Running Head: EMERGING LEADERS AND MIDDLE MANAGER LEADERSHIP

DEVELOPMENT

Emerging Leaders and Middle Managers Leadership Development

Tracey A. Salas
George Mason University

Emerging Leaders and Middle Managers Leadership Development

Executive summary
IBM Corporate managers would like to develop a framework for identifying high
performing employees to be groomed for management positions aligned with their strategic
vision as a leader in global transformation and the evolving needs of the IBM clients. With these
goals in mind, this business case lays out a plan to identify and develop leaders throughout the
lifecycle of their careers. This paper builds the case for the importance of developing new
mangers, argues the feasibility of using the existing development framework, and offers concrete
learning opportunities to stimulate the adoption of the framework to support the lower leadership
tier by:

Engaging top executives to support the leadership strategy

Aligning strategies to business goals

Focusing on developing leadership succession

Implementing an effective leadership program

The program will be managed by a dedicated Leadership Program Manager and delivered
with the assistance of other corporate functions as necessary. Leadership metrics will be used to
manage and prove the cost-effectiveness of the program. Currently, 100M is being spent on
senior leadership training, which could be reduced and reallocated at the lower tiers. The
Leadership Program Manager is only asking for 1/5 of that or 21M for training emerging leaders
and middle managers. The return on investment could be as high as 600M as more teams
quickly mobilize to solve business issues and will substantially outweigh the program costs. A
communication plan which develops materials for in-person and web based delivery will be
presented to senior leadership for approval and then tested with small focus groups to ensure
both the materials and the concepts themselves were clear and comprehensible. IBM is
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Emerging Leaders and Middle Managers Leadership Development

committed, as part of its strategic plan, to improve the leadership succession of its organization
to serve a diverse customer base in an increasing global and agile world.
Introduction
This proposal was initiated by the Training Supervisor of IBMs Center for Learning and
Development with the goal of building the case for implementing recommendations that develop
a framework for employees being groomed for management positions. A three pronged
approach was taken in exploring data that had relevance to a competency-based leadership. First,
leadership competencies were defined in relation to both knowledge and application. Second, a
method of evaluating leadership potential, and designing training opportunities to enhance
personal and professional leadership development were identified. Finally, leveraging the skills
of these potential leaders to enhance the organization was also discussed.
Statement of the Gap
Recent data on leadership indicates that there is a large knowledge gap that needs to be
filled between new employees and senior leaders. Competencies such as problem-solving,
decision making, communication skills, are more critical as one rises from individual contributor
to supervisor (Kello, 2014). The dynamic requirements of customers who are globally based
also require additional competencies that many leaders are not prepared to address. Forbes
says, Companies face new leadership challenges, including developing Millennials and
multiple generations of leaders, meeting the demand for leaders with global fluency and
flexibility, building the ability to innovate and inspire others to perform, and acquiring new
levels of understanding of rapidly changing technologies and new disciplines and fields (Forbes,
2014). At the same time, the flattening of organizations has created an explosion in demand for

Emerging Leaders and Middle Managers Leadership Development

leadership skills at every level. (Forbes, 2014). In fact, high potentials need to start developing
collaborative and integrative leadership competencies at around the middle management level. If
the manager doesnt effectively adapt their style at these levels, they are less likely to adapt them
later on in their careers (Randolph, 2012)
IBMs Workforce Management Initiative and Leadership
IBM is an organization that has had to circumvent all these challenges when trying to
match talent with areas of the organization that would make it most successful Between 2003
and 2009 IBM had created a unique workforce management initiative (WMI) that reflected the
increasing need for global organizations to have a transparent and comprehensive view of their
talent supply, requirements and implications for business strategy (Bodreau, 2010).
Implementing the WMI system required creating or incorporating specific "technologies" into
every stage of the employment life cycle, from planning through deployment (Bodreau, 2010).
According to Barbara Lombardo, IBM has a highly diverse workforce: where:

50% workforce has fewer than 5 years of service

62% workforce is in our services business

40% of employees work remotely not from a traditional IBM office

15% of population comes from acquisitions & outsourcing deals

The data confirms there is a large talent gap between those leaving workforce and those
entering the workforce. With at least half of the workforce having less than 5 years of
experience, and several other employees working remotely, IBM created competencies that help
facilitate a fluid approach to leadership and management of teams that are as dynamic as the
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Emerging Leaders and Middle Managers Leadership Development

technology.
IBM outlines its leadership competencies as follows:

Opportunities
Defining the competencies was a first step to building a transformational culture of
leadership. Building on the successful Workforce Management Initiative and Talent
Management Database, IBM also identified leadership gaps, began regularly assessing those in
leadership roles, provided them guidance and development opportunities and tracked their
progress in the Talent Management Database. Additionally, for each leadership role, the
company defined benches of potential candidates, ensuring diversity and conducted annual
leadership review s at all levels of the business.
IBM has a progressive vision of leadership that starts with emerging leaders and
continues with its executive leaders. $100 M has been invested by the company in leadership
development so far. However; efforts to date have focused only on the top tier of the leadership
development framework, with no new initiatives focused on developing middle managers or
transitioning employees from non-management to management positions.

