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Business Schools Make Strides In Leadership Development

Soft skills have become more important for MBA employers and leadership development is now the key learning objective. Business schools have ramped-up their leadership development efforts.

Tue Apr 22 2014

“I call it the natural rockstar,” enthuses Heather Giese. “Individuals that, no matter what role you put them in, will always deliver and be viewed as successful.”

Heather, boss of commercial leadership programs at General Electric, the leading global conglomerate, is talking about leaders. GE has lured a stream of successful MBAs from the comfort of their business schools to emerging markets to build the next generation of boardroom bosses.

Leadership is not as well-known as marketing or finance, the popular business school core subjects, but that is about to change. Leadership recently became the dominant learning objective of prospective MBAs, in one of the biggest world-wide applicant surveys. GMAC polled 12,000 Master’s program hopefuls.

Some programs couldn’t be more different in their approach. But most schools will agree that it is on fire. Leadership has taken something of a backseat in the years past, as the traditional subjects and entrepreneurship dominated proceedings, but the subject is booming again.

The term has risen above all others – to top the list of what MBAs hope to learn. People overwhelmingly want to go back to school to become better leaders. Finance, marketing and accounting came second, third and fourth respectively.

GMAC’s data buoys an applicant survey last year by QS, the business school research company. The survey revealed that more than 56% of applicants are pursuing an MBA to take up a leadership position. That is significantly more than those who cited boosting salary as their main motivation.

According to QS, nearly 40% of 2013 applicants expected to specialize in leadership, up from 37% a year earlier.

“There has been an increase in the proportion of respondents who see themselves as director in a large or public company, CEO of a large company and director in a small company,” the report says.

“Coupled with the large majority of candidates looking to stay within their present industry in the short term, the picture that emerges is of a more risk-averse cohort.”

What is driving the new leadership craze?

“A growing number of candidates now also see their long-term future in senior positions within existing companies rather than as entrepreneurs,” the report continues.

Even as the global economy recovers, the most rapidly-rising career path – entrepreneurship – is slowing in growth. Meanwhile leadership, a pillar of both corporate and start-up success, is on the rise.

At the same time, the trend of career-switching appears to be slowing. A huge majority of candidates in 9 out of 13 of the top industries want to stay in their current fields. Nearly 77% of consultants want to remain in their field post-MBA. In 2011 that figure was 42%.

Business schools have since been making great strides in leadership development. To help draw more candidates, schools have been ramping-up their efforts.

Harvard Business School, which requires MBAs to take two leadership classes, already has eight different second-year leader-related electives. First-year students are forced to learn Leadership and Organizational Behaviour, and Leadership and Corporate Accountability.

The University of Pennsylvania's Wharton School has a similar approach. Wharton’s Executive Feedback and Coaching Program requires students to incorporate feedback and self-assessments on leadership, previous work experience and summer internships. The school also provides one-on-one executive coaching.

It is little wonder that these two schools are considered the best in the United States. Many other schools have followed suit.

Spain’s IESE Business School, for example, held a global leadership conference earlier this month. The school drew academics and executives from the world’s leading companies – including Isak Andic, founder of fashion giant Mango, and Rosa García, CEO of Siemens Spain.

A key theme of the two-day conference was the role of business schools in preparing leaders to take on business challenges. IESE also looked at how to integrate entrepreneurship and innovation into leadership development.

“I think that the main problem today is actually how we turn innovation into a differentiating factor within global leadership development programs,” says Jordi Canals, the dean of IESE Business School.

Yet some commentators argue they have not gone far enough. Heather disagrees.

“It teachers you how to learn. And it also shows an innate work ethic that is essential to getting an MBA,” she says.

But she continues: “To grow in our organization you have to be known for delivering on your goals. You have to be someone people want to… work for, without necessarily having authority – humble and flexible, you have to be of the mind-set that you do whatever it takes to get the job done.”

However, they may have good reason to be fearful. A world-wide QS survey of 4,000 MBA employers says that strategy and leadership were recruiters’ favourite specializations. Leadership and other “soft skills” may now be more important.

For QS, 2013 was the only time in the survey’s 20 year history that MBAs actually met leadership demands. “This is not by chance,” the report says. “MBA programs have been actively developing their curricula to focus more and more on leadership development.”

Anthea Milnes, head of marketing for graduate programs at Cranfield School of Management, says: “Employers often value soft skills such as management, leadership and team working [just] as highly as functional understanding, quantitative ability or analytical skills.”

In certain regions, there is a bigger dearth of leadership experience. Asia, which is home to economic powerhouses, is frequently criticized for its lack of leadership talent.

According to some international recruiters, business school graduates are still not meeting expectations in terms of soft skills. There has been a long-standing shortfall of leadership and interpersonal skills for several years.

“MBAs bring the maturity, business and cultural awareness as well as the leadership skills to take our company forward," said Edward Hyun, vice president of strategic relationship management for American Express Global Network Services Asia.

A top recruiter from Standard Chartered said "MBA hires are critical to building our leadership".

Research from Henley Business School reveals that leadership capability is companies’ key spending priority. The Corporate Learning Survey, released this month, surveyed more than 350 executives. More than two thirds were at director or CEO level.

More than 70% also said leadership capability would be their company’s next major challenge. That is double the number who cited international competition.

“Organisations are recognising that the development of leadership capabilities… is essential to produce the best return in organisational performance for shareholder investment,” says Nick Holley, co-director of the Henley Centre for HR Excellence.

About 80% of executives will maintain or expand their L&D budgets. “Organisations clearly feel that this investment is essential and are confident that this will reap rewards,” says Professor Bernd Vogel, Director Henley Centre for Engaging Leadership.

“Even when we looked at the organisation’s very senior people, the message is: ‘investment, investment, investment’ – in leadership development [and] in team development.”

LUMS professor Cary Cooper is working with UK politicians and board-level business leaders as part of the All-Parliamentary Commission on the Future of Management.

One of the commission’s main tasks will be to identify what should be taught at business schools to encourage leadership. And how to encourage more women and people from diverse backgrounds to become leaders.

“Work has changed. No longer do we have jobs for life in the UK and employees will be facing job insecurity and short term contracts as the norm,” says Prof Cary. “Leaders will have to get the best from increasingly remote and global workforces.”

He adds: “The UK needs to future-proof its economy by developing the sorts of inspirational people who will keep our businesses competitive as well as promoting a healthy working culture in their organisations.”

Meanwhile, many still argue that leadership cannot be developed in classrooms. It is personable, practical experience that defines a great leader. That does not bode well for business schools that take flack for being too long on theory.

However schools, often criticized for producing unethical leaders, are adapting. But as Heather points out, there is no singular mould for leadership. MBA programs can only do so much.

“There isn’t a quintessential GE leader,” she says. “If you look at our last two CEOs, they couldn’t be more different in their approaches.”