Examples of Leadership Challenges within Organizations

Organizations face challenging, competitive environments and must be more effective and efficient. The challenge for leadership development providers is ensuring those services meet these realities. Here are some examples of leadership challenges:

1. Budgets are tight, and obtaining approval is going to be more difficult. Some organizations are suffering because of the changes brought on by the global pandemic. Governments, nonprofits, and educational systems will be in dire need of deficits and excessive debts. It will be challenging to obtain the budgets for the type of services offered, putting more pressure on professionals to show the value of those services with credible, unmistakable data.
2. A “show me the money” mentality has evolved. In many organizations, when requests are made for certain expenditures, there is a tendency to ask for the value the program delivers. “Show me the money” has been a common expression by senior leaders as they are asked for more budget. There is pressure on service providers to ensure they can show the monetary value and compare it to the cost – the Return on Investment (ROI). Learn more about ROI methodology here.
3. In some cases, ROI forecasting might be the only way to approve a project budget. This would require forecasting the impact in advance and comparing it to the cost to see the ROI generated with the project. It removes uncertainty and ensures the project adds value to the organization.
4. In a competitive environment, there is a need to stand out from others. This involves showing the value delivered when others do not, or at least not in credible ways.
5. There is a need to validate the value proposition. Services have been sold on the promise that they would bring value to the organization. There is a need to validate that proposition to show the client the value that was delivered in terms that executives understand and appreciate.

Why Is Leadership Development Important Today?

Leadership Development Is Needed Now

While organizations have always needed leaders who recognize emerging challenges and drive organizational results, the need is intensifying today as leaders confront market uncertainty, digitization, the power of data as a competitive weapon, and the challenges of motivating a diverse, remote workplace to enhance business performance. These shifts create a need for most organizations to change, which demands more and better leadership development. The result is a record amount of investment in leadership development – more than $200 billion globally.

Business Connection Is Missing

Unfortunately, there is overwhelming evidence that various programs, books, articles, seminars, and conferences deliver disappointing results. Based on a Fortune survey, a mere 7% of CEOs believe their companies are building influential leaders, and only 10 percent said their initiatives for leadership development have a clear business impact. McKinsey’s latest research has a similar message: only 11% of more than 500 executives polled around the globe strongly agreed with the statement that their leadership development interventions achieve and sustain the desired results.

Lack of Alignment

Leadership development providers are uniquely positioned to align the leadership development to the business. However, many providers fail to connect their programs to the business.

Examples of Leadership Challenges for Providers

Providers often encounter their own obstacles when attempting to connect their programs to the business. Here are some examples of challenges when connecting programs to business:

1. Fear of the outcome. There is a concern that leadership development may not drive enough business results to cover the cost, and if the ROI is calculated, it will be negative. This concern stops many evaluations. Leadership development providers are concerned that the lack of business results and a negative ROI will reflect on their performance, and the contract will be discontinued. The reality is that the content and delivery are OK: The support for the application is missing. The challenge is to tackle this issue proactively, not waiting for the client to ask for the business value but pursuing an evaluation strategy to show the program’s value. If the program’s provider pursues the initiative, it creates a better situation. You’re in control of the process. It’s on your agenda rather than an executive’s agenda because you have more time to get it right, and you can make a case for making changes if it needs to deliver appropriate value. If you wait for the request, you are now on an executive’s agenda, have a shorter time frame to deliver results, and are now on the defensive. If the results are disappointing or negative, it could easily result in discontinuing the program.
2. No one is asking for this. This is the second-most common hurdle. In a busy workplace, with deadlines and changing priorities, pushing an evaluation to impact, and maybe ROI, only rises to the top of the agenda if requested. After all, there is a chance that it never will be required. However, it could be disastrous later if you don’t tackle it early.
3. It takes too much time. This is often more of a myth. If you build evaluation into the program and share the responsibilities, it doesn’t take that much extra effort.
4. It is too complex. Apart from the time, there is a concern that the process may involve more statistics, finance, and accounting than most people want to deal with. There are visions of long formulas, statistical concepts, and heavy financial analysis. It is taking the typical leadership development provider out of their comfort zone. Fortunately, this is a myth. A credible impact and ROI study can be conducted that will meet the approval of the chief financial officer and involves only simple mathematics.
5. Not comfortable with business discussions. While most providers are knowledgeable in leader behaviors, facilitation skills, and motivation, some are uncomfortable discussing business issues with executives. Some say they don’t know how to start that conversation and keep it going. Fortunately, much has been published on this topic, including the book Performance Consulting. The book is designed to have those discussions with the ultimate client, the person who is requesting or funding the program.
6. I don’t know how to do this. Many lack the capability. The process is detailed in many books and case studies and taught through workshops and courses. Find a way that works best for you to gain the skills and knowledge to conduct an ROI evaluation.

This challenge prompts some critical questions for leadership development providers, including

• Do you have credible data that shows your major programs made a difference at the impact and ROI level?
  • If not, why not?
  • If so, will it meet the approval of the chief financial officer?
• How are you using those results to promote your business?

The Importance of Impact and ROI

Successful leaders deliver outstanding results, including their impact on their organizations or spheres of influence. Without impact, leaders are considered ineffective. Achieving success requires leaders to deliver on five outcomes, including impact and ROI, effectively. Properly tracking ROI provides numerous benefits, such as increased profitability and informed decision-making. After tackling these above challenges a courageous leader can deliver on all outcomes in the face of many difficulties, challenges, and uncertainties in ambiguous environments.