Emerging Leaders and Middle Managers Leadership Development

Measures of Success for Emerging Leaders and Middle Managers
Building on the successful interventions for Senior Leaders, new hires will be measured
against the core competencies to ensure critical leadership skills are developed and nurtured
early in the process. A career map that outlines long-term career development will take place at
the first formal performance review with their managers a year after the employee has been
hired. Employees will be able to self-select one of two career tracks management or technical
expert. Both career tracks offer employees opportunities for career advancement and promotion.
A training plan for emerging leaders and first line supervisors will consist of developing and
maintaining skills in the IBM competencies, as well as, developing skills in those areas needed to
grow to technical expert or manager.
Of those who have self-selected as a manger, a percentage will be nominated after the
first year by their supervisors to be accepted to the emerging leaders program. Nominees will be
expected to attend a week long face-to-face training and will be tasked to work on virtual teams
throughout the year. They will be able to meet monthly with a mentor to reinforce their learning.
The focus of the training and the exercises will be geared toward Strategic Thinking, Situational
Leadership, Emotional Intelligence and Leading Virtual Teams. Those who have successfully
completed the program will be eligible to apply for a supervisory role. At the end of their first
year as a supervisor 360 leadership assessments should be administered to the leaders team. A
middle manager in the IBM organization is someone who is responsible for managing two levels
of junior staff. Shortly after an employee receives a middle management position, he/she will
also be nominated by their supervisors to engage in a year-long blended learning program which
is very similar in structure to the emerging leaders program. The focus of the training will
include Change leadership, Delegation/Prioritization, Employee Development and Diversity and
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Emerging Leaders and Middle Managers Leadership Development

Inclusion. Spot coaching and 360 Leadership assessments will also be part of evaluating
performance improvement.
Justification
A further expansion on the existing Leadership development to include emerging leaders
and middle managers will help to bridge the leadership gap that currently exists between new
hires and senior leaders who are ready to retire and will help further IBMs goal of building a
culture of transformational leadership. It will also allow the opportunity for high potentials to
develop collaborative and integrative leadership competencies earlier before adopting a preferred
leadership style. Because the trend is for flatter organizations, it is possible that some of
employees will be expected to take a leadership role earlier in their career and lead teams in
dynamic environments for projects with a short duration. Early development of leaders will offer a
broader selection of company defined benches of potential candidates for leadership. Training
and continued support from mentors and coaches will help employees to build skills to lead in
dynamic environments; the intervention will have long-term positive effects on organizational
efficiencies for teams who have convened to meet global clients technical requirements. An
increase in productivity will provide a cost savings as time on task and labor hours decrease.
Less money will be needed to be spent on training at the executive level since employees are
receiving critical training and skill development earlier in their careers.
Assumption and Methods
Some assumptions about creating a blended learning program for emerging and middle
managers are:

IBM will be keeping the current staffing levels.

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Emerging Leaders and Middle Managers Leadership Development

Managers will be recommending participants based on data from the Talent Management
System.

Providing leadership training will also increase productivity levels of the teams

IBMs training group in consultation with Finance department has identified training which
combines leadership skills needed for emerging leaders and middle managers and examined cost
benefits against training knowledge, application, and productivity gains for IBM. To increase its
overall productivity, IBM realizes that it workforce needs to be engaged and motivated to be
productive. As part of their strategic directive, IBM has decided that this can be achieved by
increasing its leadership capability-by equipping its leaders with the knowledge and skills to
truly engage all employees. A blended learning environment will take place (1) Face-to face (2)
Virtually through synchronous discussion for mentoring, coaching, and competing peer
assignments and (3) Using a web-based learning toolkit. The course will be piloted with 50
emerging leaders and 50 middle managers. Level1 will be used to collect data on the training
and Level 3 evaluations will used collect data on the performance of the participants and a 360
assessment will be administered every year. The toolkit will be licensed to participants and will
be offered as software as a service so that new updates will be maintained by the third party
company. All data measured against leadership competencies will be captured in the IBM talent
management system.
Cost Benefits
Some of the tangible and intangible benefits of the program include:

Improving the rates of time elapsed from business response to client project
completion by 1 month for potential profit of 550M

Reducing 50M spent at the senior levels as training and mentoring at lower levels are
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Emerging Leaders and Middle Managers Leadership Development

better preparing senior leaders over the course of the next5 years.

