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The Leader’s Calling

Serve Before You Sell:

Reviewing top people development needs for 2016

About BTS BTS is a global professional services firm headquartered in Stockholm, Sweden, with some 450 professionals in 32 offices located on six continents. We focus on the people side of strategy, working with leaders at all levels to help them make better decisions, convert those decisions to actions and deliver results. At our core, we believe people learn best by doing. For 30 years, we’ve been designing fun, powerful experiences™ that have profound and lasting impact on people and their careers. We inspire new ways of thinking, build critical capabilities and unleash business success. It’s strategy made personal. We serve a wide range of strategy execution and talent development needs. Our services span the employee lifecycle from assessment centers for talent selection and development to strategy alignment and execution initiatives, and from business acumen, leadership and sales training programs to on-the-job business simulations and application tools. We partner with nearly 450 organizations, including over 30 of the world’s 100 largest global corporations. Our major clients are some of the most respected names in business: AT&T, Chevron, Coca-Cola, Ericsson, Google, GSK, HP, HSBC, Salesforce.com, Telstra, and Unilever. BTS is a public company listed on the Nasdaq OMX Stockholm exchange and trades under the symbol BTS B. For more information, please visit www.bts.com.

BTS • Client Needs Landscape 2016

Taking Stock As the wild year that was 2016 draws to a close, we reflect on the state of our business, of our industry and of our clients. One central question reflects back: The technology and financial markets that support business are developing faster than ever before, but what about the people that make business possible? Specifically, what kinds of knowledge and skills do L&D leaders need to build in their organizations? What behaviors do they want to change? What business results do they hope to achieve? These are the same questions we pose to client teams when designing our experiential learning engagements, and for this research we turn that same lens towards a wider landscape. To look back on 2016, we surveyed our population of senior consultants, directors and partners to find what matters most to our clients and how we approached those challenges in our work. Our mission with this report is to highlight the most prominent of these factors and specifically focus on five key themes, discussing how they connect with one another and to what BTS has learned about them and our clients throughout the year. We find that collaboration skills, empathetic leadership and strategic awareness stand out as critical themes with our clients, and our research and experiences indicate that they are critical attributes of successful professionals and successful businesses.

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Knowledge & Skills Targeted

Behaviors Changed

Business Results Achieved

1. Know how and why to collaborate to solve organizational problems.

1. Collaborate across boundaries and functions to achieve wider goals.

1. Hire, develop and retain top talent.

2. Cultivate the skills and perspective to lead your team and organization.

2. Articulate the company’s strategic vision to teams and clients.

2. Deliver a winning customer experience.

3. Identify and execute the future vision of the business.

3. Keep the customer at top-ofmind.

3. Deliver an excellent employee experience.

4. Gain appreciation for how each part of the business works together.

4. Be proactive about driving the 4. Transition to future business future business; question the model. status quo and provide solutions.

5. Learn how to make faster, better 5. Actively seek and provide decisions. feedback to and from others.

5. Achieve higher margins.

This field of client needs provides insight into some of the universal themes that animate today’s business world, and serves as a platform for a deeper analysis of their practical applications. These needs connect with one another across categorical boundaries. Learning flows from knowledge and skills into the behavior changes they enable, which in turn lead to business results. For example, based on our research and experiences, it’s our belief at BTS that the ability to collaborate is a critical skill for any professional, and we can connect the need for those skills with a parallel desire for increased decision making acumen; those give leaders the know-how to collaborate more (and more effectively) on the job and, while they’re at it, to give and receive valuable feedback from this larger and more diverse set of colleagues. The result is a workplace that makes strategy personal for its employees, who will be more likely to do their best work and stay at the firm for longer. There are many more paths to take through the data. In fact, we see a landscape where multiple needscases complement and multiply each other’s effects across (and even within) different categories. For example, feedback behaviors benefit from strong collaboration skills, but also benefit from supportive, empowering leadership, which in turn affects collaboration. Understanding how your individual experience fits inside the larger enterprise lets you see how your own team and department impact the overall strategy, which helps you be a better strategic leader and reveals potential collaborators elsewhere in the organization. The same recursive connections can be drawn all over this year’s findings, so let’s dive deeper into five key takeaways and illuminate the threads that bind them together.

