EXECUTIVE DEVELOPMENT



There was a time in the not-too-distant past when successful business executives were considered to have been born, not made. For the most part, business owners considered executive skills unnecessary. Almost anyone could become a manager. What mattered more was whom the executive knew, e.g., a father, uncle, or other family member. It was not until the early 1900s that business owners and academicians took a serious look at executive development. Once they did, the course of business history changed dramatically.

EXCEPTIONS TO THE RULE

Of course, not all business owners looked upon well-developed managerial skills as helpful but not required. There were business leaders who learned early in their careers that home-grown managerial talent could enhance a companies' chances of success. One such person was Eliphalet Adams Bulkeley, founder of Aetna Life & Casualty, in Hartford, Connecticut.

Bulkeley and his successors believed firmly in developing managers and promoting executives from within. Eliphalet set the tone early by developing his son, Morgan Gardner Bulkeley, to assume the presidency when he retired or died. He passed on in 1872, the same year Morgan joined the company as a member of the board of directors. Morgan did not have the desired managerial experience at the time, so he had to wait. In the interim, Thomas 0. Enders assumed the company's presidency. He stepped down in 1879. By that time, Morgan was ready. He became Aetna's third president and remained in office for 45 years.

When Morgan Bulkeley assumed Aetna's presidency, he was well versed in the company's operations. Bulkeley offered proof to the efficacy of in-house executive development. He, in turn, was succeeded by Eliphalet's grandson, Morgan Bulkeley Brainard.

Brainard served two years as a legal apprentice in the law office of Aetna's general counsel. In 1905, he became Aetna's assistant treasurer. Two years later, he moved up to treasurer. In 1910, he was promoted to vice president, a position that put him in a close working relationship with Morgan Gardner Bulkeley. It was not until 1922, when Bulkeley died, that Brainard assumed the company's presidency. He remained in that position until 1955. In its first 101 years in business, Aetna had had only four presidents, all developed internally, and the company had grown considerably. Aetna's experience proved that the system of self-developed executives could—and did—work. Other companies utilized the same approach with success. For the most part, though, companies did not place emphasis on executive development.

Right up until World War II, business experts were decrying the lack of well-trained business leaders in the United States. In 1931, Wallace B. Donham, then Dean of the Harvard University Graduate School of Business Administration, wrote in his book Business Adrift:

' We need the leadership of far-sighted men who can think out the effects of conditions of flux on our business and political policies and make plans which shall affect these policies.… The danger in our situation lies in the lack of effective business leadership."

Donham, a former banking executive, believed firmly that American business executives were trained poorly. He was not alone in thinking so. Many of his contemporaries in business and academia agreed. In fact, some business leaders such as Henry Ford believed that managers were unnecessary.

Ford believed that any business could be run by an owner-entrepreneur and his helpers. He was not above firing any of his subordinates who made decisions without Ford's input. Perhaps his opinion may have had some merit in the early days of business when companies tended to be small and one person could make all decisions, but as businesses grew in size and complexity, leaders began to realize that competent executives were crucial if companies were to survive. So, executives like Alfred P. Sloan, Jr., who was appointed president of General Motors Corp. in the 1920s, and Chester Barnard, president of New Jersey Bell Telephone Company at about the same time, argued that executive development was necessary to the success of a business. Nevertheless, there was no major push to implement executive training programs on a major scale.

PRE-WORLD WAR 11 EXECUTIVE
DEVELOPMENT

One of the problems regarding formal management training centered around the executive's role in the business world. There were still people who believed, as Ford did, that executives were not a necessary cog in the company structure. That did not mean, of course, that management training could be ignored. There was a cadre of early researchers who had sought ways to train managers to motivate workers to better production. People like Frederick Taylor, Frank and Lillian Gilbreth, and Henry L. Gantt presented radical (for the time) ideas to increase productivity and improve managers' skills.

Taylor, a mechanical engineer, performed studies aimed at defining the one best way to do each job. The Gilbreths did extensive research on how to eliminate wasted hand and body motions in routine tasks such as bricklaying. They were among the first researchers to use motion pictures to study body motions. Gantt, an engineer like Taylor, developed a chart managers could use to show the relationship between work planned and completed on one axis and time elapsed on the other. By and large, though, these researchers were practitioners, not academic theorists. They were not connected to educational institutions, which had traditionally eschewed any concentration on management courses, largely because many people thought they were unnecessary.

