Ebook

Leadership Development
as a Strategic Advantage
Impact of talent trends How leaders impact business outcomes What separates leadership programs

Leaders are the (not-so-secret)

secret to strong business
performance
There’s a direct connection between a company’s leadership and its
business performance. Bad managers don’t just make the workplace
unpleasant — they cost organizations billions of dollars each year. On the
flip side, when companies increase the number of talented managers in
their ranks, they double the rate of engaged employees and achieve,
on average, 147% higher earnings per share than their competition.
Companies that invest in their leaders and demonstrate that leadership
development is an organizational priority see meaningful benefits. This
investment includes actions like outlining clear performance expectations,
offering formal strengths assessments, and providing feedback and
structured development opportunities to help hone leadership skills.
Leaders in these companies are 1.5 times more engaged in their roles and
twice as likely to vote their employer a best place to work.
And good leadership isn’t just relevant for a company’s performance
today — it’s critical for addressing skills gaps in the workforce and
identifying and nurturing the leaders of tomorrow. Yet only one in three
leaders are effective at building talent.
These data points tell the story of how leadership can influence
a company’s performance for better or worse. But what does this
mean for how your company approaches leadership development?
This ebook will explore the lasting impact leaders have on a
business, and how investing in leadership capabilities can help
a company meet any challenges that come its way.

Leadership Development as a Strategic Advantage 2

Executive summary
When evaluating the strengths of your company’s leaders, it’s beneficial
to look for fresh perspectives from within — especially in the current
macroeconomic climate. Investing in the growth of existing executives
and identifying individual contributors or junior managers for leadership
development is a talent strategy with long-term payoff. A survey of HR
leaders from over 1,700 companies finds that internally hired executives
see 25% higher success rates in their roles than external hires.
Leaders are crucial to ensuring employees feel valued and heard.
When organizations invest in leadership development programs, they
create a strong internal leadership pipeline. Not only that, but the
efforts also result in more engaged employees, greater innovation,
happier customers, and better overall business outcomes.

In this ebook, you’ll learn:

What current talent Which business Why leadership

and recruiting trends outcomes leadership development
mean for the future of development programs require
your workforce influences most a unique approach
directly

Leadership Development as a Strategic Advantage 3

1
The impact of talent
trends on your workforce
Specific concerns for hiring
and developing leaders

2
How leaders impact
business outcomes
How good leaders impact
business results

3
A distinct approach to
leadership development
How you should go about
developing your leaders

Leadership Development as a Strategic Advantage 4

1
Impact of talent trends How leaders impact business outcomes What separates leadership programs

The impact of
talent trends on
your workforce

Leadership Development as a Strategic Advantage 5

Impact of talent trends How leaders impact business outcomes What separates leadership programs

A look into the current

employment landscape
The talent market has seen massive upheaval and uncertainty
ever since the beginning of the pandemic in March 2020.
You have likely seen some, if not all, of the following employment
and hiring trends impact your workforce, and you are unlikely
to see them go away in the near future.

The Great Resignation shows no signs of slowing

According to McKinsey, the voluntary quit rate of employees is now 25% higher
than pre-pandemic levels. Two out of five employees globally said they were
thinking about leaving their current role in the next three to six months, a
movement dubbed “The Great Resignation.” Workers are leaving for roles that
offer better work-life balance, pay, management, or a greater sense of purpose,
while employers scramble to fill open roles and replace those who have left.

Hybrid and remote options put workers in

a position of power
The increased availability of hybrid or remote opportunities means workers
are no longer limited by their geographic location and proximity to an office.
As a result, companies see increased pressure on human capital and must
compete globally to attract and retain talent.

of employees said they were

40% thinking of leaving their job

Leadership Development as a Strategic Advantage 6

Impact of talent trends How leaders impact business outcomes What separates leadership programs

Career growth and development is a top priority

among employees
The lack of opportunities for advancement was one of the top reasons
employees gave for leaving their roles in 2021. Companies looking to retain their
talent must prioritize ongoing career growth and development.

