In a world where talent and innovation reign supreme, investing in leadership development has become a crucial strategic move for organizations across industries. Research conducted over the past year reveals staggering statistics that highlight the significance of nurturing and empowering leaders. By delving into these findings, we gain valuable insights into the importance of leadership development, as well as the barriers preventing organizations from fully embracing this transformative practice.
The results of these research findings might be surprising to some more cynical individuals, including the 11% of senior executives surveyed by McKinsey & Co. who felt their leadership development initiatives had a clear business impact.1
Leadership coach Susan Aloi, PhD, FACMPE, interim assistant program director and professor for the Doctor of Health Sciences (DHSc) Population Health program at Thomas Jefferson University, thinks she understands why there might be doubters around the return on investment for assessing leadership competencies and growing them.
“In all of my research over the past 24 months,” Aloi noted during her 2023 MGMA Summit presentation, “I found that 80% of health systems believed … the investment in leadership development is a strategic imperative, [yet] only 20% of them actually invest in leadership development.”
The impact of leadership development
As professionals strive to find fulfillment in their work, it’s no surprise that, as Aloi noted from her research, 25% of employees express a desire to engage in tasks aligned with their strengths — this aspiration has far-reaching implications for employee satisfaction and overall productivity. Additionally, Aloi pointed to the important role of development to fuel higher worker satisfaction: Gallup workforce polling has found that 87% of millennial workers rate development opportunities and professional/career growth as important in their job, and nearly 6 in 10 (59%) rank those opportunities as “extremely important” when applying for jobs.2
And in a continually competitive market for healthcare workers, these types of opportunities can help stave off staff departures in an era when more than 70% of high-retention-risk employees will leave their company to advance their career.3 Employee engagement studies from Deloitte support the rationale for doing more in leadership development, as their findings point to retention rates being 30% to 50% higher in companies with strong learning cultures.4
Barriers to leadership development
While the benefits of investing in leadership development are clear, Aloi said organizational leaders typically cite five main barriers for not investing in leadership development:
- The lack of financial and staff resources stands out as a primary deterrent, preventing many organizations from committing to leadership development. Concerns about expenses and resource limitations hinder the creation of the necessary infrastructure for these programs.
- Short-term focus emerges as another roadblock, as organizations prioritize immediate results over long-term development. The pressure to meet financial targets often overshadows the importance of building a strong leadership team capable of navigating future challenges. This short-sighted approach may hamper growth and hinder organizations from achieving their full potential.
- A lack of understanding also plagues some organizations, as they fail to grasp the critical nature of developing leaders. Perceiving it as an unnecessary expense rather than a vital investment, they overlook the long-term benefits such development programs offer.
- Resistance to change further exacerbates the situation, with leaders hesitant to invest in developing new leaders who may challenge their authority and disrupt the status quo.
- Lack of time to develop their leaders. Building effective leaders is a time-consuming process that demands careful attention and investment. However, the reluctance to commit these resources hampers the growth and potential of leaders and the organization.
Case study: Unleashing leadership potential
- Munson Physician Network case study
- 37 managers across seven departments: Ambulatory nursing, cardiovascular, medicine specialties, oncology, primary care, surgery/orthopedics, women and children’s
- Leader assessments, MGMA knowledge assessments and leadership development plans used
- Group coaching classes and one-on-one leadership success coaching integrated to the model
Aloi worked in a partnership between Posada Consulting and the Munson Physician Network — part of Michigan-based Munson Healthcare — to develop high-potential leaders within the medical group practice over a seven-month period. Through leadership assessments, MGMA knowledge evaluations and individual leadership development plans, the program honed the skills and competencies of 37 diverse leaders across various departments. Group coaching, experiential learning and one-on-one coaching were integrated into a comprehensive high-potential leadership program, showcasing the power of such an approach.
“As you think about developing a leadership development institute in your organization … you need an outline,” Aloi stressed. “You have to think of the end point where do you want to end and then design backwards.” To that end, Aloi provided eight best practices she recommends to incorporate in a leadership development institute:
- Identify the participants: “Include clinical and non-clinical leaders, and also make sure you have diversity and inclusion as part of your program,” Aloi said.
- Assessments and coaching: Conduct comprehensive assessments to identify strengths and weaknesses, enabling targeted coaching for growth.
