Tag Archives: ROI

Training or Mentorship to Build Leadership Skills?

Peter Harms

Leadership development services are at least a $134 billion annual expenditure in the US, leading many to consider the estimated and actual Return on Investment (ROI).

Paul Lester

Paul Lester

A six-month study of U.S. Military Academy cadets at West Point provided some clues.

University of Nebraska-Lincoln’s Peter Harms collaborated with Paul Lester of the U.S. Army Comprehensive Soldier Fitness Directory, U.S. Military Academy’ Sean Hanna, Gretchen Vogelgesang of Federal Management Partners, and University of Washington’s Bruce Avolio to evaluate:

Sean Hanna

– Sean Hanna

  • -Candidates’s readiness to receive candid feedback from a variety of sources,
  • Mentoring from an engaged, supportive leadership coach,

-Realistic advancement opportunities in the organization.

Bruce Avolio

Participants were randomly assigned to an individual mentorship program or classroom-based group leadership training.
Those who participated in the semi-formal mentorships were significantly more likely to report increased confidence in assuming a leadership role than those in the classroom training.

Mentoring group’s effectiveness was significantly related to a coaches’ ability to:

  • Establish a trust-based collaborative relationship,
  • Provide support,
  • Offer candid, observational feedback,
  • Become sponsors and advocates when the cadets assert leadership.

Additionally, participants who experienced greatest gains in leadership skills and confidence were:

  • Open to receiving candid feedback from mentors,
  • Willing to receive challenging and negative feedback.

The least expensive approach to leadership development did not produce the greatest results, suggesting the importance of individualized attention. 

Ted Kaptchuk

Ted Kaptchuk

This effect was demonstrated when attention from authorities became a placebo effect for 250 patients with documented symptoms of Irritable Bowel Syndrome (IBS).

Those who received the most individualized attention in three no-treatment conditions reported the greatest symptom relief even though they received no medical intervention and participants were informed that the “treatment” was a placebo , found Harvard’s Ted Kaptchuk.

The most important “active ingredient” in leadership development training may be personalized attention, followed by candidates’s readiness to receive candid feedback and to implement recommendations.

 -*How has personalized mentoring helped you develop leadership competencies?

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Equal Pay Act’s Fiftieth Anniversary: Progress but no Parity

Equal Pay Act 1963

Equal Pay Act 1963

When U.S. President John F. Kennedy signed the Equal Pay Act in 1963, women earned 59 cents for every $1 earned by a man.

Today women are up to 77 cents on the dollar, according to the U.S. Equal Employment Opportunity Commission Chair Jacqueline Berrien.
She noted that the wage discrepancy is even larger for African American women and Latinas.

Jacqueline Berrien

Jacqueline Berrien

Women MBAs graduating from top U.S. business schools in 2012 fared slightly better than the national average, with 2012 Stanford alumnae earning just 79 cents for every $1 earned by a male grads, according to Bloomberg Businessweek’s annual surveys of 24,716 recent MBA graduates from each year’s top 30 U.S. business schools since 2002.
Given the substantial investment of time, money, and effort in obtaining these advanced degrees, women graduates may question this Return on Investment (ROI).

Women from the MBA classes of 2012 averaged 7.3 percent less than their male counterparts with average salaries of $105,059.
This wage disparity is more than triple the 2.2 percent gap women MBAs experienced in 2012 on average earnings of $83,404.

The survey considered pay differences by industries and found women lagged behind men in pay in eight of 11 sectors in 2012, including accounting, finance, marketing, and operations.
The gap has increased across industries since 2002, even in non-finance fields like information technology and entrepreneurship.

The largest pay differential was in highly-compensated financial fields like venture capital and private equity field, where women earned only 82.5¢ for every dollar men made — about 10 ¢ less on the dollar than in 2002.
In contrast, consulting offered the closest pay parity in 2012, with women earning 99¢ for every dollar of male classmates’ salaries.

Women earned more than men in three industries: human resources, non-profits, and investment banking.
The first two industries tend to attract more women and be lower-paid than other fields.

EEOCBerrien, of the EEOC, opined that with the current backsliding in parity progress, the gender pay gap is predicted to close in another 44 years, in 2057 — provided that there is no further deterioration of pay equity advancement.

CB Insights reported that in California from January-June 2010:CI Insights Founder Gender - 2010

  • 89 percent of series A and seed-funded companies had all male founders, compared with only 8 percent that had founders of both genders, and just 3 percent of businesses with all female founders
  • 82 percent of company founders were white, compared to 18 percent that were Asian or Pacific Islander

Equal Pay DayThe 2013 Silicon Valley Index, compiled by economic think tank Joint Venture Silicon Valley found significant income disparities by race in addition to gender from 2009-2011:

  • African-American residents’ income dropped 18%, compared to a 4% decrease across the U.S.
  • Hispanic resident’ income decreased 5%, similar to the rest of California
Catherine Bracy

Catherine Bracy

Catherine Bracy observed that the average woman in Silicon Valley, California’s “economic powerhouse”, earns 49 cents for every dollar men make in Silicon Valley, when averaging incomes of African American and Hispanic women residents.