Uncertainty about a potential recession

Countries continue to grapple with effects from the pandemic, like supply
change complications and a difficult labor market, causing widespread economic
uncertainty. The International Labour Organization projects global growth to
reach 3.6% in 2022, 0.8% lower than January 2022 projections. And for each
unemployed worker worldwide, there are 32% more vacancies than before the
pandemic. Meanwhile, in the U.S., the July 2022 Labor Department job report
left economists’ heads spinning, with 528,000 jobs added (around twice the
expected number) and pay 5.2% higher than the previous year.

Amid these conflicting signals, The Washington Post reports that, “Big Tech
is bracing for an economic recession and an uncertain future,” citing news of
layoffs, slowing venture capital investments, and hiring freezes in Silicon Valley.
Taken all together, it’ll likely be more difficult to secure the right people with the
leadership skills required to help companies meet challenging business goals.

Despite global economic

concerns, the International
Labour Organization
reports companies have
32% more vacant roles
than before the pandemic.

Leadership Development as a Strategic Advantage 7

Impact of talent trends How leaders impact business outcomes What separates leadership programs

Specific concerns for hiring

and developing leaders
In addition to the talent market trends described above,
there are additional concerns when it comes to hiring and
developing leaders. With the market as competitive and
uncertain as it is, hiring strong leaders is especially difficult.
In this challenging labor market, developing the skills and
effectiveness of existing leaders takes on new urgency.
The following reflections on the state of leadership
development today are relevant for companies of all sizes.

Talent mobility programs can ease some

hiring burdens

20%
One solution to your company’s leadership challenges is to
“build” rather than “buy” the talent your organization will need —
in other words, train current employees with the skills required
to take on leadership roles in the future. This talent mobility
approach requires identifying the skills your organization needs higher likelihood of
in future leaders and creating a plan to develop these skills in retaining a top performer
your existing workforce.
over a three-year period
While this involves more systemized planning and effort than
simply hiring new leaders, internal mobility programs build a
consistent leadership pipeline, reduce the risk of hiring employees
who are poor culture fits, and expedite onboarding times when
internal transfers step into new roles. This is also an effective
method of retaining high-performing employees. Research from
SmartRecruiters found that giving an employee a different role
or responsibilities improved the “likelihood of retaining a top
performer over a three-year period by around 20%.”

Leadership Development as a Strategic Advantage 8

Impact of talent trends How leaders impact business outcomes What separates leadership programs

The skills leaders need to succeed today

differ from those of the past
Whether you hire leaders externally or grow them from within your
organization, you will want to ensure that your leaders have the
right mix of skills they’ll need to succeed. Along with the changing
nature of work itself, the most in-demand leadership skills have
also evolved. Harvard Business Review calls out social skills, like
building relationships and communicating (especially in response to
criticism), as some of the top C-suite skills. In response to the digital
transformation of the workforce, DDI’s Global Leadership Forecast
2021 highlights the must-have skills for today’s leaders: leading virtual
teams, empathy/EQ, digital acumen, and leading change.

Small and medium-sized businesses (SMBs)

and enterprise companies approach leadership
development differently
Your company’s size is likely to impact how you approach
leadership development. SMBs might offer leadership
development opportunities based on open roles and
internal needs, while enterprises may opt for structured DDI’s Global
leadership development pathways that employees can Leadership Forecast
choose to participate in or be nominated for based on
performance. But there’s no inherent advantage to being part
2021 highlights the
of a larger or smaller company — you just need to lean into must-have skills for
whatever methods are appropriate for your company’s size. today’s leaders:
“Some of the most effective ways to accelerate talent is
learning through coaching and apprenticeship on the job,” leading virtual teams
says McKinsey partner Anu Madgavkar. “Smaller companies
that may not be able to invest in a lot of more structured empathy/EQ
learning opportunities can still deliver a lot of hands-on,
on-the-job training.” One of the other advantages of the digital acumen
small and medium-sized business environment is that
these organizations tend to be flatter and provide more leading change
access to senior leaders, which makes it easier for up-and-
coming leaders to learn from them. Larger organizations,
on the other hand, can look for ways to combine structured
learning with opportunities to work closely with other
talented and more experienced individuals.