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DETAILED TAKEAWAYS

1

Everything begins with strategic vision. Leaders

Life at a big business can sometimes be bewildering. As benefit from a more companies go global, slot more employees into complex deeper and more matrices and produce more sophisticated products based on personal understanding more nuanced customer needs, employees often struggle to of their own impact on stay abreast of the world beyond their own responsibilities. a larger enterprise. This is a constant concern for our clients, for whom success hinges on the ability to execute strategy across the entire ecosystem. For example, a shipping logistics company wants to “understand the interrelationships between different operating businesses and functions.” An online media firm expresses a need for leaders to “understand the business model, strategy, customer needs, drivers of growth and profit, and their own role in each.” This is one of the many benefits of the simulation experience. In the real world, people from one business unit may have a general idea of what their colleagues in another division do, but may not have any personal experience with how things actually work there. The experience gives participants the chance to exert control over all parts of their business, creating a deeper and more personal understanding of how the entire enterprise fits together and how they themselves affect it. Compared to the day-to-day operations within a specific team or business unit, it’s a radically different experience. This kind of strategic awareness gives leaders the power to execute strategy from beginning to end, see more clearly what they personally have to do in order to make it happen, and see in others the skills necessary to be a productive participant in that journey. It’s the starting point to so many other skills and behaviors that, as we’ll see in more detail, are critical, interconnected elements of a business’s success.

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DETAILED TAKEAWAYS

2

Great leadership supports people development. Leadership is a constant theme in all of our programs, whether it is the explicit focus of the engagement or simply a contextual detail. Just as how even the best leader can’t succeed in business without a strong understanding of what makes their company tick, someone with unparalleled business acumen can’t drive the results they aim for without a strong understanding of what it means to be a leader in their organization. The particulars of what their business provides to clients – of how and why it operates – inform the expectations, priorities and behaviors necessary for leaders to deliver results for the company. Because every business is unique, each has its own profile for what winning leadership looks like, but some elements Even of great leadership are universal.

someone with unparalleled business This year we ran a leadership-oriented engagement for a major financial software provider, based around a profile of great leadership acumen can’t drive the built from dozens of interviews. This profile includes points such as results they aim for without delegating stretch assignments to reports, challenging them with a strong understanding growth opportunities, managing performance with feedback and of what it means to coaching techniques, and clearly communicating expectations and be a leader in their goals. We’ve heard similar themes in our own research. For instance, organization. this year we asked 450 participants from a global consumer technology company about the qualities of the best leaders they ever had. In summary, they empower their people to do better, to be better, to develop as professionals. They are coaches and mentors. Good leaders trust their people and are trusted in turn. They grant autonomy and freedom. They give and receive feedback.

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empowerment clarity provides coach

individual

belief

making

visibility

motivation

ownership

motivate personal direction created

set good

ideas pushing respect questions back

coaching

remove

give

gave values

challenge people

space allowed connected air brought framework risks encouragedthinkbest expectations supported put

pushed

big right

support fail

feedback

accountability honest attitude confidence

guidance

experiment

goals

safe

transparency

lead

share

listened believed

model

team

positive

recognition

challenged beyond

trust

work

provide

great role made needed passion

help

freedom

time

coached

asked helped

strong

decisions network

make

vision success autonomy take environment opportunities example open

inspire

constructive

inspired

risk energy

goal

way

Common Traits of Best-Ever Leaders.1

Appropriately enough we found many of these exact sentiments with other clients. A financial information provider wants its leaders to experience how “coaching differs substantially from feedback, but they complement each other.” A popular online media company needs employees to “develop a habit of assigning decision rights and accountability.” We don’t prescribe a particular view of what great leadership should look like for any given client, but we do know that there is a deep pool of skills and behaviors from which great leaders will draw in order to drive results at their own company. It is these kinds of leadership traits that cascade into other development areas and drive real business results.

