Leadership Development: Perk or Priority

Review Her alma mater had never looked better. Sunlight bounced off the gables of the old library building, the rose beds were In full bloom, and the hush of earnest academic endeavor hung over the quad. For once, though, the myriad charms of the university were wasted on Karen Barton. She was livid. Two weeks ago, Barton, the senior vice president of human resources for Kendal Pharmaceuticals, had routinely turned in her budget request to her boss, Dave Palmer, the COO and executive UP of administration.

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Palmer had sent the papers back to her that morning, Just as she was leaving for an appointment with the dean of her university. Barton had looked at the revisions he had made en route and was stunned to find that Palmer had cut her executive education budget by more than 75%. As Barton recovered from the shock. She decided that It had to be a mistake. She glanced at her wristwatch. It was 1 1 :imam. She was ten minutes early for her appointment, but Palmer would probably be on his way to his regular Monday lunch with CEO Jack Stockton and the rest of the company’s senior executives-?the six-pack, as they called themselves.

She figured she loud leave a message on his voice mail but, to her surprise, he answered the phone himself. “Dave, it’s Karen. Just got your revisions to my budget, and I think there’s been a mistake. The version you sent back seems to have almost nothing for executive education,” she said, with a nervous laugh. “No mistake,” answered Palmer with the weary air of someone who had been having similar conversations all morning. “Stockton asked me to pare down next year’s budgets by 20% across all departments.

Some things have to be slashed more than others. Executive education programs are-?” “Dave,” Interrupted Barton, “you didn’t trim my budget. You Just about demolished It. ” HIS response was blunt. “Listen, Karen, when you’ve been In the business as long as I have, you can spot a perk a mile away. Eve been to half a dozen of those off-sites. I stopped going after the retreat we had at Governors Point In the late asses. It’s fun and games half the time, and the other half is a huge gripe session.

We don’t have time or money for either next year. ” Barton was horrified that Palmer would talk about the corporate retreats of the past and the university programs Sandal’s executives attended in the same breath. “You’re comparing apples and oranges. Our people benefit enormously from the courses they attend. I don’t think anyone would characterize them as fun and games-?or griping,” she snapped back. “l know you’re disappointed,” said Palmer, “but Stockpot’s the boss. ” “Are you telling me Stockton specifically asked you to cut my budget? Before the COO could respond, Barton continued: “You do realize, of course, that these cuts mean there’s no way I can launch the In-house leadership development program my team has designed. When we met to discuss It, you said you would support that Initiative. I assumed you meant financial support. ” “Hang on a minute, Karen,” replied Palmer. That was six months ago. A lot can change in half a year, and a company’s financial house proposal with our current approach of outsourcing executive education. I also said that you should present detailed estimates of the annual return on investment for a customized program. “But I did submit an analysis comparing the two approaches along with my budget proposal,” responded Barton defensively, sensing where the argument was going. “And I read it,” Palmer replied matter-of-faculty. Muff highlighted a lot of qualitative advantages, but the analysis was woefully short on quantitative benefits. Even when I added some approximations of my own, I wasn’t sure what the return on the new program was going to be. When Stockton and I discussed it briefly, we weren’t sure what the return on investment in education had been in the past either-?or how it’s currently being calculated.

In fact, that’s a conversation you and I need to have. ” Barton started to reply, but Palmer quickly added, “Look, Karen, I hate to interrupt you, but Eve got to get to the meeting. ” “I’d like to continue this discussion tomorrow. When is a good time for me to stop by your office? ” she asked. Palmer wasn’t convinced that there was anything more to discuss. My calendar is booked solid tomorrow. If you have something to show me-?and I want to emphasize if-?I’ll have my assistant set up something for Wednesday morning. I want you to be clear about one thing, though.

Our sales have dropped 26% because of the recession, we took on $300 million in debt when we acquired Premier Pharmaceuticals, and your budget isn’t the only one that has been cut. If you can put together data that show how much executive education can add to the bottom line, I’m willing to listen. If you can’t, step out of the soup line because there are going to be lots of half full bowls this year. Barton saw that she was now late for her meeting, which was beginning to look rather academic. Gathering Sources The next morning, Barton had Just dropped off her kids at school when the drizzle turned into a downpour.

