Executive Development Programs - Requirements and Success Factors

Introduction

According to the evolutionary law of learning, a species will survive only if its rate of learning is at least as large as the rate of change in its environment. This rule also applies to the learning of managers and companies, since competition is, like natural evolution a process of selection, in which those who adapt better and faster are able to secure their existence.

With dynamic market and environmental conditions, Conraths/Plompen¹ speak of a "triple hurricane" namely "technology drive, globalization and competition”, sustainable competitive advantages are increasingly based on knowledge advantages. While new technologies are available worldwide in a short time, it is the know-how of employees and managers that provides the best and most effective long-term protection from its imitations. Managers are a key success potential and a strategic factor for the management. Therefore, their training is of particular importance. They represent the most important target group for external suppliers, i.e. by specialized institutions outside the company offered training.

Management education is the pursuit of adjustments to new developments and to a deeper understanding of problems and contexts that are used to manage a company.² Executive Development Programmes (EDPs) are a form of management education: they address to "the development of managers and executives at more senior levels within an organization.“³ EDPs in general include an overall increase in the competencies of managers, they offer practical state-of-the-art training to acquire new skills and benefit from the experiences of other students. “Like Plato’s classic allegory of ‚The Cave‘ one of the demands of leadership is to persuade individuals who have accepted limited approximations of reality, like flickering shadows on a cave wall, to see greater potentialities for themselves and their world.“⁴

The topic of this article is executive development programmes at business schools and other executive education institutes, which in principle are open to all executives and offer no academic qualifications (open, non-degree programmes). As it aims to analyse external training for senior executives, the target group of the paper is executives in senior positions.

1 Executives as target group of EDPs

A concrete definition of an "executive" is difficult, because a generally accepted definition does not exist. Moreover, much of the personnel management literature offers differing definitions’ criteria, depending on the core of the analysis.⁵ Ulrich / Fluri understand executives as those, "who have the formal right to give instructions to other persons, these persons are obliged to follow."⁶ In practise, one differentiates according to the hierarchical position. In the Anglo-Saxon area, distinction is made between top/senior management, middle management and lower management. Top/senior management this includes the real top management and upper management.⁷ Senior executives are staff who work directly under the top management.⁸ According to the Anglo-Saxon distinction, in large companies members of the second, sometimes even the third level are also seen as top management.⁹

The target group of senior executives is based on the "Advanced Management Program" (Harvard Business School) by Pack as individuals who are either already in top management or on the verge of taking over a position in top management. They already have an extensive experience in the management of individual departments or functional areas and move now into the supreme decision making body of a company. It is crucial to Pack, that these executives see the company as a unit and not the individual function areas are in the foreground.¹⁰ Also according to Richter, executives deal with general management questions. While this is limited in SMEs only to the top management level, such positions in large companies and holdings are also on other levels of management. This includes executives who are heads of major functional areas as well as leaders of profit centres or managers of subsidiaries of a parent company required to report directly to the Executive Committee.¹¹ The definition of the target group implicitly assumes a stable organizational structure as it is found usually in larger, division of labour companies in the industrial and service sectors.

What is problematic, however, is the direct transfer to companies such as the software industry or large consulting firms because of their structural peculiarities.¹²

2 The Market of Executive Education - An Overview

The business education sector is perceived to be counter-cyclical - as the economy goes into decline and conditions in the job market become tougher, applications to MBA programmes typically increase. However, this model does not extend to executive education. With funding for executive programmes generally coming directly from employers rather than individuals, revenues can drop off as training budgets are frozen or reduced in reaction to an economic downturn.¹³ Global economic downturn following the financial and economic crises has slowed the industry’s growth during the past few years. Schools have seen 2-3 years of painful decline in revenues from executive education programmes. Now they hope that business is returning. But, according to Steve Burnett (associate dean of executive education at Kellogg School of Management at Northwestern University, Illinois) getting back to the glory days of 2006 will take time: Executive education “tends to tank fast, then take a few years to recover”; following the terrorist attacks of September 11 2001, “it took us 4-5 years to dig ourselves out of the hole”.¹⁴ The Financial Times data reveal the extent of the downturn by the decline in the number of students between 2008 and 2010 as shown in figure 1.

