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Bersin & Associates Research Shows U.S. Leadership Development Spending Surges 14 Percent to an Estimated $13.6 Billion in 2012

New Bersin & Associates Study Shows Companies Focus on Developing Bench Strength In-house, with High-Potentials Getting the Largest Investments

Oakland, CA – July 16, 2012 - Bersin & Associates, the leading membership-based human resources research and advisory services firm, today announced new research that shows U.S. companies have increased leadership development spending 14 percent over 2011 levels to an estimated $13.6 billion in 2012. The findings, which appear in the Leadership Development Factbook 2012: Benchmarks and Trends in U.S. Leadership Development and are summarized in a WhatWorks® market brief titled Leadership Development: Growing Our Own, also indicate a shift in spending further down the leadership chain as companies focus on developing all levels of leaders, especially high-potential talent, to remain competitive.

The Bersin & Associates research, available to WhatWorks® members and for sale to non-members, shows that companies that excel at leadership development spend up to 60 percent more per participant on average than their less sophisticated peers. That investment delivers key business results including 20 times greater employee retention. The research is based on an online study of nearly 400 U.S. organizations, and was conducted in part through collaboration with Human Resource Executive magazine in Q1 2012. The research included a series of qualitative interviews to better understand issues and trends.

“With the economy improving and corporate restructuring behind them, most large organizations have set their sights on global expansion, highlighting the need for new leadership skills in global acumen, agility and innovative thinking,” said Josh Bersin, chief executive officer and president, Bersin & Associates. “Of the $13.6 billion we estimate U.S. companies will spend on leadership development this year, we see those funds invested in developing a new breed of leaders, creating more comprehensive solutions, hiring additional leadership development staff, and acquiring tools for identifying and developing future talent in-house rather than relying on the external job market to solve their talent challenges. Our WhatWorks research helps members benchmark their programs, budgets and staffing levels to drive informed investment decisions that accelerate business results.”

Giant pharmaceutical company Merck, a Bersin & Associates member since 2008, is an exemplary large global company that builds its leadership bench strength internally by leveraging many of the trends discussed in this research.

Bersin & Associates’ Leadership Development research validates an important component of our Merck Executive Development program, which is to target senior leaders with global strategic responsibilities,” said Jim Phelan, Senior Director, Organizational Learning, Merck. “ We do this by arranging visits for these leaders to prominent organizations in the region and interactive learning discussions with local leaders. By observing and experiencing local business practices first hand, leaders develop a heightened situational awareness and appreciate the context of conducting business in an emerging market.”

Life sciences manufacturer Illumina, a Bersin & Associates member since 2010, demonstrates another key finding cited in the Bersin & Associates research: that the most sophisticated companies follow a 70-20-10 development model for all leader levels. In this model, 70 percent of learning is experiential, 20 percent is through exposure to coaching, feedback, networking and other collaborative activities, and 10 percent through formal education-based learning interventions.

“We used Bersin & Associates to support and explain to the business how this model accelerates development of leaders for next-level roles by focusing more on key experiences supported with coaching and feedback, and less on classroom-based training,” said Sharon Hartmann, Director, Talent Management, Illumina.

The study also found:

  • Mature companies invest more. Companies at the highest level of sophistication with strategic leadership development initiatives on average spend 30 percent to 40 percent more per participant than the least mature companies. As Bersin & Associates foundational research1 has shown, organizations with high-impact leadership development programs are seven times more effective at delivering improved business and talent results than organizations with less sophisticated leadership development functions.
  • Greater investment at all leader levels. Although companies traditionally have invested heavily in senior leaders, today senior leaders consume 22 percent of the leadership development. That’s a lower proportion than in prior years, as more money is directed down the leadership chain.
  • Disproportionate spending on High Potentials. High-potential leaders are critical to ensuring that businesses meet their goals now and in years to come. Increasingly, executives are realizing how important this group is to corporate competitiveness. As a result, organizations are investing heavily, spending approximately $7,100 per high potential leader on development initiatives.

To learn more about Bersin & Associates membership and to download a complimentary WhatWorks® Market Brief on this research, go to:http://marketing.bersin.com/LDFactbookMB.html

The full report is available today: $995 for a PDF and $1145 for a print copy. For more details, go to: The Leadership Development Factbook 2012: Benchmarks and Trends in U.S. Leadership Development

Bersin & Associates members may register to join Karen O’Leonard, Director Research Methods & Analytics and Principal Analyst, Benchmarking, and Laci Loew, Senior Analyst, Leadership Development for an online webinar at 2 p.m. ET/19:00 BST August 21 Developing Your Leaders: How Much Should You Invest

Those interested in learning more about Bersin & Associates and its WhatWorks® membership may also email info@bersin.com or call (510) 251-4400

For media queries, email laura.evenson@bersin.com or call (415) 465-2711.

About Bersin & Associates

Bersin & Associates is an award-winning, membership-based company empowering human resources, talent and learning organizations to drive bottom-line impact through world-class research and consulting. Our WhatWorks® research membership gives Fortune 1000 and Global 2000 HR professionals the information and tools they need to produce results for their businesses, based on global best practices.

Members use our insights and tools to design and implement best practice solutions, benchmark against others, and select and implement systems. A piece of Bersin & Associates research is downloaded every minute during the business day. More than 5,000 organizations worldwide use our research and consulting to guide their HR, talent and learning strategies.

1High-Impact Leadership Development: Best Practices for Building 21st Century Leaders, Bersin & Associates/Stacia Garr, Laci (Barb) Loew, October 2011