Leadership Development as a Strategic Advantage 9

Impact of talent trends How leaders impact business outcomes What separates leadership programs

The specific challenges of leadership

development in SMBs
When it comes to leadership development, SMBs face specific challenges. And
a significant number — 40% of middle market organizations — give themselves
a grade of “C” or lower for their talent planning efforts. Milton Corsey, Director of
Human Capital Solutions at AchieveNEXT, writes in Harvard Business Review
that the most common objections to leadership development he hears are:

Not sure it’s Perceived lack Lack of

a good fit: of time: resources:
“We’re not running “We don’t have the staffing “We can’t afford to send
Amazon here, and I don’t to send our leadership our emerging leaders to
see how the leadership teams on offsites.” business school.”
programs I hear about can
address our problems.”

But not being a company the size of Amazon doesn’t necessarily mean you can’t
provide development opportunities for your employees. Milton recommends
taking a few steps to overcome the common challenges SMBs
cite when considering whether to invest in leadership
development. This could include designing a program to
address urgent challenges, focusing on scaling and
not just growing, and training leaders in the
real world as well as the classroom.

Leadership Development as a Strategic Advantage 10

2
Impact of talent trends How leaders impact business outcomes What separates leadership programs

How leaders
impact business
outcomes

Leadership Development as a Strategic Advantage 11

Impact of talent trends How leaders impact business outcomes What separates leadership programs

A leader’s far-reaching influence

On a personal level, you’ve likely felt the impact of good leadership.
Whether it’s an empathetic direct manager, a director or VP who goes
out of their way to engage with skip-level reports, or a charismatic CEO
who truly believes in the company’s values, leaders have the power to
transform an employee’s perception of their role and their organization.
But it’s not just about warm and fuzzy feelings — good leaders are
shown to impact critical business outcomes. Let’s explore five
examples of how good leaders impact business results.

1 Good leaders build a more engaged

and productive workforce
Low employee engagement is a serious issue — Gallup estimates it
costs the global economy $7.8 trillion. Good leaders know how to
tap into their team’s sense of purpose and motivation and look for
opportunities to help employees grow and develop new skills. They
can help their teams prioritize and focus while removing barriers and
reducing distractions. When leaders take actions like these, they can
move the needle on the number of engaged employees and achieve,
on average, 147% higher earnings per share than their competition.

Low employee engagement costs

the global economy $7.8 trillion

Leadership Development as a Strategic Advantage 12

Impact of talent trends How leaders impact business outcomes What separates leadership programs

2
Good leaders motivate employees to stay
Managers account for at least 70% of the variance in employee
engagement scores across business units, and disengaged workers
are at the highest risk of leaving. According to Gallup’s research,
it takes more than a 20% pay raise to lure employees away from a
manager who engages them — and next to nothing to poach the
most disengaged workers.

3
Good leaders support change agility and
business continuity
The past few years have shown us just how unpredictable the world
can be. Rather than sticking to an outdated business model or plan,
the most successful leaders are able to pivot quickly and decisively
— even without access to complete information. Developing change
agility (both for leaders themselves and their organizations at large)
involves a process of honing self-awareness and decision-making
in ambiguous situations. This tactic is one way strong leaders can
handle disruption and ensure business continuity.

