Knowledge is Power

Educating and developing executives is essential for a company’s leadership growth. To find out more, Business Management spoke to IBM’s Mike Markovits.

More and more companies are realizing the benefits of executive education as a way of ensuring the best-trained leaders are steering the business forward. In fact, executive education is estimated today to be a business worth US$800 million. But despite this boom, some companies – especially SMBs – find it difficult to gauge the benefits and ROI of education, with improved financial performance not always visible. Others simply cannot justify the expense of having an executive away from the office and enrolled on a costly course.

However, the experts argue that the long-term gains can be enormous if plans are in place as staff leave or retire. Being able to promote and develop staff from within is a valuable asset at a firm’s disposal. As well as this, education builds up the individual business skills, which can be passed on to the next generation of up and coming executives.

BM. How much emphasis does IBM put on executive education and development?
MM. We believe that the vast percentage of executive development occurs on-the-job rather than off it. A lot of the executive development activities are based around thinking about what jobs should people be moving to next in order to best develop them for future opportunities. A lot of it is how we staff positions – how we think of things from a succession planning point of view is all off-the-job activity that is very, very critical. A lot of self-assessment and manager assessment of executive strengths and development needs that play into that – both development needs in relationship to leadership, against which we have a set of competencies that we measure our employees; or development needs around technical or business acumen kind of skills.

In terms of education, we have really geared most of the education for executives around thresholds within their career. We have programs for new and experienced executives, new members of our senior leadership team, which is the top 300 people within the company, and so the development experiences off-the-job are really geared against transition points in people’s careers. We do that development or education at transition points so that we are able to help supply people with the skills and knowledge that they need as they enter into a higher level position that requires different things of them.

BM. What benefits does education show to IBM and the individuals themselves?
MM. The bottom line benefit is that IBM meets its quarterly and annual goals because it is the executive team that is obviously driving the company. We are doing pretty well there, but we always have hopes of doing even better. A lot of the ways that I think about whether we are being successful in terms of our development of executives is as open positions occur for whatever reason, such as retirement, do we have people within the company that can successfully compete to do those positions? That is primarily the case. We rarely have a need to go to external recruiting in order to fill a need. We sometimes do it because of unique needs or for fresh thinking so it is not that it never happens. IBM is very much a promote and fill from within company and we are able to do that because we have a strong pipeline of executives so I think that is the acid test as to what the benefit is in terms of our internal development activities.

BM. Developing top management talent is critical for future success. Do you feel that education within business is being fully realized by some companies?
MM. What I see is that very large, successful companies such as IBM are able to fund much more of their own internal management development activities within the company itself. We are able to customize executive education to meet our own unique needs. Many smaller companies, rightfully so, have a hard time justifying the dedication of head count expense against those activities and tend to outsource the activities to either business schools or external training and development companies. I don’t want to be critical of them for doing that, because if I was in that situation I might have to do that too. Clearly they are not able to do the same level of customization, nor use their own executives to deliver portions of the curriculum as we are able to do at IBM and a few other large successful companies are able to do. That is something that is distinctive, partly based on our size and our profitability.

BM. Why has executive education become so important in today’s competitive climate?
MM. It has become a cliché now, but clearly people are a competitive differentiator. So many other things are commoditized through manufacturing excellence or through outsourcing. One of the few things that you cannot commoditize is your people themselves, and clearly executives are the focus at the top of the house for providing leadership and direction for the company. To have a team of executives is clearly a competitive differentiator. So how do you have the best team of executives? Well, thoughtful hiring obviously, but then there is a lot around how you develop people, mostly through job movement but partly through educational programs to enable those leaders to be best that they can be.

BM. What are your thoughts on the value of courses such as MBAs and eMBAs?
MM. In a company like IBM, I think it is less important as essentially you can learn those skills and knowledge internally – through different jobs that you choose to take as well as our own internal education program – so I think it is less important for a company like ours. However, broadly speaking, when I see that someone has pursued an MBA though a weekend program over a couple of years then I know that person is focused on developing themselves. It sends a positive message about the intent of the individual around self-development and learning, which is a pretty important focus and capability for an individual to have in order to continue to grow and be successful in their career over time.

BM. What challenges or obstacles can a company face when trying to educate its staff?
MM. In general, the challenge that many companies face in this area is that learning and development is too often viewed as an expense as opposed to an investment in the future. In many companies, there are understandable financial challenges as they try to tighten expenses and reduce costs, which often results in a cutback in learning and development. Although that is an issue at many companies, here at IBM I would say that learning and development are very much considered to be necessary for our continued success. This is based on a long heritage of IBM thinking this way, back from the days of [IBM founders] the Watsons. I don’t think we face that particular issue here, but it is a major challenge for companies generally.

Another major challenge that companies face (although once again I am fortunate that is not such a big deal here), is getting senior management to participate in activities related to educating the leadership team. Nothing sends a bigger message than seeing your leaders dedicating portions of their time to speak to upcoming leaders in the company or teaching about core competencies. At IBM that happens fairly routinely, so I feel pretty good about that because I know it is an obstacle faced in other companies.

BM. How do you see management education developing over the next five years or so?
MM. I think the big challenge for management education, which has been true in the past and I think will continue over the next five years, is how do you maximize and optimize learning while doing the job? This is opposed to pulling people out of the job and into the artificial environment of a classroom setting. There will always be some benefit to classroom-type education, but I think the challenge for folks who do leadership development and management education is how to continue to figure out better and better ways to allow learning and development to occur in a systematic manner, but while leaders are doing their jobs.