Leadership Development: An Imperative Investment

As we make plans and set our direction for this new year it makes a lot of sense for us to reflect on the past year so that we can make some learnings that help guide us on where to focus our efforts for 2024.  My thoughts undoubtedly go to Katarina’s bridge number 4: The Leadership Bridge

As Katarina points out, there’s a transformation in leadership skills required in 2024. Leaders need a blend of new and enhanced abilities. However, when checking the pulse in the Leadership Development space it’s clear to see that many companies have cut back on learning budgets and leadership development. We are not so sure that’s the wisest of moves, and we would rather underscore the pivotal role that leadership plays, especially in the face of macroeconomic headwinds that often compel companies to reassess their financial strategies. This economic environment, paired with the break-neck speed of technical innovations, means that how we lead our companies and organisations matters more than ever! And we believe that we should not turn ROI (Return On Investment) into WOI (Waste Of Investment).

Strategic Necessity: People First

In the past few years, societies, communities and organisations alike have been struggling with a multitude of challenges from pandemics, social unrest, war and conflict, and the escalating climate change issues. In the midst of all this, leaders and people managers are doing their best to build healthy teams, to drive results and to plan for the future. It’s not easy to be a good leader, and today’s environment makes it all the more difficult. It will be even harder still for leaders in those organisations that don’t have a mutual understanding of what type of company they are and what type of leadership they want to drive.

At Spotify we have a clear and outspoken belief that we are a people-first company. That means that of all the three components of a successful company; People, Product, Profit, it has to start with our people. With great people that can be and do their best, we are more likely to build great products and the right business models that will lead to profit. Products are fairly easy to copy, it is people and culture that will set you apart.

So we need to invest in finding, leading, developing and empowering the right people. And who has the most important role to play here? That’s right: our leaders. A huge part of culture can be attributed to leaders’ attitudes and actions, their ability to navigate constant change, to lead the business and people and to make sense of complexity. So amidst the temptation to tighten budgets and trim costs during financially challenging times, it’s imperative to recognise that investing in leadership development is not an arbitrary cost but a strategic necessity and one of the most cost effective investments you can make.

Business Growth Correlated To Leadership Development Investments

Investing in leadership development is correlated with business growth. 

Why are we so sure of that? To start with, empirical facts from our business. We can see that leaders that have engaged in leadership development are more likely to get good scores in our engagement surveys. And the surveys highlight and confirm that leaders having 1:1s and development talks regularly score well on almost all survey questions. This all suggests higher engagement from our leaders, and also from their team members,  and there is plenty of research pointing out correlations on engagement and productivity. 

In addition, recent research from the Josh Bersin Company shows that leadership development is the most important HR investment correlated with business growth. As Bersin says “Of everything we spend money on in HR, leadership development is the most important.” Bersin’s analysis highlights a pervasive trend – companies worldwide have been neglecting their leadership, and the repercussions are becoming increasingly apparent.

Doubling Our Efforts In Leadership Development

Many organisations don’t see the connection between developing leaders and the success of their company as there’s no direct causality. Or some companies say that they see a connection, but then do nothing to uphold leadership development. Or they build The One Big Leadership Development Program, that is “rolled-out” and “implemented” in all corners of the business in a waterfall model. However, after a couple years when they have rolled-through all levels of leaders, some will have left the company, new leaders will have joined and missed the train, and content will be obsolete given the speed of change in today’s work environment.

At Spotify, we understand the profound importance of cultivating a resilient leadership culture, not the least during challenging economic times. The recognition that performance can suffer in the absence of robust leadership development has spurred us to take proactive measures. 

In 2023, we not merely maintained, but significantly expanded our commitment to leadership development, doubling the number of programs aimed at nurturing effective leaders. This year alone we have run 58 manager and leadership programs to make sure as many of our leaders as possible have a strong foundation to stand on when they steer the ship through the storms. These programs are the foundation of our leadership culture and the Spotify way. In addition, we support leaders with other types of leadership development interventions as needed – from coaching, and tailored leadership team development, to just-in-time sessions for all. And worth noting – we do not only focus on the senior leaders, we develop all our leaders.

What do we base our leadership development programs on, and how do we run a people-first company the Spotify way? Well, we lean on our leadership model, our leadership criteria for what a good leader at Spotify stands for. It was first developed many years ago, but has seen changes and iterations. The last change was a few years ago, when we introduced the Manager Manifesto as a way to set clear expectations, and to communicate our ambitions and culture. This expectation-setting and communication helps to support our leaders by giving them guardrails and something to hold on too. This is the foundation for all leadership development in Spotify.

The Right Leadership Culture

Beware though to not just throw money at leadership development, make sure to find out what works. Investigate what external research and your own data says. Be mindful that a fancy leadership retreat may miss the mark whereas a low-cost leader intervention for all leaders in the office could be much more impactful. Make sure to do the homework before you invest. And as with all investments, invest wisely.

A robust (the right) leadership culture is not a luxury; it’s a strategic necessity. It forms the bedrock for navigating uncertainty, fostering innovation, and maintaining the engagement and motivation of teams. Leadership development will help you craft and enable that culture. Through effective leadership, organisations not only weather the storm but emerge stronger on the other side – a clear necessity for all organisations in this upcoming year.

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