It takes more than a 20%

pay raise to lure employees
away from a manager who
engages them

Leadership Development as a Strategic Advantage 13

Impact of talent trends How leaders impact business outcomes What separates leadership programs

4
Good leaders drive innovation
While leaders support business continuity today, they also have an
important role in growing employees’ innovation skills in order to prepare
for the demands of tomorrow. The skills that help companies understand
their customers and outperform their peers can be learned — including
creativity, analytic thinking, curiosity, and collaboration. A good leader
prioritizes the development of these innovation skills in their workforce as
a tactic to not only surpass the competition, but also increase employee
engagement. Plus, leaders who encourage innovation are themselves
1.5 times more likely to develop novel products or services in their work.

5
Good leaders nurture and develop the next
generation of leaders
Let’s not ignore the impact of good leadership on managers themselves.
The increased pressure and responsibility of leadership means more than
50% of new managers fail within the first 18 months. Strong leaders are
aware of this and provide the resources to help new leaders prepare for
the demands of their new roles. Udemy Business instructor Ron Carucci
explains that based on his own study, “The vast majority of leaders say they
felt unprepared for the challenges of leadership they discovered when they
took bigger jobs.” Research also shows that when companies are good at
talent planning initiatives (e.g., identifying critical positions and can’t-lose
players and engaging senior managers in the talent planning process), they
enjoy annual revenue growth of 10% or more than their peers.

Leaders who encourage

innovation are 1.5 times
more likely to innovate
in their own work

Leadership Development as a Strategic Advantage 14

Impact of talent trends How leaders impact business outcomes What separates leadership programs

Why diversity in leaders

is imperative
Historically, leadership positions were only available to people from
very specific identity groups. This is why there are more CEOs
named James than female CEOs in total. But, research shows that
companies with homogenous leadership teams, whether based on
gender or ethnicity, perform far below their more diverse peers.
These leaders are often not reflective of the customers their
companies serve or the employees who work for them.

Why that matters for customers:
When leaders task their teams to develop
products from a perspective of inclusivity
and equity, companies build more
innovative solutions for their customers,
according to BCG. This results in a better
customer experience and stronger
overall brand sentiment.
Why that matters for employees:
More than three out of four job seekers
and employees say a diverse workforce
is an important factor for them when
evaluating companies and job offers,
and nearly a third would not apply for
a job if there were a lack of diversity
in the company’s workforce.

Leadership Development as a Strategic Advantage 15

3
Impact of talent trends How leaders impact business outcomes What separates leadership programs

A distinct approach
to leadership
development

Leadership Development as a Strategic Advantage 16

Impact of talent trends How leaders impact business outcomes What separates leadership programs

What separates successful

leadership development programs
from all the rest
We’ve explored why there’s a pressing need for
leadership development, both from a talent market
and business outcomes perspective. But how exactly
should you go about developing your leaders? That’s
the question we’ll explore in this chapter.
Because leaders need to develop specific skills while
already working in high-pressure situations, successful
leadership development requires an approach distinct
from most other employee training programs. Consider
incorporating the following into your company’s
leadership development initiatives.

Flexible to fit the learner’s schedule

For the busy leader, time is one of the most valuable
Leaders are much
resources. Stepping away from daily responsibilities to
attend a week-long seminar — a traditional approach more likely to retain
to leadership development — simply isn’t practical and apply what
anymore. Programs that offer asynchronous learning
and self-paced micro-learning modules are easier
they’ve learned when
to fit in as schedules allow. Plus, leaders are the learning is broken
much more likely to retain and apply into smaller chunks
what they’ve learned when the learning
is broken into smaller chunks.

Leadership Development as a Strategic Advantage 17

Impact of talent trends How leaders impact business outcomes What separates leadership programs

A cohort-based approach that promotes peer

learning and collaboration
When leaders learn together, they benefit from the collective knowledge of
their peer group. This cohort-based approach helps leaders build a common
vocabulary and way of working. Plus, unlike a program that relies solely
on individual study, a cohort setting provides opportunities to engage in
structured dialogue around identifying problems, thinking critically, and
collaborating — all skills that are critical for effective leaders.

