corporate leadership problems. "Too many training initiatives rest on the assumption that leadership will be the same regardless of company culture, strategy or market dynamics," she told me. "A brilliant leader in one situation may struggle in another. Leadership training must be relentlessly contextual and tie development to real, on-the-job needs, not just theoretical exercises."
To develop your own leadership skills, Parisi advised, you need to first understand what makes a successful leader. Here's how Parisi's leadership essentials can apply to your own leadership development:
1. Leaders grow with their business.
Effective leaders perform and transform. They're willing to change not only behaviors, but also the mindsets underlying these behaviors. For example, if a manager were struggling to delegate tasks, simply telling that manager to be less of a "micromanager" would be insufficient, Parisi said. The leader would need to proactively confront the mindset that was causing this behavior in the first place, such as fear of losing control over the business or a false belief in the need to personally make every decision.
Only by challenging these beliefs can a leader truly evolve and grow with his or her business.
On this note, Parisi said, she recently worked with a global software company that needed a fundamental shift in executive strategy, starting with leadership beliefs. "The company was suffering from low employee engagement and weak internal trust scores," Parisi said. "We worked with the company to reset internal expectations, create new accountability systems that would support this leadership style change and develop 7,500 company leaders.
"In 18 months, the company's employee trust score went from 28.5 percent to 52.3 percent, and employee engagement increased by 3.11 percent."
This engagement increase might seem small to some, but Parisi said the company's finance department equated the change to "an operating profit increase between $124 million and $171 million."
Your takeaway: Being an effective leader requires more than just changing behaviors. You need to be willing to confront the belief systems underlying these behaviors.
2. Leaders create a context in which everyone succeeds.
As Tammy Erickson from London Business School has written, being a great leader today is less about being "best" at a single skill and more about "creating a context in which others can succeed." This starts with building your organization's capacity for collaboration and ensuring that the organization has a continual infusion of new perspectives.
Parisi agrees. "When we are doing strategy, leadership or change work, we operate from a core belief that leadership is relentlessly contextual," she said.
Great leaders don't dictate a single path forward, Parisi said. Instead, they frame challenges facing their organization in ways that are "evocative and inspiring" helping all employees to feel personally invested in solving these challenges. They build frameworks to shape questions on and make sense of disparate data.
Your takeaway: Lay the groundwork for success by providing talented employees with the opportunity to form strong, trusted relationships that empower their success, rather than pitting peers against one other. Continually ask yourself, "How can I create a context in which everyone succeeds?"
3. Leaders serve and empathize.
Parisi said she attributed much of her professional success to the lessons she learned in her youth. Holding many roles in both student government and sports groups, she said, she developed an early understanding that the foundation of leadership is service. She also credited her father, a prison warden, as a mentor who significantly influenced her approach to power.
"I could tell how much compassion and kindness he exuded towards the inmates," she said. "I could sense that the inmates felt respected by him. It was a great example of bringing grace to a position of power and not abusing it."
Your takeaway: Empathy is the ability to experience and relate to the thoughts, emotions or experience of others. Empathetic leaders spend more time listening than talking. They don't let feelings control a situation's outcome. They're attuned to the concerns of others; and, as a result, their employees trust and respect them -- driving engagement, productivity and passion.