Benefits June 5, 2002

Leadership Programs Are Lemons, Execs Think

June 5, 2002 (PLANSPONSOR.com) - Most executives are skeptical that formal company leadership programs to attract, develop and retain leaders are fruitful, a survey finds.

Reported by

Camilla Klein

According to Hewitt Associates, 77% of organizations surveyed have formal processes and programs to develop leaders in place, yet a mere 32% believe their organizations are effective in achieving that objective.

The Hewitt study shows that

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while 68% of the firms surveyed have a defined set of qualities they look for when hiring leadership talent,
only 43% of these companies consistently use this criteria when hiring leadership from outside, and
86% use it when hiring from within for a leadership position

Training Methods

When asked how their firms develop high-potential leaders,

67% of the respondents said internal training,
53% mentioned cross-functional experiences and
51% cited external training

While the most popular techniques for middle management were:

internal training, cited by 68%,
external training, listed by 44%, and
cross-functional experiences, mentioned by 32% of the sample

Evaluation

Meanwhile, the survey shows that companies are using a variety of methods to assess leadership behavior and ability,

80% rely on evaluations from managers,
58% use peer feedback, and
40% have self-assessment programs.

As for the success of these programs in determining an appropriate leader for a position,

63% of the sample indicate they are very effective or effective,
30% say they are somewhat effective, and
7% believe their assessment techniques are slightly or not at all effective

Money Motivates

Further, the Hewitt study reveals that 87% of the firms surveyed link leaders’ pay to their individual performance. Specifically,

79% of the sample link base pay to executive performance,
77% link annual incentives, and
64% connect long-term incentives

However, when comparing the pay differential between high and average performance in the same type of leadership role,

only 55% of the sample say that it is significant,
33% say that it’s moderate, and
12% say that pay differs slightly or not at all

The Hewitt survey sample comprised CEOs and HR executives representing 240 major US-based, multinational companies.