Changing the Currency

New Research on How Businesses Calculate the ROI of Executive Development

Vistage InternationalNovember 2012

How do businesses measure ROI on executive development efforts?

What methods of executive development are most used?

What methods are most effective?

Who We Talked With…

• Ulrich Nettesheim, Lecturer, UC Berkeley’s Haas School of Business

• Steven Stripe, Senior Vice President of Finance, Equifax

• Katie Rials, Director of Human Capital Development, SCI Companies

What We Created… • 31-Item Survey

• August 2012

• 346 responses representing more than 175 organizations worldwide

Some Participant Organizations

4

State of Leadership

• Impactful leadership development directly tied to business performance

• Financial limitations continue to put competing pressure on development initiatives

• Collaboration, communication and shared vision are key area of focus

State of Executive Development

Hybrid

Non-Traditional Executive Development

Traditional Executive Development

Defining DifferencesTraditional Non-Traditional

Leadership Retreats Internal Peer Group Meetings

Workshops Regular Cross-functional team meetings

E-learning/Online Training Custom-designed development plans

Classroom Training Executive Coaching

University/Advanced Degree Programs External Peer Group Meetings

Off-site Seminars/Speakers Internal Leadership Meetings facilitated by external consultant

Rotational Assignments

Most PopularTraditional Non-TraditionalLeadership Retreats Internal Peer Group Meetings

Workshops Regular Cross-functional team meetings

Off-site Seminars/Speakers Custom-designed development plans

E-learning/Online Training Executive Coaching

University/Advanced Degree Programs External Peer Group Meetings

Classroom Training Internal Leadership Meetings facilitated by external consultant

Rotational Assignments

TDO48%

HDO*52%

Traditional vs. Hybrid

* Hybrid development organization = those that use four or more peer-based / collaborative (non-traditional) executive development methods annually

Changing the Currency

Cutting-edge collaborative executive development methods require leaders to examine how they measure success– Financial metrics remain important– Research revealed additional metrics that

help business leaders measure effectiveness

New Measures: 5 Key Drivers of ROI

Growth

Alignment

Collaboration

ExecutionRetention

Succession

HDOs are more aligned to a common vision

Executives are more informed about the goals/processes of the organization

Executives share a common vision for the organization

Executives frequently work together

Across business units, goals are aligned

64%

62%

56%

64%

87%

89%

84%

85%

HDO

TDO

Q: Please describe how your organization’s approach to executive development affects the alignment between Execs and overall business strategy. (% strongly or somewhat agree)

Alignment

HDOs are more collaborative

Collaboration is part of our company culture

Group conversations take place outside of meetings

My company has an open dialogue & common language

Business units fully support decisions made by other business units

Senior leaders are comfortable having difficult conversations

59%

78%

49%

39%

35%

73%

91%

73%

52%

55%

HDO

TDO

Q: How much do you agree/disagree that the following practices related to collaboration are exercised in your organization? (% strongly or somewhat agree)

Collaboration

HDOs are better at resolving conflict

People rely on open dialogue & communication to discuss conflicts

There is a clear understanding of who is best positioned to solve problemss

When faced with a conflict, leaders calmly & collectively face issues

All parties relevant to a conflict are given equal opportunity to share

39%

37%

46%

43%

59%

56%

69%

63%

HDO

TDO

Q: As a whole, how effective is your organization at the following conflict resolution methods? (% very or somewhat effective)

Collaboration

Executives in HDOs feel more ownership of the strategic direction

Executives have ownership of the strategic direction

Executive team determines the strategic direction of the company as a group

66%

66%

87%

83%

HDO

TDO

Q: How much do you agree/disagree that executives at your company feel like they have ownership of the strategic direction of the company? (% strongly or somewhat agree)

Execution

HDOs make strategic decisions faster

Speed at which strategic decisions are made

Speed at which new initiatives are implemented

Speed of necessary course correcting

50%

40%

36%

69%

54%

56%

HDO

TDO

Q: How effective is your organization at the following: (% very or somewhat effective)

Execution

Keys to Increased Retention

• Leadership• Aligned Rewards Systems• Culture• Development / Growth

Retention

Research did not uncover any key differences regarding retention among HDOs and TDOs. This could be an area that warrants further research.

HDOs have greater bench strength

My organization has ready replacements for key positions

My organization is able to identify bench strength

My organization promotes the internal HiPo population

14%

27%

48%

44%

51%

71%

HDO

TDO

Q: How much do you agree or disagree with your organization’s approach to succession planning? (% strongly or somewhat agree)

Succession

HDOs achieve better growth rates

Flat or negative growth

10% + growth

43%

11%

36%

15%

HDO

TDO

Q: Please describe the growth rate of your organization’s revenue in the last fiscal year:

Growth

The Payoff: HDOs Better Positioned for Business Success and Stronger Growth

• Blended approach – it’s the mix that matters

• Collaborative methods build the capability of the organization, not just the individual

• Collaborative, peer-based models drive best results

Visit us at www.vistage.com/hci to download the entire research report and for more information on collaborative,

peer-based executive development programs

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16,000 Members in 15 Countries

Vistage member companies generate nearly $300 billion in annual revenue, employ 1.8 million people worldwide, and outperform their competitors