Forced to slow down, she reconciled herself to a dreary tailgating commute to work. Her foot off the accelerator, Baron’s mind began to race. She simply couldn’t get over Palmers attitude toward executive education. In her opinion, he was being shortsighted in cutting her budget. Sandal’s takeover of Premier had increased the company by a third, and little had been done to integrate the two workforces. Barton knew that if she launched a customized program that included participants from both Kendal and Premier, it would smooth the integration process.

An in-house program could also reinforce Stockpot’s three-pronged agenda: grow the business through acquisitions, build closer ties between Sandal’s business units, and create a more unified global strategy. Moreover, Barton believed that Kendal should uphold its commitment to a learning culture and leadership development despite the recession. She recalled reading about Dryer’s Grand Ice Cream in her previous life as a consultant with a New York-based change management firm. The then-$1 billion Dryer’s had faced one crisis after another in 1998.

Its manufacturing costs had soared as the price of butterfat rose to a record high, Ben & Jerry abruptly stopped distributing Dryer’s products, and rivals started a price war. Worse, CEO Gary Rogers was diagnosed with a brain tumor and had to undergo neurosurgery. Yet Rogers and his president, William Croon, invested $1 demonstrating that Dryer’s cared about developing its people. It was no accident, Barton believed, that Dryer’s had reestablished its position as a profitable market leader by 2000. She wondered what Palmer would make of that story.

Although he had left the door a little ajar, she would probably get only one chance to force it open. So it was critical for her to understand how his mind worked and what buttons to push to get him on her side. Almost without thinking, Barton picked up her cell phone and called Carols Freesias, who headed the company’s fast-growing Medical Devices division. She had forged a good working relationship with Freesias from the day she arrived at Kendal. He had worked closely with Palmer for 15 years before taking over as head of the division, which accounted for 10% of Sandal’s $3. Lions in revenues and a similar percentage of the company’s 7,950 employees. If anyone could help her understand Palmer better, it was Freesias. He answered on the first ring. “Carols. ” The voice at the other end of the line was deep, with a slight accent. “HI, it’s Karen. You’re in early,” she responded. “Performance evaluations,” laughed Freesias. “Good to hear from you. What’s on your mind? ” “Dave Palmers on my mind. You’ve known him for a long time, and I need your advice on how to tackle him,” replied Barton. “Can I stop by? ” “Why don’t we grab a quick lunch? ” Freesias suggested.

Eve got meetings with the marketing and ad agency people lined up for the afternoon. ” “Sure, I’ll see you at 12:30 in the cafeteria. If I can get out of this traffic Jam, that is. Here I go,” she said to tease Freesias, who refused to ride in her SUB because of the speed at which she took her turns. “Don’t drive and talk on your phone at the same time. It scares me Just listening to you,” Freesias admonished as they hung up. Doing Homework It was almost noon before Barton got out of meetings. As soon as she had a moment to herself, she pulled up Palmers bio on her PC. The 59-year-old economics graduate was a lifer, she recalled.

He had spent most of his career in one division, in fact, Consumer Care Products, and had risen from the ranks to run it. He had received high marks from people inside and outside the division for his no-nonsense leadership style. It didn’t surprise anyone when Stockton, after heading the company for less than a year, had appointed Palmer to the newly created position of COO. In many respects, Palmer was perfect for the Job. He was methodical, detail driven, and devoted to the company. Barton had once heard Freesias refer to Palmer as a bulldog because of his energy and tenacity.

If you want dollars, you have to show how you fit in with their plans. You must be willing to fight for resources with the rest of us. ” “Why are you treating this like another interdepartmental tussle? Don’t you see that my department is connected to all the others? Every division benefits from the HRS budget. I spend money on our people-?your people. Don’t you realize the impact of training on your people and your division’s performance? ” The tone of Baron’s voice reflected her concern. “Look, I’m Just trying to point out how some folks might see things,” Freesias shot back. Some folks-?or you? ” probed Barton. “Come on, Karen. I want to see you get the budget you need, but you’re going to have o Justify it like the rest of us,” Freesias said. Uniform right,” Barton replied apologetically. “Sorry. I’m worried that it’s going to be next to impossible to prove that executive education benefits the bottom line. There are some measures, like participant satisfaction, that we track. But I didn’t get the feeling Palmer wanted that kind of data. ” Freesias thought for a moment. “Well, if I were you, I’d work on every create a backup plan.