Providing Awareness of IBMs leadership initiatives

Communicating the strategic intent of the organization with regards to Leadership

Making senior leaders aware of their role in fostering a succession of leaders

Creating a culture that is in support of best practices in leadership

Table 1 outlines the costs of providing training for Emerging Leaders and Middle
Managers which is approximately 21 M. The cost of training emerging leaders runs
approximately $3,300 per person and the cost of training middle managers runs approximately
$5,800.
Table 1 Emerging and Middle Managers Cost of Training each Employee
Emerging Leaders

Cost Per Person

Cost per person

Instructor costs per
person
Program Materials
Tool Kit

$1,855
$250

Middle Managers

Cost Per Person

Cost per person

Instructor costs per
person
Tool Kit

$1,855
$250

Coaching

$200
$1,000

$200
$1,000
$2,500

Total of
Costs Per
Person

$3,305
Total Costs

$5,805

# of
students
per year

$2,300
# of
students
per year

$2,300

total costs

$7,601,500
total costs

$13,351,50
0
$20,953,0
00

Emerging Leaders and Middle Managers Leadership Development

Data from the financial group has shown that the average long-term team project at IBM
lasts a year. High performing teams are able to complete their projects a month earlier saving
time and labor hours which can be redirected immediately to other projects. Tables 2 &3 show
the cost benefits of first line leaders whose teams finish early can save as much as 47K per
project. A middle manager typically manages at least 4 teams in the organization. If all of those
teams are high performing teams, the savings to the organization would be about 206K per
project. The return of investment for emerging leaders training could be $13 per every $1spent
on training which would total of 99M. The return of investment for middle manager training
could be $34 per every $1 spent on training which would total 453M. Because managers are
now receiving training at the earlier levels, IBM may not need as much training for senior level
managers. Over the next five years, senior manager training could be reduced 10% each year for
leveling off at 50M invested for senior management training. The total ROI for all leadership
training could be as high as 600M.
Table 2 Emerging and Middle Managers Team Salaries
First Line Leaders
First Line Leader
Computer Programmer
Computer Systems
Analyst
Application Developer
Software Developer
Consultant
IT Specialists
Middle Managers
Middle Manager
Team 1

Annual Salary

Total Costs

$100,000
$72,000
$80,000
$70,000
$81,000
$86,000
$78,000
Annual Salary
$200,000
$567,000

$567,000
Total Costs

Salaries Total
per
Saved per
Month
Project
$8,333
$6,000
$6,666
$5,833
$6,750
$7,166
$6,500

$47,248

Salaries Total
Per
Saved per
Month
Project
$16,666
$47,250
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Emerging Leaders and Middle Managers Leadership Development

Team 2
Team 3
Team 4

$567,000
$567,000
$567,000

$2,468,000

$47,250
$47,250
$47,250

$205,666

Table 3 Emerging and Middle Managers ROI

First Line Leaders Benefit Cost
Ratio (BCR)
First Line Leaders Return on
Investment (ROI)

Project Benefits
Project Costs
Net Project
Benefits
Net Project Costs

Middle Managers Benefit Cost

Ratio (BCR)

Project Benefits
Project Costs

Middle Managers Return on

Investment (ROI)

Net Project
Benefits
Net Project Costs

$47,248
$3,305
$4,394,300

$14

$3,305

$13

$205,666
$5,805

$35

$19,986,100
$5,805

$34

Project Planning
The Leadership team under the direction of the Chief Executive Officer has outlined a high
level plan:

November 2014-December 2014 working group of senior Leaders is established to

review goals of training for emerging leaders and middle managers in alignment with
IBMs strategic goals.

December 2014-A report of the goals will be prepared by training program Manager for
the CEO.

January 2015- CEO will unveil the new policy based on the working groups
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Emerging Leaders and Middle Managers Leadership Development

recommendation at a company all hands that will take place at the corporate headquarters
and broadcast to satellite offices all over the world.

January-July 2015 develop a course for a diverse audience and their specialized needs.