There were two schools of thought about the need for formal management training at the college level. One group felt that the best way to learn management was to manage. In their eyes, the best management training program was on-the-job experience. Others disagreed—they believed that managers' jobs were too complex to be left to trial and error. They argued that budding executives would be better served if they combined experience and formal education, with the emphasis on the latter. The debate continued. Meanwhile, what management training was available at the college level prior to the 1930s was geared primarily to undergraduates and concentrated exclusively on theory. Most of the schools concentrated more on business skills than management. If management was taught at all, it was more than likely presented in specialized fields such as production engineering or personnel practices.

The Wharton School of Finance, the first collegiate school of business established in the United States, typified colleges' approach to management training in the first part of the 20th century. The curriculum concentrated on undergraduate training, and the courses offered were not considered entirely practical even by the late 1920s. Only two universities in the country, Harvard and Stanford, sponsored schools that dedicated themselves entirely to graduate students of business. Many business people saw the lack of concentration at the graduate level as a severe deficiency in the educational system. Some business executives and educational administrators sought to remedy that situation, such as Wallace B. Donham.

Donham took over as dean of the Harvard Business School at a time when people were beginning to look at business as a profession. The role of business was changing considerably. Until World War I ended, business had been conducted on a small scale and mostly in the small community. As the 1920s came to a close, business was becoming bigger and its local flavor was fading. Business leaders and educators saw a need for a new approach to teaching business. Donham reacted to the need by introducing the business case history approach to the curriculum. This change revolutionized management training.

Donham emphasized that since more college graduates find careers in business than in any other field, training should neither be strictly theoretical nor restricted to colleges. His goal was to widen business students' overall knowledge of business theory and its practical application. The Harvard Business School's role was not to train specialists per se. It was more to develop students' capacities to examine as many of the constantly changing facts and forces surrounding administrative situations in business as they could, and to use the acquired knowledge imaginatively in determining current policies and action. To accomplish this goal, Donham introduced the case history approach.

Donham felt strongly that case histories developed essential student habits, skills, and capacities to form judgements on diverse factual situations, as well as overall initiative. His innovative approach seemed to work. Students who dealt with actual case experiences to test analytical, problem-solving, and decision-making abilities were better prepared to assume management roles in actual business situations. Students of business were few in number compared to the amount of managers growing businesses required in the years leading up to World War II. The war decreased the supply even more.

WORLD WAR II'S IMPACT ON BUSINESS

Many business people, managers, and subordinates alike, entered the armed forces between 1941 and 1945, creating a shortage of management talent. Ironically, the demands of the armed forces created a business boom at a time when there were too few executives to manage the increased production and sales. There was a positive side to the irony, however: people began to appreciate the importance of well-trained managers in the workforce. Consequently, there was a renewed emphasis on executive development once the war ended.

OLD-TIME EXECUTIVES DID NOT
DISAPPEAR

Even though more attention was paid to executive development after World War II, the "old school" managers did not disappear entirely. Company histories abound with stories of presidents and chief executive officers whose styles were a bit unorthodox but who were outstanding leaders. Take the case of Joe T. LaBoon, CEO of Atlanta (Georgia) Gas Company.

LaBoon proved that pre-World War II management styles could still be effective in the 1950s and beyond. He epitomized the idea that a company's commitment to managers who worked their way up through the ranks could be beneficial to shareholders, customers, and employees alike.

LaBoon began work with Atlanta Gas in 1939 as a cooperative education student from Georgia Tech. He rose through the ranks gradually, taking on greater responsibilities such as Vice President in the Rome and Atlanta divisions (1962-69) and Senior Vice President of Operations (1974-76) before assuming the company's presidency in 1976—after 39 years with the company. He was elected CEO in September 1980. LaBoon was the consummate CEO who recognized the value of the company's employees and strong public relations.