Figure 1: Average number of participants per school on open programmes

Abbildung in dieser Leseprobe nicht enthalten

Source: Based on Jacobs, 2010, Financial Times¹⁵

However, the popularity of university-based executive education around the world still has potential. According to the findings of a study conducted by the Manchester Business School, Dubai International Academic City, and Dubai Knowledge Village the global economic downturn has had a negative impact on training and development spending within the Middle East. More than half of the respondents noted that spending on executive education had been “significantly” affected, while other organizations agreed that spending had been “somewhat” affected. Dr Lucy Daly, Research Business Manager, Manchester Business School, said: "Development budgets in the region have been hit by the economic downturn, with almost 70% of respondents stating that budgets had declined over the last three years. However, improvement is expected during the next three years, with around 50% of respondents expecting spending to increase and only 18% anticipating a decrease in budget."¹⁶

The situation is similar in other parts of the world according to a late 2010 state of the industry survey conducted by UNICON. UNICON is a consortium of 97 worldwide member business schools -- including Columbia, University of South Carolina, Notre Dame, Harvard, Stanford, Wharton, London School of Business and Cheung Kong Graduate School of Business. They found that many universities with executive education programmes around the world expect notably higher enrolment during 2011. Sixty-five percent of participants surveyed by UNICON predicted increased participation in their open enrolment programmes this year. Additionally, 78 percent of schools projected an increase in customized executive education programmes during 2011. Nearly half of the schools surveyed indicated an increase in their number of programming days, now offering up to 39 weeks in open enrolment programmes and an average of 49 weeks in custom programmes. Slightly more than half also reported increasing the number of days that educational programmes for executives are offered. “As the survey trends indicate, the executive education industry is in positive transition as industries rebound and their leaders return for the educational and development opportunities provided by university-based executive education,” said Mike Malefakis, Associate Dean for Executive Education at Columbia University and co-chair of the UNICON benchmarking committee responsible for the survey.¹⁷ The following figure shows the structure of executive education in the United States.

Figure 2: Executive Education in the U.S.

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Source: Based on Crotty/Soule 1997, pp. 4

U.S. companies have been using EDPs for a long time. First developments go back to late the 19th Century or early 20th Century. As the above classification shows, there are different types of executive development. In addition to the company's internal training initiatives (in- house programmes), universities and their business schools offer executive MBA programmes and a variety of public courses in functional areas or general management. Recently, company-specific programmes (customized programmes) get more and more attractive. Bob O’Connor, director of corporate education for the QUT Faculty of Business (Australia), says that due to the global financial crisis there has been a clear move away from long-term general management programmes to shorter, multidisciplinary workplace-blended learning programmes. They tangibly help organisations execute business strategies or solve business problems.¹⁸

As illustrated in Figure 3, Harvard University managed to win first place in the field of nondegree executive education according to Business Week’s survey 2011; Iese Business School (Barcelona) according to the FT’s survey 2011.

Figure 3: Top 10 in Open Enrolment Programmes (Executive Education worldwide)

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Source: Businessweek 2011, http://www.businessweek.com/bschools/rankings/; FT 2011, http://rankings.ft.com/businessschoolrankings/executive-education-open-2011

According to Turpin (IMD), the future of executive education will be shaped by the following trends:

- more demanding customers (efficiency, flexibility, real-time availability etc.);
- emerging market competitors (organizations from emerging markets starting to compete in the global arena);
- new technology (ipad, podcasts, twitter, facebook, blended learning etc.);
- increasing globalization (organizations need leaders who are comfortably operating in a global context);
- complexity in environment;
- faculty scarcity;
- commoditization of products and services.¹⁹

3 Requirements placed on Executive Development Programmes

The following chapter deals with the programme requirements from a practice-induced point of view. First, selection criteria and goals are discussed, this is followed by a discussion on the success factors of the programmes, and finally newer trends in executive education are shortly described.

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^* University of Economics in Prague, Faculty of International Relations

¹ Conraths/Plompen, 2000, p. 258

² Sauter 1991, p. 9

³ Crotty/Soule, 1997, p. 4

⁴ Fulmer, 1990, p. 26

⁵ Weber, 1997, p. 5

⁶ Ulrich/Fluri, 1988, p. 37

⁷ Weber, 1987, column 316

⁸ Hammer, 1988, p. 26

⁹ Gaugler, 1993, p. 69

¹⁰ Pack, 1969, p. 69

¹¹ Richter, 1992, p. 124

¹² Weber, 1997, p. 6

¹³ Jacobs, 2009, http://www.ft.com/

¹⁴ Burnett, 2011. In Bradshaw, 2011, p. 8

¹⁵ Jacobs, 2010, http://www.ft.com/, 19.8.2011

¹⁶ n.a., 2011c, http://www.zawya.com/story.cfm/sidZAWYA20110228112046?q=TECOM%20Research, 6.9.2011

¹⁷ n.a., 2011d, http://uniconexed.org/in-the-news/c-change-strategies-03-05-2011.html, 6.9.2011

¹⁸ n.a., 2009, http://www.hcamag.com/resources/learning-and-development/educating-executives/115481/, 6.9.2011

¹⁹ Turpin, n.d., www.imd.org/uupload/webToolWWW/5345/Document/Presentation.pdf, 19.8.2011