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DETAILED TAKEAWAYS

3

Collaboration requires committed leaders. A business is often more than the sum of its parts. It’s a collection of capital, IP and, most importantly, people, and it falls to those people to turn those raw inputs into a productive enterprise. Think of all the factors that influence when and why people collaborate and to what ends. It affects decision making, project planning, basic workflows, knowledge sharing, coaching; practically everything that people do on the job relates in some way to their ability to productively engage with other people. Being a better collaborator is foundational to being a better business professional. Clients from all walks of business recognize this and talk about their collaboration needs in terms of specific benefits they want to bring to their businesses. A pharmaceutical company tells us how they want leaders to “collaborate crossfunctionally in order to take an enterprise-wide approach to strategy execution.” An Oil & Gas giant needs employees to “seek out opportunities beyond their area of responsibility to collaborate to pull high value levers that optimize system-wide results and integrated earnings.” A huge P&C insurance firm wants to “utilize the expertise across the company through more cross-functional collaboration to deliver value to customers across multiple products.”

The key value in cross-functional collaboration is that individuals and groups become smarter and better able to make winning decisions when they reach outside of their familiar domain. Someone who works in a different part of the business as yourself, or who has a different role within your division, or who has the Collaborators help same role but is a few years separate in age and experience, for instance, leaders of any station will likely have a perspective on a given challenge different than your own. vet their ideas, question Collaborators help leaders of any station vet their ideas, question their their assumptions and assumptions and break through biases and blind spots. This is a natural feature of any BTS program, where participants are often grouped into break through biases teams with peers from outside their own domain, functional area or and blind spots experience level.

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This is a topic that we’ve actually studied quite a bit this year. BTS sponsored an Economist Intelligence Unit study2 on how a company’s habits for and perception of cross-functional collaboration relate to its performance. They found that companies more comfortable with collaboration achieve, on average, faster revenue growth. The EIU found that employees at companies with leading market share, from the CEO to line employees, consider themselves to be more effective collaborators. Market share leaders see the benefits of collaboration in improving decision making, making employees more efficient and productive, and developing employees and building their buy-in to strategy.

op Companies Collaborate More Effectively at All Levels How effective is collaboration within your company?

of respondents There is a significant%drop off rating collaboration as ‘mostly’ or ‘very’ effective at that level in collaboration as they go C-suite and senior executive leaders 62 down the corporate hierarchy Business unit leaders Collaboration tends to be very high at the C-Suite, less so Middle managers for every level lower Frontline managers However, despite this drop off, top performers Line employees collaborate better at all levels of the organization0.00%

57

46

44

73

61

55

53

45 43 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% Market share leaders

Others

Source: Economist Intelligence Unit survey, 2016. Copyright © 2016 BTS | 18

Collaboration is not a simple panacea, of course. In general the EIU found that larger firms have a harder time implementing collaborative behaviors because they are often more sensitive to its challenges and perceived downsides. Specifically, that collaboration complicates project ownership and may not be worth the time and effort. It does make logical sense, since larger companies have more employees and branches (and, naturally, develop more silos), whereas smaller companies have fewer employees (who may collaborate more often with one another out of necessity) and often feature flatter and more agile organizational structures. Because pushing boundaries requires being comfortable with uncertainty and having confidence in one’s own professional brand, leaders need to recognize these challenges and proactively support collaborative behaviors in their teams. Indeed, we just saw how great leaders tend to challenge, empower and trust and coach their teams – all of which help employees take those first critical steps outside of their silos. 7


ollaboration a Significant Challenge for Large Orgs. Which of the following beliefs about the downside of

collaboration can be found at your company? Organizations with revenues % of respondents >$10bn are more sensitive to the risks/complications of It complicates the ownership of projects/initiatives collaboration It is perceived as not worth the time it takes Collaborative culture is less fully realized in manyIt increases largetension between departments It frustrates employees organizations It leads to group-think Yet ¾ of executive from large It creates an inaccurate impression of individuals' organizations say that performance/contributions collaboration will increaseIt increases cost and risk in importance in the next 0.00% 20.00% Over $10bn Under $10bn 3-5 years