LaBoon was a nontraditional CEO who fostered an open environment in which employees at all levels became part of the decision-making process. He expanded the company's training programs, raised pay scales, improved facilities and buildings, and upgraded the gas delivery system. In short, LaBoon positioned Atlanta Gas Light Company to grow bigger and more financially secure during his eight-year tenure as CEO. By the time he died in 1988, he had served the company for 49 years. His success explained in part why businesses placed new emphasis on executive development after World War II.

MANAGEMENT BECOMES A PROFESSION

After World War II, business owners and academicians began to think of management as not just a complex and demanding job, but as a profession that required well-developed college-trained people to fill executive positions. Thus, there grew a new emphasis on college degrees as a first step toward managerial training. However, companies also recognized that they had to develop company-specific training programs to supplement college training. First, though, they had to define exactly why executive development programs were necessary.

WHY STRONG EXECUTIVE
DEVELOPMENT PROGRAMS ARE
NECESSARY

There were a number of changes in the workplace that prompted a different approach to executive development after World War II. For instance, technology began to change at an unprecedented rate. Workers expected more autonomy on the job. Executives could no longer be autocrats—they had to find new ways to motivate employees. Labor unions grew in size and importance after World War II. These changes created a major reason for implementing new styles of management and management training.

Another significant reason for a new approach to executive training was continuity. Business leaders such as Bulkeley and LaBoon were prime examples of the advantages of continuity. Not only had their predecessors, who were also their mentors, groomed them well, but they had done the same for their successors. As time passed, it became more and more obvious to business leaders that continuity in management was necessary if a company was to survive and prosper.

Another issue prompting the new approach centered around strategy. The new corporate environment emerging after World War II suggested that companies would have to change strategies in order to remain competitive. No longer were domestic companies, the only businesses providing goods and services to Americans. A number of foreign competitors were entering the marketplace on a worldwide basis. They brought with them different styles of management, more efficient means of production, and a host of new ideas that threatened to change the way American companies did business. So if American business executives were not aware of the new management theories, production techniques, etc., they would be unable to manage effectively. The best way to instill the new theories was through revamped and constant training.

A fourth reason involved corporate structure. Many American companies had grown too large and unwieldy to be managed by a limited number of bureaucrats. General Motors Corp. was a typical example of a mechanistic organization, i.e., a bureaucracy, a business structure that is built on complexity, formalization, and centralization. Corporate leaders after World War II recognized the need to reorganize, to simplify their companies' structures as much as possible. Doing so required a new breed of executive who could engineer change with an eye toward reducing the levels of bureaucracy and enhancing productivity. The question facing business leaders was where they could find executives who could accomplish this task.

The answer lay in training. They realized, however, that they could not provide this training by themselves and turned to the world of academia for help.

A PARTNERSHIP BETWEEN BUSINESS
AND ACADEMIA

Educational leaders were happy to work closely with their business counterparts to develop new management theories and training programs. The two entities formed a symbiotic relationship from which they both profited. Business schools produced well-trained, albeit somewhat inexperienced, management specialists. Companies provided funds, equipment, and executive expertise to help schools build up facilities and programs. Special programs such as Masters of Business Administration (MBA), cooperative education, and internships grew by leaps and bounds.

In cooperative education (co-op) programs, students attended school and worked in paid or unpaid assignments simultaneously. By the time they graduated and entered the workforce, they were well-versed in theory and practical application. Internship programs were similar, but they generally involved unpaid apprenticeships. The close relationship between education and business paid off handsomely for the two. However, they still had questions with which to grapple as the partnership developed.

One of the first questions to be asked about executive development was simply what skills should be developed. Theorists emphasized the need for executive development in such areas as managers' knowledge and awareness of their organization and environment as well as self-awareness. They took a close look at executives' tasks and skills. Academicians broke management down into its basic components, which had actually been determined by Henri Fayol, the managing director of a large French coalmining firm, in the early 1900s: planning, organizing, leading, and controlling. They differentiated between management (simply getting things done) and leadership (getting things down by influencing other people). They studied the different specialized areas of management, e. g., marketing, financial, operations, human resources, and information. Basic management skills drew increased attention.

