Introduction
Organizational strategy is highly dependent on the ability to build strong internal capabilities and utilize the resources. Increasingly complex business environment requires the companies focusing on human capabilities as a core asset and capability. With that in mind, the crucial role that Strategic Human Resource Management (HRM) plays in modern organization is to create a bridge between the generic and functional strategies and human factor (Millmore, 2007). This alignment allows addressing the competency gap and ensures that organizational functional capacity and resources are adequate to meet the goals of generic strategy and develop sustainable competitive advantage. Some of the critical constructs of HRM activities are Leadership and Management Development (LMD) programs, succession planning, performance management and appraisal system and training and development. It does without saying that all these elements build on the HRM cycle and cannot be considered or managed in isolation from each other. As such, recruitment and selection process is the beginning of the cycle, aiming to enact high retention rates and build on the motivation and high performance culture (Anyim, 2012). The objective of this document is to look at the leadership and management development practices and analyze LMD role in building high performance culture and creating strategic alignment in the organization.
Definitions, Objective and Purpose of LMD
LMD is a complex of organizational policies and programs for personal and professional development of individuals with current or potential management responsibilities, which the company considers as part of its talent pool (Boxhall and Purcell, 2011). It is important to recognize the difference between leadership and management development as well as differentiate these two concepts in general. The role of leadership in the company is to incorporate a long-term vision and take the organization through change. Managers, on the other hand, possess the capabilities that help in the execution of the strategic and operational goals. With that in mind, both roles are extremely important for the company and LMD attempts to address the capabilities and attributes of both, leaders and managers (Magginson, 1996). The structure and methods used in LMD should recognize the fact that management and leadership qualities are not, necessarily, represented by the same individuals. Kotter (2001) argues that many companies suffer from being “over managed and under led.”
The above arguments constitute the drivers behind the learning process that makes part of LMD. Modern business and educational environments recognize four major learning styles, which include activist, theorist, pragmatist and reflector. The approach and style of learning determine the learning strategy that can be more or less effective for individuals (Evans, 2006). With that in mind, two major learning theories build on the structure of LMD: planned and emergent. Planned learning strategy involved formal structure and learning outcomes, central leadership and controllable and predictable environment. Emergent learning, on the other hand, is the “learning on demand” strategy, determined by mutual adjustment generally not driven by any intentions (Magginson, 1996).
The approaches to LMD are very varied, and organizations tend to develop their personalized learning strategies, based on the budget, profile of the individuals and organizational culture. The range of LMD approaches can be outlined by the types of learning strategies that fit between planned and emergent learning, such as entrepreneurial, umbrella, process and other learning strategies. Latest trends in the development of LMD demonstrate strategic shift from traditional approaches, such as a planned course and theoretical training to development and interventional programs and real-life practical training for the management team (Bolden, 2010). The purpose of LMD is to develop management and leadership capabilities that help the organization to align generic strategy with HRM. Well-structured and organized LMD can make a significant contribution to the development of high performance culture and effectiveness of company´s operations (Armstrong and Baron, 2002).
The Role of LMD in Organizational Performance
The role of LMD in the contemporary business environment should be seen at least from two angles. First of all, the impact that these programs have from employee-employer relationship perspective and, secondly, from the perspective of general competitiveness of the company on the market. Strategic HRM aims to enact organizational competitiveness and create complete alignment of internal capabilities and market requirements through addressing both of the above mentioned elements.
Market environment illustrates more dynamic and competitive profile in the majority of industries. The complexity of the business is determined by strong pressure on costs and organizational effectiveness, critical for sustainability and profitability of the company. The contribution that LMD can make to the development of individual and group capabilities and skills is essential for increasing effectiveness and quality in operational and commercial sides of the business. Looking at the business effectiveness and the role of LMD more specifically, it is evident that large multinational corporations (MNCs) as the pioneers of the strategic HRM and LMD development prove the impact that this program has on the development necessary management skills from within the company. LMD helps the organizations to shape knowledge, expertise and behaviors that are most appropriate for the company and can effectively incorporate organizational culture and strategic goals into the tactical tasks. LMD also serves as an effective tool for implementing change, as it enables learning strategies that assist to manage resistance and build on comprehension and shared vision within the company. One of the good examples of the LMD is the Leadership Development Program in such companies, like Maersk Line, DHL and other organizations, focused on international mobility. LMD is structured in a way to bring combined strategy of on-field rotational training in various organizational divisions and theoretical learning that supports practical experience. The years of LMD existence in the company demonstrates that that a large part of middle and top management are graduates from the LMD programs (DHL, 2013). With that in mind, LMD can represent reasonably high and long-term investment, but guarantee quality and customized approach to management capabilities and resources.
