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There's good news and bad news when it comes to business leadership development. The bad news is that traditional costly classroom training yields marginal results, if any. But the good news is that leadership development for small and mid-size businesses doesn't actually have to be expensive, nor do you need a big HR team to do it effectively.

What Is Leadership Development?

2017 research study by A.J. O'Connor Associates found that many small businesses are, in fact, developing leaders and building a leadership pipeline without extraordinary expenses. Their report revealed that 61 percent of respondents use a combination of special projects or assignments and internal coaching to cultivate leaders.

With years of research behind them, the Center for Creative Leadership (CCL), has determined that 70 percent of successful leadership development is delivered through challenging assignments, 20 percent through developmental relationships and 10 percent through formal course work and learning programs. Recent research also adds five critical elements for nurturing leaders in the U.S.: managing direct reports, gaining self-awareness, executing, addressing ethical dilemmas and making mistakes.

The Road Map

Here is a road map for small businesses that want to begin or strengthen their approach to developing both current and future leaders within their organizations using existing resources.

Know What an Effective Leader Looks Like

Start with a little research on leadership behavior, both generally and in your industry. There's plenty of information available from highly respected organizations like the CCLDevelopment Dimensions International and Harvard Business Review.

Ask existing leaders and observe those who are successful. But don't stop there—ask employees what they think makes a good leader. Then, identify the specific knowledge that leaders require. Put it all together in a profile and use it to consider gaps in existing leadership, and identify areas of focus for future leaders.

Include Leaders in Strategic Planning

Too often, leaders get their budget assignments for the coming year without any context of what the overall plan must accomplish. That's why one of the best ways to mature leaders is to involve them in the drafting of the organization's business strategy and operating plan.

As you invite them to work on the plan, take time to explain the components, answering questions such as:

  • What do the financial measures mean?
  • What is the consequence of not meeting them?
  • What restrictions are placed on the organization by regulators or financial institutions, should targets be missed?

Work as a team to build out the plan based on any non-negotiables that must be met. And don't forget to bring selected future leaders into the process as well to grow their understanding of the big picture.

Send Leaders on a Learning Quest

To ensure leaders gain specific knowledge and skills, send leaders in search of a learning tool. The internet is full of free or inexpensive ways to learn, from digital resources like Massive Open Online Courses, podcasts and MindTools, to good old-fashioned books and articles. Google “free online leadership courses" for about 18 million options.

Communicate the Development Vision

Whatever your leadership development strategy is, make sure that the leader knows that he or she is being tapped for a growth opportunity. As a leadership development consultant, I was blown away by how many participants took internal courses without any idea of what they were supposed to learn and bring back to their work.

Be clear about why the knowledge, skill or behavior is vital to their growth, and let them know that you consider this learning process to be an investment in them and in the organization.

Give them learning objectives beforehand, and afterward, discuss what they've learned. Help them take generic insight and apply it in the context of their current and future role. Finally, give them a chance to practice, practice, practice.

Allow Time for Reflection

We learn every day, but in this fast and furious world, we move on too quickly without realizing that we have grown. One of the easiest ways to grow current and future leaders is to set the stage for knowledge, skills and behaviors that are important to their work, give them opportunities to learn and then reflect on the learning.

This process doesn't cost a lot of money, but is absolutely the best way to develop leaders.

Photo: Creative Commons