Academicians and business leaders recognized that in order to be successful, managers needed to develop technical, human relations, and conceptual skills. To teach these skills, schools offered courses in every aspect of management. Learning became a never-ending process for many executives. Once they graduated from college, which became the most common source of supply for businesses, they continued with (MBA) programs or other business-related curricula. Businesses left nothing to chance. Most companies established in-house training programs to supplement academic programs. There were two reasons for this: to ensure that executives had access to current theories and practices and to help develop in-house employees. This was in recognition of the fact that colleges could not supply all of the potential executives companies needed to operate.

Executives and academicians did not overlook the importance of experience. They realized that there existed a great deal of executive potential in some employees who had not had the benefit of college training. Therefore, companies operated training programs to help develop these employees. The new philosophy of executive development was simple. While college training was helpful to give aspiring executives the theory of management they needed to start their careers, it could not be substituted entirely for experience. Their philosophy reflected the point Henry David Thoreau made in his book Walden, when he wrote, "To my astonishment, I was informed on leaving college that I had studied navigation!—why, if I had taken one turn down the harbor I should have known more about it." Executive development training became cyclical. It was a case of education, experience, more education, more experience, and so on.

Organizational behavior specialists developed a wide variety of theories to explain worker behavior and develop worker potential. Names like Maslow (Hierarchy of Human Needs), McGregor (Theory X and Theory Y), and Ouchi (Theory Z) became prominent in organizational behavior circles. Managers adopted these theories and implemented many of them in the workplace. (See the glossary for a brief description of these theories.) They developed programs for reinforcement and punishment; management by objectives; participative management; and for job enrichment and design, quality circles. The extensive list went on. Executive development was almost becoming a science.

Executive preparation encompassed three distinct parts: training, education, and development, all of which could occur simultaneously. Training referred to on-the-job learning aimed at helping incumbents perform better in their current positions. Education was more formal in nature. It prepared people for future positions. Development concentrated on programs designed to prepare individuals for new jobs required by organizational or industry change. The idea was that no employee could advance up the career ladder without adequate development. But, much of that training had to be completed by executives in an informal setting.

THE IMPORTANCE OF SELF
DEVELOPMENT

One of the keys to successful executive development is that the higher a person progresses up the corporate ladder, the more he or she needs to rely on personal development to manage successfully. For several years after World War II, management development programs operated under the pretext that companies could control the entire development process. However, this philosophy changed as the years went by when it was discovered that not all managers "cloned" by development programs successfully performed their jobs. Theorists began to understand that individual development is influenced as much by personal environment and life style as it is by other people's ideas and experiences. They introduced a new approach to executive development: on-the-job versus off-the job development.

On-the-job development included such facets as experience, mentoring, job rotation, and assignments to special projects, task forces, and committees. The idea was to give budding executives exposure to as many different experiences and environments as possible. There were drawbacks to on-the-job training, though. For example, it was sometimes too narrow in focus and taught only current production methods and techniques. Off-the-job training, on the other hand, presented more diverse approaches to executive development.

In the 1960s, theorists introduced a large number of new ideas to enhance executive development. They concentrated on three approaches to management: process, system, and contingency. The process approach was proposed as a way to synthesize the diversity in management. It was simply a rehash of Fayol's steps of planning, organizing, leading, and controlling. The systems approach recognized the interdependency of internal activities within the organization and between the organization and its external environment. Finally, the contingency approach argued that different situations required different managerial responses. These approaches blended well with new styles of training that companies began including in development programs, e.g., role playing, sensitivity training, conference training, and simulation. The emerging use of computers was particularly helpful in simulation.

Simulation enhanced managers' decision-making abilities and provided experience with teamwork. Computer-generated games created hypothetical companies and scenarios that tested students' skills. The simulated situations asked students to make decisions about production, costs, sales, inventories, and research and development problems. In this respect, simulation differed somewhat from role playing, which involved human resources problems for the most part. Often, the participants formed teams that competed against one another to formulate the best answers to problems. This gave them the chance to develop teamwork skills, preparing them for the emergence of quality circles and participative management. Thus, the introduction of the computer marked an important step in executive development.

Companies were quick to adopt new techniques as they were introduced—and as they fit into the corporate cultures. For example, Boeing Corporation concentrated on mentoring, special courses, participation in the increasing number of professional societies, and university courses as keys to its executive development program. The Goodyear Tire and Rubber Company focused on job rotation and special internal and external courses. Which techniques companies used varied from firm to firm. Specialists recognized that there was no one executive development approach that worked better than any other. The key was for each company to utilize executive development approaches that worked well in their particular culture. That practice continues to this day.

