Needs assessments. Bench strength. Skills gaps. Leadership competency models. To what end?

Before you build a fancy new leadership development program from scratch you must understand exactly what problems need to be solved today and in the future.

We spoke with Susan Cook, Manager of Leader Effectiveness at Cardinal Health, and Tracy Schatzel, Head of Specialty Programs at Vanguard; and we’re convinced they are among the most talented clairvoyants in corporate America. As managers of rotational programs, their jobs require that they see the future for the business units they support.

They say that deciding whether or not to start a new program depends on clearing up some misconceptions. One of those misconceptions is that an LDP is tantamount to having a supplemental workforce—a contracted inventory of labor that can be deployed at any time. Susan and Tracy agree that stakeholders must understand that LDPs don’t take the place of traditional talent acquisition or third-party contract resources.

“If you have a talent gap at a more entry or mid-level, a rotational program may not be the right fit,” Tracy explains. “And if you have an immediate talent need, that should be addressed through talent acquisition and not through a rotational program.”

Susan adds that a traditional direct hire is usually the best option when a department needs someone fresh from college to serve as a subject matter expert.  

“But if they want early career people who are well-rounded utility players with technical skills and differentiated development in communications, problem resolution and strategic thinking—things that prepare them to be a leader in the organization—then an LDP may be what they need.”

Susan has built out successful programs in analytics, customer support, engineering, finance and other business areas. She says once everyone is on the same page about the kind of talent that an LDP can produce for an organization, the next step in starting a new program is to evaluate the business metrics and future needs. That’s where the clairvoyance comes in.

“We look at the strategic initiatives and at existing talent within each of those organizations,” Susan says. “We look at things like retirement readiness, existing skills and skills gaps.”

At Vanguard, Tracy’s team starts the process by identifying the future talent needs within a particular division. If a business line is growing or if there’s a skills deficit, a talent gap must be addressed. For example, Vanguard is increasing its personal advisor services. To meet the need for more advisors created by this strategic shift, Tracy’s team recommends hiring externally to meet short-term needs and building out an LDP as a long-term complement to that approach.

“Sometimes it feels like an LDP is being used to build skills within an existing group,” Tracy says. “We try to provide a broader approach, because sometimes what’s needed is more of a learning and development solution.”

It’s important to anticipate the opportunities for growth within the division. Predicting the future means working with data analytics teams, performing a skills analysis, and assembling talent plans in conjunction with HR stakeholders to address the talent gaps of tomorrow.

Vanguard’s two-year rotational programs in finance, investment management, technology, and more are a pipeline to future leadership roles—not a good way to address current needs.

“You very quickly build a strong bench of talent when you build a program,” Tracy says. “So if [managers] don’t anticipate that they aren’t going to have a lot of senior-level and mid-level roles available in the future, we would absolutely not recommend a rotational program. Because high-potential talent will be ready to move up at a quicker pace than the average hire. And if you don’t have opportunities for them to grow into, they will very quickly leave.”

“As you’re building a program, there’s got to be continuity,” Susan adds. “Can you support bringing in participants year over year? You’ve got to make sure that you can carve out opportunities for participants not only for the years that they are in the program, but also after they graduate so you can retain the talent you’ve developed.”

Is there enough money to ensure the program’s long-term success? From the workshops and additional training to travel costs, relocation costs and even cost-of-living increase participants might face if they’re rotated somewhere more expensive, the diverse experiences that LDP participants enjoy require substantial investment.

Getting funding for LDP hires versus full-time equivalent (FTE) or supplemental workforce hires takes some persuading, especially since the business unit may have to forfeit a head count to get the program funded.

Cardinal Health’s HR department (where Susan operates) administers the programs, but the funding, direction and strategy comes from the business units themselves. Tracy says Vanguard has also found that it makes more sense for the programs to live within HR rather than within the functional area being served.

“This gives the programs stronger alignment with broader talent initiatives such as talent management processes and leadership development training,” she says. Keeping the programs under the direction of HR also keeps the programs’ activities in lockstep with the partners and processes that deliver the people skills for the overall business.

Originally, Cardinal Health’s training programs were siloed within their respective departments and not managed by HR. Around eight years ago, Cardinal Health brought the different development programs under one umbrella, which was called EMERGE. Having EMERGE streamlined through HR allows them to capture  economy of scale, Susan says.

“So if we were offering content, workshops or conferences, we could pool those resources and put the necessary governance and parameters around it. We can share best practices.”

The next step in planning a new program is to get support from the senior levels of the department. Alignment at all levels is crucial. For EMERGE, this means finding an executive sponsor and creating a steering committee composed of leaders from the business unit.

“These are folks who have influence. They are strategic. They can be advocates for the program and help rally the support needed within the organization,” Susan says. “Our steering committee members can influence the decision and say ‘this program will give us talent that will bring a different perspective and inject innovation into your team’.”

As another litmus test, Cardinal Health tests its training program initiatives on interns. If those “ideal experiences” test out well with the intern group, that’s a solid indication that the business unit is suitable for building out an LDP. In fact, over half of the current EMERGE participants started out as interns.

How long does it take to build an LDP? From the decision to build until they’re ready to start recruiting, it usually takes Cardinal Health about 18 months from start to finish.

“We have to identify our needs a full year in advance so we can meet those needs,” Susan says. “So part of that build time is getting alignment on everything from where these rotations are going to be, what we’re going to pay, what experiences are going to be a part of the program, and be able to articulate that offering on campus to meet those recruiting cycles.”

As useful as development programs can be, launching one under the wrong circumstances can be costly.  Even under the best circumstances, flexibility, coordination, testing and cooperation are all crucial. And, as the best LDP managers have shown us, being able to read the tea leaves doesn’t hurt, either.