40.00%

Source: Economist Intelligence Unit survey, 2016. Copyright © 2016 BTS | 23 However, these challenges only highlight why collaboration is the most in-demand skill and behavior this year. In fact this is a case where we can see strategic vision at work. Many of our client companies trend toward the larger end of this spectrum, but their leaders recognize the value that collaboration offers despite the difficulties in implementing it, and plot a course for overcoming those barriers and realizing that value. It’s also another sign of winning leaders wanting to challenge their organizations and teams with initiatives that they know will be difficult.

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DETAILED TAKEAWAYS

4

Feedback culture drives engagement and performance. Collaboration requires that people be more comfortable It’s interacting with each other more frequently, more productively, so often the and more personally. It is this mindset that empowers an case that individuals organization’s feedback culture, by which we refer to a withhold negative culture where employees are comfortable with freely giving feedback. But of course and receiving rapid feedback on others’ (and their own) performance and input, whether it be positive or negative. it’s that exact feedback This is also why giving and receiving feedback is a major that most needs to component of winning leadership, as it’s so often the case that be heard. individuals withhold negative feedback so as to not seem rude, to not rock the boat, to not be seen as a naysayer. But of course it’s that exact feedback that most needs to be heard by the concerned parties. Leaders and teams need to make it clear that critique will not be taken as repudiation, but rather as constructive input to the business.

We also sponsored an EIU survey last year, focused on the factors that drive employee buy-in to company strategy.3 Two of the key findings point to the value of feedback in driving buyin: successful companies offer more avenues for feedback in general, and companies that encourage (and actually support) negative or constructive feedback have better outcomes in achieving buy-in.

1 2

Successful organizations offer more avenues for employee feedback

When it comes to creating effective strategic buy-in, successful firms are more likely to encourage constructive criticism and negative feedback

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To add dimension to these findings, though, this year we found another angle on the same dataset that makes the value of feedback that much clearer. Sorting respondents by their firms’ pace of revenue growth, we can see that employees in the fastest-growing firms are by far more comfortable with giving this sort of feedback. We can make the case, therefore, that a company’s feedback culture, where employees are excited and expected to give each other the rapid feedback they need, is strongly related to the firm’s ultimate financial performance.

“How comfortable do employees at your company feel with giving negative feedback and/or constructive criticism?” Estimate the percentage of employees that fit the following descriptions

Market Leaders

Generally above average

Average or same as peers

Below Average

Average % of employees

60

Strong correlation between comfort giving tough feedback and revenue growth

50 40 30 20 10 Not Comfortable

Have Reservations, But Do it Anyway

Perfectly Comfortable

Respondents sorted by company revenue growth

Because we also know that winning leaders tend to foster feedback and have a strategic view of how and why feedback and collaboration work for the business, we can see more clearly than ever the importance of the leader as a driver of business value. The question remains, then: How do you develop leaders like this and how does that impact the entire enterprise?

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DETAILED TAKEAWAYS

Our ultimate mission with clients is to help them execute strategy and deliver business results, but of course we do that by helping to educate and develop our clients’ employees. Therefore it’s only appropriate that developing and retaining top talent is the most indemand business result we saw this year. On its surface, the goal of skills building is to equip leaders to drive the business forward, but it’s interesting to note that the act of providing professional development opportunities at all is itself a factor of a given business’s success. In its 2016 survey of millennial professionals from around the world, Deloitte found that a key driver of younger employees’ loyalty to their current company (an analog for retention) is the extent to which it develops and supports them in growing their skills and in taking on more leadership responsibilities.4 However, it’s our point of view that these desires are not specific to millennials. Given that BTS trains thousands of individuals from hundreds of businesses each year, we know that current and aspiring leaders of all levels, in any organization personally benefit from the experience, and the company benefits from their skills and continued commitment. 80% 70% 60% Respondents

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Professional development creates lasting value.