Another major innovation of the 1960s was provided by W. Edwards Deming. He introduced a comprehensive system modeled after Japanese management techniques. Deming emphasized the use of statistics to analyze variabilities in the production process. At first, American manufacturers were reluctant to adopt his ideas, which focused on rigorous quality standards during the initial design of products, seeking constant and ongoing improvements in production and service operations, and thorough training for employees in all facets of management and production. Eventually, American managers incorporated his ideas, particularly those regarding training.

THE 1970s

As the 1970s began, the focus on executive training changed somewhat. In fact, change was the issue of the decade. Two management specialists in particular spearheaded the issue: Rosabeth Moss Kanter and Tom Peters. Kanter produced a book, The Change Masters. In it, she told executives that they needed to become adept at anticipating the need for productive change, and to become leaders of that change. Peters asserted that past management practices were outdated. He said that the unprecedented rate of change in business mandated that managers respond to constant innovations in areas such as computer and telecommunications technologies if they wanted to remain competitive. He encouraged management to focus on self-managing teams and simplified organizational structures. The ideas of Kanter and Peters found their way into executive training programs quickly. Speed in adopting new ideas became essential in executive training, especially for companies that wanted to survive in the fast-paced business environment of the 1970s and 1980s.

THE 1980s

The decade of the 1980s created a new focus on executive training. College and business training programs began to emphasize communication and interpersonal skills. The programs included such previously overlooked skills as listening and nonverbal communication. Executives received training in effective feedback and delegation skills. Training programs addressed new communications media such as electronic mail and information networks. New programs placed increased emphasis on cross-cultural insights into the communications process. These were influenced in part by the ever-growing global economy, in which business executives from many different countries were liable to be involved in a variety of projects.

Executives required training in foreign cultures, languages, and business practices. They had to grasp the realities of intercultural business dealings in which the simple act of a handshake could make or break a deal. They had to learn entire new ways of doing business, which included responding to a rising emphasis on public policy. Executives had to become aware of a plethora of governmental regulations and social issues influencing business strategies and tactics. In many industries, the role of the CEO became one of dealing exclusively with government officials and stakeholders, i.e., non-company employees who had any type of interest in a business' operations. CEOs left day-to-day operations to subordinates, which influenced training programs. Executive training involved diverse specialized courses such as Business and Society, and Ethics. Society had a major influence on the direction and content of executive training programs. The programs of the 1980s carried over into the 1990s with the usual changes.

THE 1990s

Business in the early 1990s was marked by major restructuring changes. Corporations began downsizing, resulting in the loss of millions of jobs. Executive development programs included enhanced concentration on topics such as sensitivity training, ethics, affirmative action, and sexual harassment. Universities and in-house training programs alike changed as rapidly as necessary in order to include courses on the topics affecting society and the workplace, not only nationally but internationally. The changes had a definite impact on what companies were looking for in executives—and the training they provided.

Executive coaching became a common practice among business organizations in the 1990s. An executive coach was typically an outside consultant who came in periodically to discuss and work on personal learning and development issues with an organization's top executives.

Faced with a rapidly changing competitive environment, executives signed up for a variety of executive education courses covering information and other new technologies, competing in a global marketplace, and how to deal with change. Leadership training based on role-playing and case studies remained a staple of executive education.

Universities as well as non-university training organizations offered a wide range of classes and programs. Executives could choose from general management courses offered as part of a program leading to a Master's in Business Administration; shorter non-degree programs targeted to specific types of executives; open enrollment courses and programs; and customized, company-specific programs. Satellite and cable feeds allowed executives to learn at home or in the office, but the newest development involved online courses and programs that executives could take without time constraints.

THE FUTURE OF EXECUTIVE TRAINING

The need for executive development programs will continue to increase after the 1990s. Companies that do not respond to this need will be unable to survive in a rapidly changing, highly competitive, global environment. Executives will have to be aware of changes in public policy and governmental regulations at home and abroad that will impact the ways they manage. To ensure continuity in management, businesses and universities will need to maintain a close working relationship. Businesses will also continue to operate internal own training programs. Corporations that do not establish and maintain intensive executive development training are destined to become obsolete—which is one thing executive development can never afford to be.

