The Manager’s Dilemma

As a manager, you have recruited the best graduates into your services organization. You have diligently articulated the 'why' of your business, its higher purpose. You created graduate-hire programs for key functional areas including HR, Finance, and IT, that provide these recruits a macro view of the environment. Yet your millennial stars, who would make the biggest impact in the long run, are heading for the exit after the two-year mark. So, what now? How can you make them stay?

The classic retention levers - promotions and raises - that used to keep top talent have been limited due to a rather sluggish economic growth. The economy has led to reduced attrition in the middle of organizations, while also driving the frequent fine tuning of cost structures, which reduces the openings for formal promotions as well as the funds for meaningful progression at the base of the pyramid. Even if the economy were to turn around and these levers open up, statistics show that money as a primary motivator currently accounts for less than 3% of the US workforce. The primary motivator of millenials in the workplace is purpose. Taking all this together, it appears that the Retention Power of today’s first line managers in many cases is limited to charisma and creativity around job enrichment.

Early career top talent is more eager than ever to make an impact. Bombarded with stories of entrepreneurial peers managing or selling entire companies, they can easily feel stuck in entry level positions. Lacking a clear path for purpose and growth, these individuals quickly become discouraged and start searching for new opportunities, with many succumbing to the allure of an MBA. In the past, an MBA was a sure way to significantly increase a person’s earning power and responsibility. However, with less hiring and millennials expected to soon reach 40% of the US workforce, balanced with ever increasing costs of schooling, there is no longer a guarantee of a strong MBA ROI.

Wouldn't it make more sense for businesses to offer an in-house MBA for free?

By offering an in-house MBA you would:

Energize your eager talent: provide millennials with the tool-set they need and the fulfillment they seek Create win-win economics: organizations realize internal cost savings from reduced attrition, higher ROI of highly skilled early career talent, while this talent can continue earning – and learning – without taking a break pursuing outside education Utilize talent immediately and iteratively: not only retain but continuously maximize the capabilities of top talent by aligning them with the most complex, transformational projects or redeploy them flexibly to urgent, critical situations

In fact, large companies can do better than an in-house MBA by going down a more focused and transformative path, training ‘students’ to thrive in the rapidly changing world around them.

The In-House “Master’s Degree”

By focusing resources correctly, the ‘school’ can even become entirely self-funding, but before getting into the details, let's examine why an in-house Masters of Business Administration aligns with human motivation:

Mastery - Check. The probability of attrition decreases significantly as top talent individuals challenge themselves to complete a structured master-level program with well-defined timelines and outcomes.

Further, working towards Mastery of high impact market valued skills, by learning alongside experts, is highly motivational, keeping even the most ambitious ‘student’ engaged.

Business - Check. Knowing the ins-and-outs of what makes a business tick is not only vital for having a successful corporate career, but it also promotes intrapreneurship. The viable vision and execution plan inherent to successful intrapreneurship, is deeply rooted in an understanding of an organization’s macro environment.

As ‘students’ learn about their environment, they can judge the impact and feasibility of new initiatives. This knowledge enables them to then identify and take on realistic projects that align with strategic business objectives. As the practitioners grow and lead these high impact projects another key motivator is realized: sustainable Autonomy. Autonomy gives students a sense of ownership and accountability motivating them to lead their projects to successful completion.

Administration – Static and unexciting, the word ‘administration’ is defined by the establishment of routines and controls to maintain systems and structures, and often what becomes the status quo. It is hard to imagine that these activities could become a central purpose in a person’s life. Modern leadership is dynamic and it necessitates constant adaptation, risk taking, and learning to keep up with a world that is transforming at break-neck speed. Thus, today the need is not actually for an MBA, but for an MBT, a Masters of Business Transformation.

Developing transformational leaders is tricky. It requires students to learn how to be a leader and to gain deep knowledge of business transformation. Business Transformation can only be fully understood after a thorough study through the lenses of People, Process, and Technology. Based on research, the best way to ‘teach’ these skills is not through classroom lectures, but rather with multiple field experiments, simulations, and active work experience – the higher the stakes the better. High stakes mean high risks but also high returns and this is how the program becomes self-funding.

As students’ progress through the program and are enabled with the right skill sets, they are challenged to take on value adding, often high stake projects. These complex assignments then yield high growth and productivity benefits for organizations. With the learning process is connected to tangible business outcomes it creates a feedback loop growing a student’s sense of ownership and engagement, while also driving increased benefits. Think about your own organization, and how it could benefit from a structured MBT program. Among many of the critical success factors, it is critical to identify the right practitioners that would thrive in such a program.

Students of an MBT program are top talent, self-motivating individuals, with eagerness to grow and become leaders that drive their organizations into the future. The MBT provides learning opportunities and connects these students together, so that they can grow and learn from each other. They become fearless, possess the courage to dive into challenging projects knowing that they are supported by fellow students, and the formal support systems built into the program. When a student is in a tough situation, they call up their mentor to bounce ideas. Before critical presentations they receive a call from their ‘buddy’ wishing them good luck and providing last minute tips. The interaction with peers and mentors, challenging projects, and the training curriculum they undergo provides a complete learning experience.

Of course, it can be challenging to know which student is ready for a given project, and what are the most critical skills that must be developed for success. Live projects are like having live ammo during military training or properly diagnosing a patient in the ER during residency training. Things can get serious quickly and the role of the manager or ‘professor’ does not conclude once knowledge transfer is complete. The professor must maintain ultimate accountability for outcomes. It is also the professor’s role to create environmental conditions that maximize the probability of each student’s success. This includes creating a sense of safety, comradery, and maintaining the effectiveness of support structures.

To create a high impact learning environment a manager must be dedicated to the success of the MBT program and identify collaborators, to support the initiation of the program. Luckily, as the program grows, senior students can take on leadership and governance roles within the MBT program, reducing the overhead of the program. The end goal of a successful, self-funding MBT program is to have all governing roles from recruitment to program lead assigned to senior students as secondary roles in addition to their day to day project work. The variety of secondary roles provides top students the opportunity to prepare for management positions in different areas of the business such as recruitment, marketing, and sales. As the program gains a foothold it will also allow the manager to further tailor and expand the program into new areas or ‘hubs’ in the business providing even more rotational opportunities for students. Thus the program grows organically, middle out, based on supply-demand dynamics and not through a top down mandate.

The MBT In Practice

We have been running our own MBT program – which we coined ‘Transformational Leadership Development Program’ or TLDP – for four years and there have been many wonderful success stories and lessons learned. Most importantly, our internal MBT program has provided us exponentially increased Retention Power, far exceeding the outcomes of even the best individual manager: 0% attrition during the two years of the program compared to the up to 20% in the broader market, especially in the shared services environments, with a bias towards hi-pots. Over the coming weeks I will be posting more articles that examine why an MBT program is so important for your organization and potential students.

In our next article, we will be interviewing graduates of the program to understand why they decided to join the program, what motivated them to complete the program, and finally what they are up to post their graduation. Along with these insights on motivation, we will be publishing additional articles outlining how we have constructed our program and its progression from a pilot with just a handful of students, to having 70 students to date. Please feel free to reach out and let us know what specifics you are the most interested in seeing in future articles, or just leave your comments down below.

Kristof Kovacs - IBM Global Leader, Continuous Improvement and Services Competitiveness

The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions.