Thursday, February 19, 2009

How to Design a Frugal Leadership Development Program


I recently wrote a post proposing a “The Leadership Development Economic Stimulus Package”, which included instructions on how to design a three million dollar leadership development program.

The post was meant to be satire, but I’ve heard some thought I was serious.

I wish I could spend that kind of money on a leadership program; even better, I’d like to attend that program as a participant. I know of companies that do, and I applaud them for their commitment to the development of their leaders. I just published a list of the 2008 Best Companies for Leaders, and you don’t show up on these lists without a serious investment in leadership development.

I also had no intention of throwing stones at the excellent institutions that provide the kind of services and products I included in my fictional program. Each and every design element had merit, and if done correctly, can be well worth the investment.

The reality is, especially in these challenging economic times, is that many companies can’t afford to spend that kind of money. Even in prosperous times, I don’t think I would anyways. I’m pretty frugal to begin with, and I tend to spend my company’s money like it’s my own.

At the end of that post, I promised to show how to design a similar program, but at a fraction of the cost. I’ve written articles on low cost leadership development before, including “Leadership Development on the Cheap”, “What if Leaders Designed their own Programs”, and “Leadership Development is a Sunk Cost”.

So let’s see how much we can trim off the 3.1 million dollar program, without losing any of the benefits. The original elements are in black, the frugal alternatives in red italics.

How to Design a Frugal Leadership Development Program

1. First of all, let’s start with the assumption that this will be a two week program, with 40 participants. That’s about the longest any program should be, with the maximum number of participants.
Two weeks is overkill, and who can afford to be away from the office for that long? Let’s trim the program to six days, but break it up into two separate three day sessions, with lots of pre and post work in between. We’ll use webinars and conference calls before and after each session. We’ll keep the participant size the same, and use small groups for maximum involvement.

2. Go to one of the top 10 business schools or big 10 consulting firms and pay them to do comprehensive needs assessment. Invite in a team of professors and consultants into your business to do interviews, research, and everything needed to ensure the program is addressing strategic business objectives and developing the right competencies. The university will benefit from this research as well; it keeps the professors connected to the latest business issues and makes for great future case studies. Cost: $200,000, includes travel
Do the needs assessment yourself. Why would you want to outsource these kind of conversations? Cost: $0.

3. Hire the same university or consulting firm to design a custom program just for you. Yes, the program on the surface may look just like any other program, but rest assured, the money you spent on the needs assessment will guarantee the program addresses your unique needs. Cost: $300,000 (does not include licensing fees)
Do the design yourself. If you’re not sure how, learn how. Do some networking. Or, hire an independent, low-cost niche consultant who has designed programs for other companies and has just gone independent (get references). Cost: $0-$20,000.

4. For pre-work, develop a customized, online, media rich, interactive, game-like business simulation. Cost: $200,000
For pre-work, point participants to free online articles, have them purchase a book, do some interviews, background investigation, or shadowing.
Cost for 40 books: $800

5. For additional pre-work, send each participant to a two-day assessment center, where they will go through an intense, comprehensive assessment process to determine their individual development needs. Cost: 40x$8000 each= $320,000+$80,000 travel=$400,000
In additional to the strategic needs assessment, it’s always good for individuals to identify their own personal development needs. They could do a self-assessment, ask their manager, a few peers and direct reports for feedback, or do a formal 360 assessment. Cost for 40 360 assessments if purchased: $4000

6. Get a top notch, luxury conference center in a resort location. It’s hard to learn when you’re uncomfortable and hungry. Spare no expense on the food and amenities. Cost: $500,000
Stay at a nice, but reasonably priced off-season hotel and meeting room. Most of your time is spend in a room anyways. Yes, participants will need to eat, but you don’t need to serve a grand buffet for every meal. Cost: $50,000

7. Have the participants fly in on either private planes or first class. Private limos to the hotel. Cost: $100,000
Use a sharp corporate travel agent and centrally manage the travel arraignments. Use low cost economy fares, share rental cars, and use off-site parking. Cost for two trips: $40,000

8. Hire the most famous management gurus as instructors. Throw in a few rock star keynotes. Cost: $500,000
If you want to learn from a guru, read the guru’s book. You don’t need to pay a $20,000 per day speaker’s fee. Have participants work on real company issues. See posts on action learning by Chris Morgan on how to do this. Use internal experts and senior managers for your instructors. Or, if needed, hire an expert (another one of those niche players) for about $3000 per day to compliment your internal experts. Cost for two days: $6000

9. Hire personal executive coaches for every participant. Not just any coaches – hire the best, those famous CEO coaches we always hear about. Cost: 40x$20,000 each= $800,000
Use a peer coaching process: teach participants how to coach each other as a part of the program. Cost: $0

10. You can’t have all work and no play. Participants need a chance to relax, unwind, bond, and reflect on their development. Throw in an afternoon of golf, a dinner cruise, a private rock band performance, three receptions, and a weekend spa treatments. Cost: $100,000
It’s not a vacation, it's work. And the rest of the team is back at the office covering for participants while they’re gone.
Cost of two dinners together at decent restaurants, drinks not included (you can’t learn hung over): $2000

11. Every participant needs something to remember the program by, an “anchor”, as we like to call it in the OD and training business. Engraved crystals and team jackets usually do the trick. Cost: $10,000
A small, but personal memento for each participant, and a warm hug. Cost: $800

12. Lost opportunity costs from having your top leaders away from the business for two weeks: priceless.
Payback for return on action learning projects: priceless.

Total costs: $3,110,000
Total cost for the frugal program: $123,600
Savings: $2,986,400

So there you have it! Now go invest in your leaders, and take the rest of that money and stimulate the economy in some other way.

8 comments:

Anonymous said...

Question - where can I get 360's done for managers for about $100 like you mention?

This is great stuff Dan. Just today I submitted a training budget that included request for books that was close to your $800. And were doing the design ourselves. - Jon

Dan McCarthy said...

Anon -
Try LPI online:
https://www.lpionline.com

Art Petty said...

Dan, I love the dose of reality that you offer here for anyone/any firm looking at an LD initiative. One of the great misnomers is that these program have to be expensive to be effective. They don't and you show that.

I offer supporting thoughts in my post at Management Excellence in a piece entitled: No Leadership Training Budget, No Problem--Nine Tips, No Charge.

Thanks as always for your insightful posts. -Art

David Parks said...

Dan

Thanks for the illustration. Without too much calculator bashing, I still think you can still do better.

I confess I don't have much visibility into the venue and travel costs (as a provider) but $90k seems a lot.

The overall per participant cost (based on 40) works out at just over $3,000. This is a fairly big number based on my experience working with top class client companies.

Some of the areas I find clients directing their attention towards to save money include:

- train the trainer with internal resources
- joining together with other companies on a cost share basis
- reducing the number of vendors they are working with and negotiating more favorable business terms

In the last downturn, the prevailing mindset was "cut the budget." This time around I see more mature and creative thinking on how to maintain leadership development.

Just today I took a call from a company in the homebuilding supply market to do some work. They recently axed 25% of their workforce yet will be delivering a workshop in March. Their own internal trainers will deliver it . . . and they will be delivering the exact same content as some of the companies on the 'Best Companies For Leaders' list. Imagine, this means they are getting the same or similar road tested and proven workshop that the likes of a GE or 3M use and all for less than a $5,000 investment.

If frugal thinking means getting creative, then I say bring it on. I wholeheartedly agree with you that there is a lot of room for smart cost savings and improving the effectiveness of leadership development. Thanks for making us all think (frugally and creatively).

David Parks
Bluepoint Leadership Development

Dan McCarthy said...

Art -
Thanks, I'll take a look.

David -
I love your attitude, even more so because you're a top-notch provider!

Chris Morgan said...

Great ideas! I also agree that organisations really should have the capability to develop high quality programmes in house.

If you are thinking about how to design such a programme then this post might be helpful - how to put yourself in your audience's shoes:

http://learn2develop.blogspot.com/2009/02/put-yourself-in-their-shoes.html

Regards - Chris

Dan McCarthy said...

Chris -
Thanks, I'll take a look!

Ken B said...

Dan,

Are you available to apply the same thought leadership to the entire Federal Budget?

I have a suggestion. Have the leadership team turn off their "Crackberry" for 1 hour a day and redirect that time into self-study leadership development program with an accountability partner at the office.

That turns into about 6 weeks of training at little or no cost.

But seriously, if the company feels compelled to hire a famous key note speaker for a day I'll make myself available for $19,999 and I'll even throw in the Engraved crystals, team jacket and the warm hug.

Great suggestions Dan!