July-August 2015 Add staffing and training capabilities to ensure emerging leaders
understand the needs of the organization and can lead technical teams to accommodate
the agile and global needs of its users.

September 1-5 2015 Pilot the class for 20 people

September -October2015 revised course based on Pilot feedback

October-December 2015 set schedule for upcoming year; hire instructors, schedule
students, book venue and make travel arrangement

January 2016 Start Training Program

The company has established working groups and assigned project teams who will be held to
a schedule to make the vision a reality by 2016. IBM has been a very successful company
because of its diverse employees, their commitment to the workforce, and their genuine integrity.
The company would like emulate this behavior throughout the company by building a leadership
succession that values diversity and inclusion at every level.

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Emerging Leaders and Middle Managers Leadership Development

Table 4 Implementation Schedule
Task completed

Task to be completed
Nov-14

Feb-15

May-15

Sep-15

Dec-15

Mar-16

Working Group Convenes

Working Group Report
Unveils Policy
Course Development
Staffing and Training
Pilot Classes
Revise Class
Schedule classes

Table 5 Responsible People

Responsible People
Task
Training Program Manager and
Leadership Team
Training Program Manager and
Leadership Team
CEO
4 ISDs, 4 SMEs
Contracts

Working Group
Convenes
Working Group
Report
Unveils Policy
Course
Development

Start
Dates

Durati
ons

Nov-14

30

Dec-14
Jan-15

5
45

Feb-15

165

Staffing and
Training

Aug-15

30

Pilot Classes

Sep-15

Revise Class
Schedule classes

Sep-15
Oct-15

30
90

4 ISDs, 4 SMEs , 4 contract Instructors

4 ISDs, 4 SMEs , 4 contract Instructors
HR and Contracts

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Emerging Leaders and Middle Managers Leadership Development

Business Impacts
Below is an outline of benefits of undertaking or not undertaking each intervention.
Table 6 lists a high level summary of the pros and cons of each intervention.
Scenario A-No Training
If the intervention is not undertaken, there is a potential that IBM may find itself with employees
who are ill prepared to navigate the challenges of the dynamic business environment at IBM. It
is possible that the productivity and profit suffer as the response time to the client may decrease.
Scenario B-Emerging Leaders Training
If the intervention is undertaken, new or emerging leaders will be prepared to think strategically,
lead a team s, and apply situational leadership and the response time to clients may increase.
However, money invested will not be immediately recouped and longer term assessment might
be a determination of the effectiveness of the program.
Scenario C-Middle Manager Training
If intervention is undertaken for middle managers will be prepared to think strategically, lead
teams, and apply situational leadership in response to clients may increase. However, money
will not be immediately recouped and longer-term assessment might be determination of the
effectiveness of the program.
Scenario D-preferred option-Emerging Leaders and Middle Manager Training

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Emerging Leaders and Middle Managers Leadership Development

If an intervention is undertaken for new or emerging leaders and middle managers, it is possible
that productivity and profit will rise as the response time to the client many increase
significantly. Less training money will need to be spent on senior leaders as they will have
received training in some critical leadership skills earlier on in their careers.
Table 6 Business Impact Scenario
Scenario
A

Description
Intervention is
not undertaken

Pros
Cost savings
on
leadership
training

Cons
Response time
to clients may
decrease

Intervention is
undertaken, new
or emerging
leaders

Response
time to
clients may
increase

Cost for
leadership
Training

Intervention is
undertaken,
middle managers

Cost for
leadership
Training

D-Preferred Option

Intervention is
undertaken, new
or emerging
leaders and
middle managers

Response
time to
clients may
increase
Response
time to
clients may
increase
significantly

Cost for
leadership
Training

Conclusion
Analysis of the data and issues faced at IBM and other organizations of the same size and
magnitude indicates that there is a significant gap in experience between first line managers and
senior leaders. In order to bridge that gap, IBM would like to institute leadership development
that starts throughout the lifecycle of the employee and is recorded using the companys talent
management database. Competency based leadership models that are enhanced by blended
learning offer the opportunity for IBM to better prepare its emerging leaders and middle

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Emerging Leaders and Middle Managers Leadership Development

managers earlier for an unpredictable and dynamic global enterprise. It is investment in earlier
development of leaders by implementing training for emerging leaders and middle managers
should reduce the dollars that need to be invested in senior level training. The productivity of
client response should increase as more leaders are able to engage a motivate teams which could
have a significant potential revenue increase for IBM.

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Emerging Leaders and Middle Managers Leadership Development

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