I know you want to launch a customized program, but if Palmer is worried that it’ll be too expensive, maybe you should go back to sending people to external programs. If you remember, I attended an advanced management program at a B school two years ago, and it was great. I loved the fact that the participants came from various industries and different countries. We enjoyed sharing ideas and experiences. Sending ten people to ten different programs creates a greater diversity of perspective than if everyone listens to the same message. ” “I’m not ready to throw in the towel Just yet,” Barton declared as they both got up to leave.

She didn’t add that outsourcing education mightn’t be an option for very long either, since Stockton and Palmer had trained their guns on that as well. Defending a Thesis That afternoon, as Barton set out to draft a memo to Palmer, she couldn’t help wondering what she could have done to avoid this crisis. When she had Joined the company five years earlier, she had taken a more proactive attitude to training than her predecessor. Rather than waiting to be approached, she had met with senior executives every quarter to discuss their people’s training needs.

Barton then started several training initiatives aimed at two types of employees: new hires, who had to be brought up to speed quickly, and first-level supervisors who had been identified as high-potential performers. Many of these programs proved to be popular, with average enrollments of between 25 and 30 employees. However, Barton had initially adopted a low-key approach to leadership development. Her team collected information on programs at various business schools, which she sent to all the executives. If a manager showed interest in a particular program, the HRS department furnished additional information and arranged enrollment.

Barton usually encouraged executives to speak to previous attendees first and look over the course materials those people had brought back. That, she believed, was a good way to determine whether the executive’s needs fit with the program’s theme. If the company’s managers rated a program as “poor” or “below average” three times in a row, Barton would discourage executives from enrolling in it. When an executive returned to work after completing a program, Barton would assess its value to the individual and the company.

She asked each participant to fill out a two-page form that included questions like: ; How confident are you that you will be able to use what you have learned in your current Job? ; To what extent do you think the materials covered will help you to improve your performance? To what extent do you think the program will prepare you for future Jobs in the company? The HRS team did not usually conduct anything more formal by way of follow-up and left it to participants to integrate what they learned into their Jobs.

It was also the participants’ responsibility to contact colleagues and subordinates if they wanted anyone else to attend the same program. Until five years ago, only about ten of Sandal’s executives each year had attended programs at universities or institutes. Since then, executive education’s popularity had risen, and the company had sponsored an average of 20 angers in each of the past three years. Noticing the trend, Barton had started thinking more proactively about leadership development. Around the same time, specialized programs for Sandal’s executives.

It was one of them, in fact, that she’d been on her way to meet with the previous day. The more she learned about the opportunities to customize executive education, the more Barton liked the idea. Her plan was to conduct two programs a year, each consisting of two six-day sessions, with a month’s break between them. She obtained tentative commitments from several faculty members at the B schools, who agreed to help Sandal’s senior executives design courses, develop materials, and serve as classroom facilitators. Eventually, Barton hoped, the program would be a springboard for the creation of Sandal’s corporate university.

When Barton did the math, she estimated the cost of a customized program at around $12,000 per participant. That was less expensive than the $1 5,000 to $20,000 in tuition Kendal spent, on average, to send a manager to a university program. Nevertheless, the overall costs would be significantly higher, since the plan called for 40 to 50 of Sandal’s executives from all over the world to attend the programs. That’s why Barton had asked for a budget outlay of $650,000 for executive education for the next year-?double the previous year’s budget.

Examining Options Barton stared at the blank pad on her desk. She wished she had a plan for responding to Palmer, but all she could think of were questions-?and more questions. If Palmer wasn’t willing to budge, did it make sense to get the division heads involved? Could she create a pull strategy by getting them to ask for more education opportunities? Would they rally around her, or, as Freesias had warned, would they see her as a rival for resources? In any case, would their involvement way Palmer?

Or would it give him the impression that she was doing an end run around him and alienate him further? Baron’s mind Jumped ahead. She started thinking about the contingency plan Freesias had suggested. Should she give up on the customized program for the moment? Barton looked up to see her secretary standing outside the door with coffee and a box of cookies. It was well after 5 pm. “I’m guessing you’ll be working through dinner-?and maybe even breakfast,” said Tracy, as she placed them on Baron’s table. “Thanks,” said Barton, “you read my mind. Now, if only I could read Dave Palmers. ”