LMD as a Strategic Process
As it was mentioned before, LMD is a strategic investment, which is built upon the strategic organizational needs and restricted and shaped by the external environment. The reality demonstrates that in order to achieve an effective outcome from LMD program it should be seen as an ongoing strategic process. Similar to job analysis, which should be done regularly to avoid “outdating” and address the changing business environment and organizational goals, LMD should always be a subject to re-vision and analysis, aimed to improve and further customize the process. There are three critical constructs to LMD success: vertical alignment, which represents clarity of goals and organizational management hierarchy, horizontal alignment that explains shared values, comprehension and personal loyalty within the company and appropriateness of LMD practices, monitored and supported by the integrated performance management system. First of all, it is important to realized that LMD, as strategic and integrated process, should touch upon the entire leadership pipeline, including junior management, middle management and top leaders of the company. While the objectives and strategic goals will always remain shared for these management levels, set of skills and directions of personal development will vary, determined by the needs of operational, tactical or generic capabilities of individuals within this pipeline. Secondly, horizontal alignment is critical for the company as it brings buy-in and understanding of the higher purpose among individuals that build on the identity of the organization. That said, it is critical that LMD aims to enact common practices, ethical aspects of business interaction and performance measurement, integrated not only hierarchically, but also through divisional structure and geographies of the company. Finally, LMD is personal learning plan or emergent learning strategy that comes as a result of personal development needs. It is critical that LMD is broken down to the tactical level of the company and incorporated into an integrated performance appraisal system. This will not only make learning aligned with organizational goals, but will ensure that LMD is seen as motivational and development tool by the employees themselves (Nohria, Groysberg, and Linda-Eling, 2008).
Talent Management And Management Development Cycle
Cannon and McGee (2010) note that Talent Management (TM) is the process of formulation, identification and development of people for current and future performance in the company. TM is concerned with the development of the talent management strategy, implementing specific programs, retention strategies for internally developed talents and dealing with changes in human capital requirements. Succession Planning (SP), on the other hand, is often considered as an integral part of TM and is concerned with the best practices to satisfy future requirements and develop an “optimal mix of internal and external recruitment” (Cannon & McGee 2010, p.11).
LMD is a continuous process of learning and, thus, it should be aligned with actual requirements in individual development as well as with the level of the management responsibility that an individual has within the company´s hierarchy. As such, leadership pipeline starts with leading “self” and only further in the career shifts to a wider scope of leading “others”. With that in mind, the tools and programs within the LMD should be accurately built to address the needs of the respective management level. One of the ways to address this alignment between the management level and LMD is through a coherent performance appraisal and management system. It is critical that performance appraisal system, developed by the company, incorporates strategic goals, drilled down the organizational hierarchy to the lowest tactical level. This delegation and breakage of strategic objectives into specific tactical tasks will enable better understanding on the learning needs on different levels and throughout existing management cycles. The purpose of performance appraisal should support the purpose of LMD, which means that it should not be built to punish low performance, but to develop individuals through setting clear expectations and personal development plan along with specific, measurable, achievable and time bound (SMART) goals.
Learning process is cyclical and continuous. Its continuity is explained by changing external and internal environment, as well as personality and behavioral patterns of each individual. As much as learning will always be an ongoing process, management cycle will remain strategic for several reasons: organizational priorities and functional strategies evolve as they respond to the external business environment (Allen, 2010). Different strategies and objectives, in their turn, outline the needs for specific management fads and styles. With that in mind, management cycle is a way to support the adaptability and responsiveness of the company, required to align internal capabilities with immediate and future needs of the company (Bolden, 2010). The elements, like management cycle and continuity of learning within the company, build on the concept of learning organizations that outline the latest trends in organizational development.
Performance Measurement and Assessment
One of the most challenging tasks of the organization is to develop a robust performance evaluation system that will not only be able to demonstrate individual and divisional fallacies in the operational landscape of the company, but also create a strong base for personal and professional development framework. Performance management system should be supported by a strong competency framework, which creates a “blueprint” for exemplary performance in a given role and position within the organization (Cardy & Leonard, 2011).
Performance management is a complex set of tools, which includes and addresses three elements: goal setting, competency framework and reflection and remuneration scheme. First of all, coherent and effective performance system should rely on SMART goals, which builds on transparency and clarity of expectations for each of the individuals within the company. It is critical that the measurement approach is clear and well-communicated to both, managers and employees, as it clear and agreed from both side measurement systems will ensure personal motivation and engagement. Secondly, competency framework has a threefold purpose: build expectations, create effective job description and determine the model for behavior and attitude. Competency framework should always stand behind every performance appraisal. Finally, clear measures, goals and their assessment will enable the company and management to develop a comprehensive and integrated performance reward and remuneration system and build on high performance culture by directing employee efforts towards strategic goals through bottom up approach.