50% 40% 30% 20% 10% 0%

“There is a lot of support for those wishing to take on leadership roles.”

“My leadership skills are not being fully developed.” Stay > 5 Years

Recreated from Deloitte’s 2016 Millennials Survey

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“Younger employees are actively encouraged to aim for leadership roles.”

“I feel that I’m being overlooked for potential leadership positions.”

Leave in < 2 Years


Pulling back from Deloitte’s data, we see similar sentiments amongst our clients. One of our financial clients expressed their need to “develop people to have both high expertise in their current role and to adapt and grow to meet future customer needs.” Another specifically wanted to “increase the share of employees who believe they are receiving the training necessary to do their jobs.” Sound familiar? The bottom line is that when employees feel like their leaders support them, when they are invested in the company’s mission and strategy When and want to be a part of that future, they will be more engaged in their work, employees feel like in their teams and in the enterprise. These have real effects on the business. SAP, one of our largest clients, managed to quantify the financial impact their leaders support of employee engagement and retention on its operating income. A change them, they will be more of just a few percentage points in their Employee Engagement Index could engaged in their work, cost hundreds of millions of euros in lost productivity, opportunity costs and in their teams and in hiring and onboarding expenses.5 This is just one example, dependent on SAP’s the enterprise. human infrastructure and scale, but the lesson carries through to any company. Think about your own firm – what kind of costs (even hidden ones) are attached to employee development and retention? Those are the stakes. And beyond those direct costs, think of how much more effective a highly trained workforce would be at executing on the other skills and behaviors we saw in this year’s client needs landscape. It pays off for individuals looking to expand their professional lives, as well as in building a productive, healthy enterprise.

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What comes next? This year’s landscape of client needs presents a web of causes and effects that is hard to fully untangle at first glance. And even though we investigated some of those themes in more detail here, the truth is that all categories of people development need are inseparable, symbiotic. We saw how brightly the themes of leadership and strategic vision shone through to behaviors and results like feedback and talent development, but we could have easily explored how feedback and collaboration behaviors empower better decision making and help teams execute future business models, to name just one alternative. The connections never start or end in any one particular locus. Therefore we feel that the client needs landscape invites continued comment and discussion about how it relates to your own experiences and business realities. So what didn’t make the top five this year? For knowledge and skills, we also see prominent needs for having leaders understand the KPIs and customer dynamics that drive their business; for behaviors, taking responsibility for coaching and mentoring others within the organization. In terms of results, clients are also looking to create a differentiated value proposition and to achieve market leadership. Will these rank higher next year? Will the current top five hold their position or will they be replaced by entirely new categories of need? When the time comes we’ll take a new snapshot of the client needs landscape and explore why and where those changes occurred. It’s impossible to predict the future but it’s a safe bet that 2017 will be an exciting of growth, change and surprises. What is certain, however, is that we’ll still be working to deliver the people results that drive business success for our clients. From all of us at BTS, thank you for being a part of an amazing year, and thank you for sharing in the journey of learning and innovation that lies ahead. 1 Constructed from BTS research findings. 2 Economist Intelligence Unit. “Fostering Collaboration,” 2016. Sponsored by BTS. 3 Economist Intelligence Unit. “Strategic Mindset: Gaining employee buy-in across the global organisation,” 2015. Sponsored by BTS. 4 Deloitte. “The 2016 Deloitte Millennial Survey: Winning over the next generation of leaders,” 2016. 5 SAP. Integrated Report, 2015.

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