As we enter the fourth industrial revolution, where technologies blur the lines between physical, digital, and bioloical spheres, the pace of innovation and change will only increase. Companies will need highly skilled leaders who can navigate these unchartered waters. It is critical that organizations focus on leadership and management development.

We know that without skilled leaders, business strategies, competitive advantage and market performance suffer. However, research from the Institute for Corporate Productivity found that while 78 percent of surveyed business executives affirmed that leadership development was critical to their companies, only 28 percent claimed to be highly effective at developing leaders.

Credibility matters

Experiential learning happens through problem solving, on the job assignments, and using simulations and serious games.

Jim Kouzes and Barry Posner, authors of “The Leadership Challenge,” note that perceptions of highly credible leadership are correlated with increased employee engagement and retention. