Building Organizational Capabilities: Leadership Skills and Lean Practices

published in: Leadership

15 Mar
2010

Building organizational capabilities, such as leadership development or lean practicies, is a top priority for most companies. However, many of them have not yet figured out how to do so effectively.  The odds improve at companies where senior leaders are more involved.

Nearly 60 percent of respondents to a recent McKinsey survey say that building organizational capabilities such as lean practicies or talent management is a top-three priority for their companies.  Yet only a third of companies actually focus their training programs on building the capability that adds the most value to their companies’ business performance.  70% of them face contradiction between their business plan intentions and day-to-day activities.  In addition, companies do not focus on day-to-day activities that could maintain or improve the capability that contributes the most to their business performance.
 
Leadership skill, for example, is considered by the majority of respondents to be the capability that contributes most to performance.  Yet only 35 percent of respondents say they focus on it. And only 36 percent of executives consider their companies better than competitors at leadership development.

Let’s see what the trained people think about the trainings and consultations they participated in.

lean practicies, leadership skills
Chart 1. Effectiveness of company’s management training programs.

I don’t plan to interpret graph.1, but I could not overlook that the employee group provides the least answers “very effective” and the most answers “slightly or not effective”.

 
 
Another McKinsey research, among 1069 companies, reveals that where training is reported to be least effective, top managers tend to invest most in training for the leadership team and least on the employees—despite this group’s more immediate impact on operations. In contrast, companies with effective training programs invest the most in training the employees.
 
240 out of these 1069 companies rated their trainings as very effective in improving business performance. They distributed their training budgets in the following proportions:
lean practicies, leadership skills
Chart 2.  Three years training budget split among employee groups.

Perhaps not surprisingly, at companies where senior executives set the training agenda, the training and skill-development programs are seen as more effective in driving business performance, though there is still much room for improvement.

We claim the management is science.  But as long as the subject prevails in the daily managerial decisions, the science will be second. And we shall continue to face paradoxes like:  70% of the companies to act in conflict to their business priorities.  In real life, it turns that management is function of the leadership qualities of the manager.

 

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