NerdWallet analyzed data from the U.S. Census for 366 metro areas to determine the lowest pay gaps for women in small, medium, and large cities, and concluded that on balance, Silicon Valley was one of the “best places for women to work.”

Wage discrepancy in one of the U.S.’s most economically viable areas, whether around the national average or well below, demonstrates that 50 years after the Equal Pay Act, the average female worker in the U.S. is far from earning an equal wage.

Happy Anniversary, Equal Pay Act of 1963, and Many Happy Returns of the day for at least 44 years, until women’s pay may be equal across industries and geographies.

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ROI of Effective Managers

Dilbert and Pointy-Haired Boss

Dilbert and Pointy-Haired Boss

Inept managers cause stress, cynical posting of Dilbert cartoons, and foment incredulous recounting of unparalleled cluelessness.
However, the all-too-rare effective manager delivers a creditable Return on Investment.

Edward Lazear

Edward Lazear

Stanford’s Edward Lazear and Kathryn Shaw collaborated with Christopher Stanton, now of of University of Utah to study the impact of nearly 2000 supervisors on more than 23,000 employees’ output productivity in a large  services firm.

Kathryn Shaw

Kathryn Shaw

They found that although there is substantial variation in managerial quality, as measured by their effect on worker productivity, the skillful managers in this workplace improved productivity by 10 percent.

Christopher Stanton

Christopher Stanton

Lazear, Shaw and Stanton demonstrated that replacing managers rated in the lower 10% of boss quality by employee output with managers in the upper 10%, the resulting increase in team total output is about the same amount as adding one worker to a nine member team.

In addition, effective managers are associated with increased productivity among both top-rated workers and the lowest-performing workers, with greater performance increases among the firm‘s top performers.

The researchers noted that employees’ peers had negligible impact on productivity measures, so they concluded that productivity increases are significantly influenced by managerial behaviors.

These findings point to the importance of hiring skilled managers and improving or removing unskilled managers to drive productivity and associated profit.

As a result, pre-employment assessment and managerial training industries are required to demonstrate efficacy in selecting already-skilled managers, and transforming less-skilled managers into top performing supervisors.

Some argue that developing managerial skill is a long-term behavior change because many of the interpersonal behaviors of effective managers have long-standing characterological roots.

For example, Lazear reported that the best managers in this large sample demonstrated humility and a sense of humor in their efforts to teach and motivate employees.
These attitudes develop over years, and may not be amenable to short-term training interventions.

Randy Hodson

Randy Hodson

Randy Hodson of Ohio State University conducted an ethnographic study of “worker citizenship behavior”, including level of work effort, absenteeism, and employee engagement.

He found “manager citizenship behavior” has the greatest impact on employee engagement, work effort, and employee’s related productivity.
These management behaviors include:

  • Leadership practices
  • Communication style
  • Commitment to worker job security
  • Providing appropriate work supplies and tools to achieve workers’ output requirements
  • Absence of “management abuse.”

Managers who respected worker rights and maintained an effective, productive environment for workers  had workers who invested more efforts in work and achieved greater productivity, besides having a better relationship with each other and with bosses.

Watson Wyatt TowersWatson Wyatt’s WorkUSA 2009 survey of 13,000 full-time U.S. workers across all job levels and in all major industries that organizations with highly engaged employees had:

The report found waning employee engagement over job tenure:  Employee engagement is highest in the first six months on the job, and is more than 11 percent higher during that “honeymoon period” than for longer-tenure employees.
Employee engagement drops nine percent after the first six months on the job, and continues to decline.

Watson Wyatt’s regression analysis of these data found that this 11% decline in employee engagement has the same expected impact on employee productivity as a decline of assets per employee of nearly 0.6 percent.

To offset the impact on productivity, a typical firm would need to invest more than $2,700 per employee.

A similar regression analysis controlled for industry, firm size and capital intensity and estimated that 11% decline in engagement is associated with a 1.7 percent reduction in market value.
For the typical S&P 500 firm, this decreased expected market value could be $216 million, suggesting that managerial behavior is a critical determinant of productivity and ultimate market value.

The challenge for top management is to evaluate sustained improvement in managerial behavior attributable to managerial learning and development interventions, to ensure Return on Investment for managerial development.

-*What managerial attitudes and behaviors have you seen increase employee productivity?

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