Sitting at the intersection between consulting and training, we have a front-row seat to our clients’ business goals, strategic priorities and culture.
We have seen leadership initiatives that boom with great impact and many others that bust. Through that experience, we have identified the common culprits behind why most leadership development initiatives fail to support company strategies and business results, but more importantly we have defined the success factors and a new approach that helps companies and their leaders achieve great performance and execution.
There have been many books and articles written about the extraordinary business success of Southwest Airlines. Yet their continued success deserves reflection as they illustrate one of four major trends we see happening at the intersection of business and talent.
For those of you who need a refresher on Southwest Airlines, below are examples of the plethora of firsts they have achieved in the commercial aviation industry:
- 42 consecutive years of profitability and employee profit sharing
- Total job security, no furlows ever
- For 30 years the best return to shareholders of any stock listed on the S&P 500 index
- Named to FORTUNE Magazine’s World’s Most Admired Companies list for 21 consecutive years
The last two achievements are in competition with all industries – and this is an airline! History has shown that the airline industry has been a major destroyer of shareholder value over the years, and as a business school professor in the 1990s exclaimed, “One of the worst industries to operate a business!” Yet Southwest, relative to other American airline companies, has outperformed to such an extreme that it seems like magic.
These results are not because Southwest is smaller; in fact, they have the most domestic passengers of any U.S. airline.
Their success is not because their prices are high; on the contrary, they launched an era of unprecedented affordability in air travel, described by the U.S. Department of Transportation as “the Southwest Effect.” Their unwavering profit is not because they are cheap and save at the expense of their passenger experience; instead, they enjoy the lowest ratio of complaints per passengers boarded of all major U.S. carriers since the metric was first tracked in 1987.1
So, what’s the secret? How could an airline outperform all other companies on the S&P 500? How can other companies move towards similar success?
Southwest Founder Herb Kelleher and CEO Gary Kelly have a relentless focus on their people. Their line executives own the performance of their people (not the HR function), and their strategy is first driven by what’s right for their people.
Our hypothesis is summarized by a recent quote from Gary Kelley, “Our people are our single greatest strength and most enduring long-term competitive advantage.”
Southwest’s success illustrates the movement towards more line leaders taking ownership of “people” and is one of four key trends we see shaping the market that will have a profound impact on engagement and company performance.
Defining “Great” Leadership
What does “great” leadership look like in your company?
Focused on the task of developing leaders for the past 20 years, we have been surprised by what most companies use as their leader expectations: a competency model, adopted from an external firm, with upwards of 50 universal behaviors. At first glance, it is hard to disagree with the common themes and behaviors – for example, being “customer-centric” or a “strong collaborator” are universally good traits. But at second glance, we tend to agree with the President of R&D for a global pharma company: “We, too, have a leadership competency model. To be honest, I’ve never really known what to do with it or how it applies specifically to our business and my leaders.”
Our view is that all-inclusive leadership competency models slow execution for the following reasons:
Assessing “Great” Leaders
Stop guessing and start pinpointing leadership development needs
How often are leadership development needs and subsequent training programs to address those needs predicated on a group-think process focused on a generic competency model comparable to guesswork? Or on the latest book or article on leadership attributes? When high performance for critical roles is behaviorally defined via a “great” profile, your organization has the basis for a highly objective, quantifiable gap analysis that will pinpoint your top priority leadership needs.
Companies can assess “great” leadership in their organization by building on the solid foundation of a “define great” process. We believe in putting people in the kinds of situations they are likely to face today and in the future at their company, and assessing their thinking, behavior and skills.
From guru-centric development to practicing great leadership at your company
A CEO leading a massive business transformation realizes that her leaders will make or break the company’s success. She engages her CLO to build the leadership training program to support the transformation and requests: “Please promise me that this will not be another soft, squishy class. This program must further our vision and help our leaders lead in both the core business and the new business.” A marketing leader goes to a five-day external program at a prestigious university. She comes back to work and reflects that “out of the five days, I got about a day and half of great speakers, new insights and some good ideas to try out.” When you check in with her a month later, she is manically multitasking on her day-to day challenges and admits she hasn’t been able to apply any of her learning to what matters in her job. Elsewhere, a sales manager goes to management training and returns to tell his manager, “I learned how to read a P&L statement, but I have no clue how that knowledge alone will help my team hit our monthly numbers.”
We have observed three core issues that have caused most leadership development initiatives to fall short, failing to deliver business results:
How to move from leadership program to “great” on the job performance.
The leadership, training and consulting industry has driven little innovation to support a leader truly becoming great on the job. At best, leaders might walk away from a training program with a participant binder or even a reference app with the content they were taught in the classroom to make it more easily accessible. It is also rare that what is taught is also what is assessed in a 360, required for performance management and succession, and compensated with rewards and recognition. Often the expectations set by managers are different than what is addressed in the leadership development program. These inconsistencies cause noise and a lack of focus on what the company needs most.
Our collaborations with clients have shown that we can create high impact support for execution of “great” leadership on the job through the following:
People: From HR to Business Leader Ownership
There is an interesting dance that has evolved between central talent organizations and line executives, and it’s an accountability dance that is common across companies and industries.
How did we get to a place where the C-suite delegates key selection, assessment, development and performance management decisions to someone else? How can this most critical driver of shareholder value be outsourced or delegated? We believe it’s time for business leaders to take back the investment and development of their leaders – arguably the most valuable asset of their business.
In the U.S. alone, companies spend over $14B annually on leadership development. Yet leadership development continues to be identified as a high priority need and a key gap every year in the Conference Board’s CEO research and in Bersin’s Human Capital reports. We believe it’s time for business leaders to take back the investment and development of their leaders – arguably the most valuable asset of their business. And we know that when you “Define Great, Assess Great, Experience Great and Execute Great,” you can move the mean on leadership performance and execution in your company. After all, it’s leaders at every level that develop and execute your strategies for success.
Learn About Accelerating Leadership Development
10 Considerations for Your HiPo Program
In the U.S. alone, companies spend over $14B annually on leadership development.2 Yet leadership development continues to be identified as a high priority need and a key gap every year in the Conference Board’s CEO research and in Bersin’s Human Capital reports. We believe it’s time for business leaders to take back the investment and development of their leaders – arguably the most valuable asset of their business. And we know that when you “Define Great, Assess Great, Experience Great and Execute Great,” you can move the mean on leadership performance and execution in your company. After all, it’s leaders at every level that develop and execute your strategies for success.
- About Southwest, Southwest Airlines, https://www.southwest.com/html/about-southwest/.
- Leadership Development Factbook: Benchmarks and Trends in U.S. Leadership Development, Bersin by Deloitte, July 2012.