- Develop competency models: Define the competencies required for effective leadership early in the process so that the education offered is “based on what your leaders need rather than what you think your leaders need,” Aloi said.
- Customized education: Align educational programs with identified gaps and strategic goals, ensuring relevance and impact. “Many organizations … put together strategic goals, push them out to the organization and cross their fingers and hope they happen without intentionally thinking about [whether] leaders and their teams have the knowledge and skills needed to meet or exceed those goals,” Aloi said. “Without asking that question, you’re more likely to not meet your goals.”
- Embrace the dyad/triad leadership model: Building better connections between clinical and nonclinical leaders will foster team performance, communication, collaboration and positive leadership culture, all of which help lead to better patient care.
- Focus on team development: “In our industry, we focus so much on the individual leader and neglect to also build the team that’s following them,” Aloi said. Cultivate the followership component of leadership, nurturing cohesive and high-performing teams.
- Build bench strength: Identify and develop high-potential leaders within the organization to ensure long-term growth and retention.
- Intentional leader assimilation: Implement a comprehensive onboarding program — perhaps six to nine months long — that facilitates the integration of leaders into the organization’s culture and fosters their growth from day one.
The value of assessments
Identifying the strengths and weaknesses of your leaders “provides the organization and the leader valuable information that helps to identify where the leader is going to excel and areas where they need to improve,” Aloi said, noting that it then allows for development of targeted strategies for growth. “Without doing this, you are shooting in the dark,” she added. Assessments also help facilitate career planning.
Creating customized development plans to address the individual’s specific needs offers “a roadmap for improvement over the next year,” Aloi said, which in term provides the benefit of self-awareness to the individuals in the development institute. “This helps them identify blind spots and biases that may be hindering their effectiveness as a leader,” Aloi said. “And let’s face it, we all have blind spots, and we all have biases that we’re not aware of. … To know about them is going to help us be better leaders.”
Assessments throughout a leadership development institute also provide a means to measure its impact. “When you invest in an institute, you need to be able to demonstrate the efforts over time, so you can compare pre- and post-assessment results,” Aloi said. These comparisons allow for adjustments to be made, as well as longer-term performance as measured by retention rates, promotion rates, strategic goal achievement and financial performance. Aloi suggested organizations could survey the team members who report to leadership institute graduates to gauge performance.
The assessments also should help guide coaching conversations. The coaching conversations for the Munson Physician Network “were so rich and open,” Aloi said. Through one-on-one and group discussions, “we talked about what we did well, what we didn’t learn well, and we learned from each other in a safe environment.”
Development plans and competency models
Each of the 37 practice managers in the Munson institute had individual development plans based on strengths they identified and development opportunities, with goals for each of those areas and specific action plans. “We made sure these action plans and focus areas aligned with strategic goals, so that we weren’t creating more work for the individuals in the organization,” Aloi said.
Most of the time, the competencies needed for development “align strongly with the values of the organization,” Aloi said, who recommended integrating MGMA knowledge assessments based on the six domains of the Body of Kowledge for Medical Practice Management to inform those competency models.
“You may look at your leadership team who have completed the MGMA knowledge assessments and found that 40% of them have a knowledge gap of financial operations,” Aloi said. “While that may not be good, it’s beneficial then because now you can laser focus your improvement efforts.” Aloi said that these types of competency-based frameworks encourage leaders to view capabilities holistically and align them with certain departments, practices or even specific job roles.
The sample competency-based framework that Aloi shared (Figure 1) distinguishes competencies needed for people leaders, operational leaders and strategic leaders at different levels of the organization. “All leaders need a customer focus. … Driving execution is also going to be extremely important for leaders, but maybe not so much as the individual contributors,” Aloi said.
Building a leadership institute curriculum framework
A formalized curriculum — aligned with your strategic objectives, organizational values and the previously identified competencies — is essential. Aloi stressed the need for experiential learning as part of that framework.
“Adults learn through experience,” she said. “Adult learners don’t necessarily learn by sitting in front of a computer, maybe that’s about 10% — 20% to 30% is through the coaching, and then the remainder is through that experiential learning.” If leaders need proficiency in data analytics, experiential learning on where and how to pull data to analyze for cost and revenue opportunities is going to be more successful than “watching a 30-minute video.”
The success of a leadership institute curriculum often hinges on use of a dyad or triad model, especially for leaders managing the shift to value-based care. The triad model of including nurse leadership alongside physician and administrative leaders is seen as increasingly important for organizations looking to rebuild workflows and establish successful programs for managing population health.
