Closing the executive skill gap
There are many peer groups for everything under the sun, but using them as an executive development tool is gathering steam.
It's a way for companies — particularly small companies — to look at the future of their businesses by improving how they think about and manage them through sustained efforts, consultants and companies said.
While peer groups and education develop the talents of junior executives and managers, they also help senior executives to refine their skills.
Bottom line: Education is a lifelong process and crucial to improving a business.
Lancaster-based software company Cargas Systems Inc. has five of its top leaders in peer groups, CEO Chip Cargas said. He attends a regular peer group for CEOs through the High Center for Family Business at Elizabethtown College. Two other executives attend a peer group for middle executives.
Another person is part of a peer group with Vistage, the business development group, and another attends an industry trade association peer group, Cargas said.
"There are three different types of peer groups," he said. "So you're always getting new ideas and new information."
More companies are warming to peer groups, said Roger North, president of Lancaster-based North Group Consultants, a business-development consultancy.
Training programs and seminars are a good start for managers and junior executives to learn new organizational and management skills, he said. But one-time training goes only so far.
"The problem with this is that people go to get training, and they come back, and it's not reinforced," North said. "That's where the customized approach comes into play."
One-on-one mentoring programs and peer groups offer a sustained reinforcement of management skills, he said.
"That is a tremendous learning environment, because it's active learning. You're not just going to a speaker and taking notes," said Mike Mitchell, the High Center's executive director.
The center's peer groups help young executives and CEOs alike to address short-term problem-solving in a business and develop long-term skills for the future, he said. The hallmark of a successful peer group is that it challenges members on their decisions — or indecision, he said.
The groups discuss business problems and best solutions. Members go back to their companies and address those issues, Mitchell said.
At the next meeting, the results are shared: Did you address the issue? How did you address it? Why did you take that path? What was the outcome, and was it desirable? If you didn't address the problem, why not?
The goal is for the members to constantly refine their decision-making skills, Mitchell said.
Peer groups are a good start, but Cargas Systems addresses leadership development on a broader stage, Cargas said.
It's an employee-owned company, with 70 percent of its 53 employees owning stock in the firm. So workers are encouraged to think like leadership, Cargas said.
Over the years, the company broadened the decisions that managers and team leaders can make without asking for approval from company hierarchy, he said. That exists within a framework of rules, but it builds a culture where everyone thinks about decisions from the same standpoint as an owner, he said.
"We've had a lot of success with incrementally broadening leadership roles," Cargas said.
Internal leadership education is important, especially in family businesses where you can have a mix of family and nonfamily executives in a growing company, Mitchell said. Issues of ownership, succession planning and management development affect everyone in the company.
"A lot of times the family has aspirations to have their next generation take over management of the company, so they're addressing these issues," he said.
Small companies could learn from how large public companies handle leadership training, particularly in the area of education and professionalism, Mitchell said.
TE Connectivity Ltd., the Switzerland-based manufacturer of electronic connectors with a significant midstate presence, offers three levels of intensive executive and managerial development, the company said in an email.
Leadership Way is for the top 1,500 leaders in the company and stresses values and trust, strategy, execution and talent management, the company said. It also requires leaders to develop action plans incorporating these overarching values for a six-month period.
Leadership Foundations is for TE Connectivity's 5,000 mid-level managers, with focus on leaders as coaches, effective communication of strategy and change, team-building and problem-solving.
The Plant Manager Transformation Challenge is a seven-month course for its 130 factory managers stressing strategy, execution and leadership for better business outcomes.
Individual development, business improvement and professionalism are at the core of TE Connectivity's programs, the company said.
In the classroom
Many companies include formal education as part of their employee and leadership development, consultants said.
In a global economy, that education and professionalism is a must, especially if family companies have a desire to grow and improve, Mitchell said.
"That's somewhere that family companies have lagged behind public companies," he said.
Some companies want new executives to broaden their knowledge base, depending on the company's goals. That includes education from colleges, universities and technical schools.
"A lot of times you have people coming into these jobs who don't have tons of education, and they're moving into leadership positions," North said.
Even if the need is there, it doesn't necessarily translate to increased enrollment in education options such as MBA programs, said Richard Young, director of Penn State Harrisburg's MBA program.
There has been an overall drop in MBA applications over the past five or six years, but otherwise relatively no change among firms that partner with the university, Young said. Only the U.S. Department of Defense has dropped out of the program, but that's related to federal cost-cutting, he said.
"Our program is geared to the working professional, and our stated outcomes focus on analytical ability and team dynamics to make our graduates more productive and more valuable to their employers," Young said in an email.
Graduate students can take courses in a narrow area, but usually they're studying a broader array of disciplines for a complete understanding of business management, he said.
"Our thinking is that business problems do not come as nice, neat, well-defined packages but usually transcend multiple parts of the enterprise," Young said.
Education in many forms — formal, peer-review, internal and technical — is crucial to today's businesses, Cargas said.
"Whether it's technology or software or journalism," he said, "everything keeps changing, so you need to keep on top of education."