GLOSSARY

Hierarchy of Human Needs -
describes the five levels of human needs in order of ascending importance, i.e., physiological, security, social, esteem, and self-actualization, which people must fulfill on an ascending basis before they can become fulfilled.
Management by Objectives -
An approach to management control and employee motivation in which a manager and an employee cooperatively establish goals against which the employee is subsequently evaluated.
Participative Management -
A method of increasing employees' job satisfaction by giving them some say in how they do their own jobs and how the company is managed.
Theory X -
A management approach based on the belief that people must be forced to be productive because they are naturally lazy, irresponsible, and uncooperative.
Theory Y -
A management approach based on the belief that people want to be productive because they are naturally energetic, responsible, and cooperative.
Theory Z -
A management approach commonly found in American companies that have adapted Japanese techniques that employs consensual decision making, lifetime employment, slower evaluation and promotion, informal control, a moderately specialized career path, and holistic concern for the employee.

SEE ALSO : Training and Development

[ Arthur G. Sharp ,

updated by David P. Bianco ]

FURTHER READING:

Bardach, Kenneth C. "Patterns and Trends in Executive Education," Selections, Autumn 1997.

Beresford, Lynn. "Higher Learning: A Crash Course on Executive Education Programs," Entrepreneur, August 1997.

Brill, Alissa. "Professionals Gain Perspective and Skills with Executive Education Programs," Los Angeles Business Journal, 4 August 1997.

Donham, Wallace B., Business Adrift. New York: Whittlesey House, 1931.

Drucker, Peter F. Management: Tasks, Responsibilities, Practices. New York: Harper & Row, Publishers, 1974.

Glasser, Perry. "School Choice," CIO, 15 March 1999.

Hall, Douglas T., et al. "Behind Closed Doors: What Really Happens in Executive Coaching," Organizational Dynamics, Winter 1999.

Kanter, Rosabeth Moss. The Change Masters: Innovation for Productivity in the American Corporation. New York: Simon & Schuster, 1983.

Keys, J. Bernardedt, and Robert M. Fulmer, eds. Executive Development and Organizational Learning for Global Business. Binghamton, NY: Haworth Press, 1998.

Law, Gillian. "Executive Education Goes On-Line," Management, February 1997.

"Leadership Training: Executive Education's Biggest Challenge," Canadian Business, 10 April 1998.

Lenihan, Mary. "On-Line Classes: Changing the Future of Executive Education," Los Angeles Business Journal, 4 August 1997.

London, Manuel and Edward M. Mone, eds. Career Growth and Human Resource Strategies. New York: Quorum Books, 1988.

Mailick, Sidney, Ed., Solomon Hoberman, and Stephen J. Wall. The Practice of Management Development. New York: Praeger, 1988.

McCall, Morgan W., Jr. High Flyers: Developing the Next Generation of Leaders. Boston, MA: Harvard Business School Press, 1997.

Peters, Tom. Thriving on Chaos. New York: Alfred Knopf, 1988.

Reingold, Jennifer. "Corporate America Goes to School: B-Schools are Hustling to Meet the Demand for Executive Education," Business Week, 20 October 1997.

"Rude Homecoming: The Rigors of Executive Education," Canadian Business, 10 April 1998.

Sadler, Philip. International Executive Development Programmes. Third edition. NP: Kogan Page, 1998.

Sharp, Arthur G. American Champions: A History of Business Success, Part I. Morrisville, Pennsylvania: International Information Associates Publishers, 1991.

Sharp, Arthur G., and Elizabeth 0. Sharp. The Business-Education Partnership. Morrisville, Pennsylvania: International Information Associates Publishers, 1992.

Thach, Liz, and Tom Heinselman. "Executive Coaching Defined," Training and Development, March 1999.

Vicere, Albert A. "Changes in Practices, Changes in Perspectives: The 1997 International Study of Executive Developmental Trends," Journal of Management Development, July-August 1998.

Winterton, Jonathan. Developing Managerial Competence. New York: Routledge, 1999.



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