Performance management system and its effectiveness is a subject to leadership and management capabilities as the system itself, as any other standardized mechanism will never be able to incorporate the customization of the process, which can be achieved through human interaction. Many companies experience challenges in integrating a unified “reading” and use of performance management system, which, to a great extent, depends on leadership and management styles of individuals, performing performance appraisal and preparing Balance Scorecard. With that in mind, it is important that performance management system is implemented and supported by cyclical training among appraising managers, aiming to enact common practices, rules and “reading” of its elements. One of the crucial factors to be considered in this regards, is the development of management capability to delegate his own objectives down to the tactical or operational level of his subordinates. This vertical and horizontal alignment of performance measures and targets is critical for organizational effectiveness. The reality shows that the larger the organization is, the more difficult it is to lead and deal with diversity. Well-developed Performance management system can make a significant contribution to building on robust performance alignment and transformation of organizational goals into individual targets.
Training and Development Activities as Part of LMD
LMD is a multifaceted framework, which, as it was already mentioned before involves various approaches to learning, based on the leadership styles of individuals, organizational outreach to training, financial capabilities and investment opportunities, management development cycles and other elements, discussed in this document. Experience of many MNCs and medium size organizations illustrate the diversity of training and development activities, utilized by the HRM of these companies to achieve its strategic objectives. LMD programs and practices can be split in three major categories: traditional theoretical learning, on-the-job training and development academy. Each of these elements builds on the integral part of LMD, but is not, necessarily present in each of the LMD programs. Theoretical learning is often applied by the companies to introduce Standard Organizational Procedures (SOP), Code of Ethical Conduct and other major frameworks that incorporate critical organizational behaviors and attitudes, expected from all the individuals. On-the-job training methodologies have evolved over the past decades, determined by the growing complexity of the organizations in general. That said, previously, on-the-job training was based on a simple “hand-over” that was done by a predecessor or direct manager. Today, on-the-job training often involves rotational program and practical real life simulations that allow individuals receiving more embracing “message” about their job. The purpose of this “accelerated” training on the job is explained by the need to provide individuals with a better understanding of possible processes and create the urge for on-demand learning. Finally, development academy is a way to call a set of additional practices and training tools, individually developed by the companies. These tools may include Virtual Learning Platform (VLP), which provides individual and independent set of training programs in all business areas, international rotational programs within the TM framework, targeted team buildings, such as those, aimed to introduce organizational culture and build on shared values, and other activities.
The scope of development activities in the company is limited only to its creativity and strives for innovation and financial limitations of HRM. With that in mind, additional research on specific companies may provide various examples of personalized LMD activities as well as generally adapted and utilized practices. It is important, however, to remember that LMD is a strategic process, and adaptation and responsiveness of this organizational element should be aligned with the pace of organizational transformation. Only with this alignment the company can achieve the highest possible level of performance and address immediate and strategic issues through appropriate strategic options.
Summary and conclusion
This document looked at the contemporary leadership and management development practices and the “reading” of strategic HRM and organizational alignment, which modern organizations represent. One of the critical elements of organizational competitiveness and strategic sustainability in the fast-evolving business arena is the ability of the organization to develop its internal human capabilities. With that in mind, retention, motivation and engagement of employees in organizational activities are essential for developing its competitive edge.
The findings of this research illustrate that LMD is essential for shaping appropriate management and leadership capabilities as well as ensuring strategic alignment of HRM activities with the generic strategy of the organization. It was determined that LMD is a strategic process, which should reflect the changes of the company and contribute towards organizational responsiveness and flexibility in view of external influences and market competition. The reality shows that LMD serves two major purposes: helps the organization to build on the authenticity of its Brand and competitive strategy in the industry and builds on its competitive identity on the employment market. This dual role determines the complexity and diversity of LMD activities across the industries and companies.
LMD should be seen as an integral part of performance management, and the relationship between these two organizational elements are mutually beneficial. LMD helps to contribute to the performance management practices by outlining personal development element in the performance appraisal and by setting measurable personalized goals. Performance management, on the other hand, outlines the direction and strategic options of the company and helps translating them into specific learning outcomes of LMD training and development activities.
LMD is an essential part of organizational structure, and the scope of organizational involvement to this process explains its focus on strategic HRM in general. It is possible to argue that growing complexity of the businesses and external pressures on the companies from cost and efficiency perspective will continue developing and prioritize LMD activities globally. Numerous academic and business researches were done to measure the impact of LMD on modern organizations, it is, however, evident that the degree of influence and effectiveness vary from organization to organization and this variability is explained by experience of the company in strategic HRM, tis size, scope of activities and organizational culture.
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