Developing a leadership mindset

Leadership development is more than a skillset, it’s also a shift in mindset.
Leadership development doesn’t actually benefit the business unless the
leader changes their behavior as a result of what they’ve learned. The cohort
setting is one of the most effective ways to emphasize behavior change and
develop a growth mindset. When leaders learn together, they reinforce new
behaviors among themselves and feel more accountable for bringing these
new ways of working into their day-to-day jobs.

Real-world application
Learning needs to connect to the real problems leaders are facing. It may
sound obvious, but many traditional development programs take place in a
vacuum, separate from the work leaders are doing every day on the job.
This is one of the top reasons leadership development fails,
according to McKinsey (for more on this, see the sidebar
“Why most leadership development initiatives fail”).

The cohort setting is one of

the most effective ways to
emphasize behavior change

Leadership Development as a Strategic Advantage 18

Impact of talent trends How leaders impact business outcomes What separates leadership programs

Why leadership
development initiatives fail
Executives and learning stakeholders might hesitate to invest in leadership
development programs because they haven’t seen a compelling return
on similar investments in the past. Build a strong learning program by
addressing these common reasons for leadership development “failure.”

1
Lack of clear objectives: The subject of leadership development can include
countless topics. But a focused program with clear objectives is a critical
foundation for any sort of development initiative, according to Forbes. Does
the business need leaders to guide employees through an upcoming change
or are teams losing out on deals due to lackluster negotiation skills? Ensure all
participants are aligned on the program’s purpose.

2
Not measuring results: It’s not enough to simply gather participants’
feedback on any leadership development initiatives they’re part of — yet many
organizations take this approach. To truly measure the results of your programs,
McKinsey suggests assessing changes in leaders’ performance and behavior.

3
Seniors leaders aren’t championing learning: Companies can spend the
time teaching their managers new skills, but if organizational systems and
senior leaders don’t back the implementation of those skills, nothing changes.
For a leadership program to succeed, according to Harvard Business Review,
a company’s most senior leaders need to encourage learning and foster the
systems changes needed for people to apply what they’ve learned.

4
Underestimating growth mindsets: Developing leaders requires helping
them change their usual behaviors to embody the leadership behaviors your
company needs. But change, particularly of ingrained behaviors and long-
standing beliefs, can be uncomfortable. McKinsey finds that many leadership
development programs skip over the process of questioning underlying beliefs
or mindsets and therefore fail to create real behavior change.

Leadership Development as a Strategic Advantage 19

Develop leaders
to take on tomorrow’s
challenges
There’s no question that leadership development is important:
55% of CEOs say developing the next generation of leaders is their
top challenge, while only 11% of HR professionals say they currently
have a strong bench to fill leadership roles.
This challenge feels especially pressing today, given the
unpredictability of the world. According to the DDI Global
Leadership Forecast, “In the past, many organizations could more
easily predict their challenges in the next three to five years, and
groom leaders who were prepared to meet them. But as markets
have shifted rapidly and companies are feeling increased pressure
to innovate and redefine their markets, companies need leaders
who are prepared to lead during rapid change and re-prioritization.”
As we’ve covered here, developing your leaders is a complex
undertaking. Yes, it involves growing some subject matter expertise
and building new skills, but more importantly, it’s about changing
behavior to make an impact on your business. And it requires
understanding your organization’s specific needs today while
also anticipating the challenges of tomorrow.

Get in touch to learn how Udemy Business

cohort learning can help you prepare the next
generation of leaders at your organization.

Leadership Development as a Strategic Advantage 20

About
Udemy Business
Udemy’s mission is to provide flexible, effective skill
development to empower organizations and individuals.

Udemy Business enables employers to offer on-demand

learning for everyone, immersive learning for tech teams,
and cohort learning for leaders. With our integrated learning
solutions and strategic partnership, we equip companies with
the tools to build a future-ready workforce, increase employee
engagement, and achieve critical business outcomes.

Learn more at business.udemy.com