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New Bersin & Associates Study Shows that Top Executives Suffer from Lack of Leadership Development

Nearly half of U.S. companies have no leadership development programs or use inconsistent approaches

Oakland, CA – November 19, 2009 – Bersin & Associates, the only research and advisory firm focused solely on enterprise learning, talent management, and talent acquisition, today announced the release of its latest study, Leadership Development Factbook 2009: Benchmarks and Analysis of Leadership Development Spending, Staffing and Programs. The study is the industry’s most comprehensive source of data on spending, resource allocation, program design, and impact of corporate leadership development.

The research isolates clear and measurable business benefits of strategic leadership development. These benefits include improved financial performance, higher levels of employee engagement and retention, and a greater ability to adapt to transformational business changes. “Organizations that implement strategic, four-level leadership development programs are simply better companies. They deliver markedly greater financial returns, they adapt more rapidly to business change, and they endure tumultuous business cycles,” said Kim Lamoureux, principal analyst and co-author of the study.

“Leadership development continues to be a top priority within organizations, with 62% of respondents citing it one of the top three talent strategies for their organizations,” said Lamoureux. “Yet most leaders – from first-level to senior executives – fall short in many skills and capabilities. Our research shows that only 37% of respondents rate the capabilities of their top executives as excellent. First-line supervisory skills are rated even lower. Fewer than 20% respondents gave first-line supervisors an excellent performance rating.”

The study continues to find that the most senior executives are not getting enough focused development. Twenty percent of companies do not offer any development to executives – the highest percentage for any management level. In addition, the study shows that fewer than half of executives have development plans in place.

According to Josh Bersin, president, these findings are profound. “Our research over the last five years clearly shows that high-performing organizations take leadership very seriously. Top performing companies in every industry segment are led by individuals with deep levels of experience and understanding of the business, comprehensive abilities to see the future and drive change, and a unique set of personal skills that fits into the culture of their organization. Such a complex set of capabilities takes years to develop and must be continuously improved. Excellent business leaders are like athletes – they must continually work on their game.

Other key findings of the research include:

  • Only half of all leaders participated in some type of formal or informal leadership development over the last year. These low participation rates are due, in part, to tighter budgets in the current economy. Many of these programs are being curtailed or modified for greater efficiency and companies are being more selective in choosing leaders for development programs.
  • The majority of leadership development budgets goes to lower-level leaders. This is due to the fact that first- and mid-level managers vastly outnumber higher-level leaders and receive primarily formal, more costly types of development (such as traditional, instructor-led classroom). At the upper levels of leadership, executives receive 15% of leadership development budget dollars and senior leaders receive 22%. However, companies spend far more per person annually on developing these senior leaders: $1,900 per senior-level leader and $3,333 per executive, as compared to $533 per first-level manager and $1,000 per mid-level manager.
  • Companies are shifting to more informal methods for leadership development. The higher up the leadership chain, the more informal and personalized the development becomes. Once an individual reaches the executive level, the majority of development occurs informally. Just one-third of the companies in the study offers formal development programs to executives. Executive development consists primarily of coaching, mentoring, and experiential or on-the-job learning.
  • Leadership development is beginning to mature. Nearly half of U.S. companies have no leadership development programs or use an inconsistent approach. This is a decline from last year’s figure of 60%. Twenty-six percent have a focused or strategic approach to leadership development – an increase over last year’s figure of 17%. So, although leadership development is still immature within most companies, many organizations are making progress in moving toward more effective leadership initiatives.

The 128-page report is based on a June 2009 survey of 352 U.S. companies – all of which offer some type of leadership development programs and represent a broad cross-section of industries and company sizes. The purpose of the study is to provide organizations with ready-to-use metrics for benchmarking and planning their leadership development efforts. These include metrics on spending, budget allocation, staffing, participation levels, delivery methods, and development hours. The study also includes best practices and examples for improving the effectiveness of leadership development programs and the impact of leadership development on an organization’s turnover, employee productivity, and other business metrics.

Leadership Development Factbook 2009: Benchmarks and Analysis of Leadership Development Spending, Staffing and Programs is available at no cost to all Bersin & Associates research members. Non-members can purchase the study for $595. For more details, including an executive summary and a table of contents, click here.

About Bersin & Associates

Bersin & Associates is the only research and advisory firm focused solely on research in enterprise learning, talent management, and talent acquisition. The company’s WhatWorks® membership program offers actionable guidance, improves operational effectiveness, and delivers business impact to companies in all industry segments.

Bersin & Associates research members gain access to a comprehensive library of best practices, case studies, benchmarks, and in-depth market analyses designed to assist professionals in making fast and confident decisions. Members also have direct access to analysts and a wide range of tested tools and models to address both strategic and day-to-day challenges.

More than 5,000 organizations worldwide have used Bersin & Associates’ research and advisory services to guide talent and corporate learning strategies. Research areas include planning and strategy, learning programs and delivery, talent management, leadership development and succession planning, talent acquisition, technology and infrastructure, informal learning, social networking, measurement, and analytics.

For more information, go to www.bersin.com or call 561 455 0622, extension 223.