Once that triad team is identified, it’s crucial to help them develop relationships and build trust to work together as a team, Aloi said, and get them to work from a shared set of key performance indicators (KPIs), as well as distinguish “who manages what” and how the triad can act “when something’s out of the ordinary,” she added. It also provides major benefits in longer-term strategic thinking.
“I have found that the triad leadership model helps exponentially with provider productivity models and leveraging technology,” Aloi said. “Having that team to lead strategic initiatives for practices and departments is going to be critically important for the future, because you need that clinical perspective, as well as that administrative perspective.”
Diagraming a curriculum across multiple months (Figure 2) offers a high-level view of what manager-level leadership institute participants need to do. Aloi recommended cohort learning of groups of diverse individuals across the organization as they focus on their learning and development. “I have found that putting that diverse team together with varying knowledge sets is more robust, because they learn from each other and they build community within that team,” Aloi said, “and they leverage each other’s knowledge in safe places.”
Aloi recommended personal one-on-one coaching as one of those venues for individuals to have conversations about vulnerabilities and how to improve. She also suggested breakfast forums, behavioral-based courses and simulations in the first months of an institute as ways to engage with manager-level leaders to ensure there are multiple dimensions to the experiential education that has proven successful with adult learners.
Moving beyond the first 90 days of an institute, Aloi suggested bringing in more skill-based learning to complement the continued personal coaching, along with group/shared learning cafes and interprofessional project teams. Aloi said she has seen success in asking senior organizational leaders about projects that they have always wanted to get done but never pursued and putting them in the hands of the leadership development institute cohorts. “Not only does it contribute to organizational success,” she said, but it also gives leaders visibility into other parts of the organization and build internal networks as they work on the project.
Toward the final weeks of the institute, Aloi recommends knowledge exchange and celebration of the developments achieved.
For senior-level leaders with high potential, the curriculum model can be extended to a two-year program (Figure 3). This approach “is a little more intensive from a time commitment and assessment commitment,” Aloi said, but it typically is more exclusive, with participants nominated by the executive team and medical staff leadership.
Aloi emphasized that the models she presented are very robust and should be scaled to the needs of an organization. “You don’t have to try to do everything all at once,” she said, noting that the Munson work began with only a seven-month program before slowly ramping up.
To that end, Aloi recommends that organizational leaders keep in mind where these efforts can fail, typically due to:
- Lack of alignment with organizational goals
- Poor design, inefficient follow-up or ongoing support to learning leaders
- Lack of buy-in from senior leaders
- Inadequate evaluation to determine program effectiveness
- Lack of diversity and inclusion.
“You can’t just turn people loose, there’s got to be intentional learning — this is where the coach comes in,” Aloi said. “Knowing what you want to measure to know you are successful is also important. You want to be able to look at financial performance that these leaders are linked to, are they achieving their strategic roles? Have we improved retention? Have we increased promotion? Have we increased recruitment? Are our team feedback surveys better?”
Beyond alignment of stakeholders, connecting institute goals to organizational strategic goals and effective communication, Aloi emphasized that a successful leadership development institute is “a learning journey that aligns with competencies and values” that matter to the performance of the leaders.
Organizations that neglect to invest in leadership development jeopardize their standing in the industry and risk losing top talent to competitors who prioritize nurturing their leaders. By acknowledging the significance of leadership development, overcoming common barriers and implementing a comprehensive framework, organizations can unlock the full potential of their leaders and propel themselves towards sustainable success. The future of your organization depends on the leaders you develop today.
- Feser C, Nielsen N, Rennie M. “What’s missing in leadership development?” McKinsey & Company. Aug. 1, 2017. Available from: https://mck.co/3PJ9Si0.
- Adkins A, Rigoni B. “Millennials Want Jobs to Be Development Opportunities.” Gallup. June 30, 2016. Available from: https://bit.ly/3NGW6dq.
- Lorman. “39 Statistics that Prove the Value of Employee Training.” Sept. 1, 2021. Available from: https://bit.ly/3pHC2zx.
- Deloitte Insights. “Becoming irresistible: A new model for employee engagement.” Deloitte Review. Issue 16. Jan. 27, 2015. Available from: https://bit.ly/3rj7uo7.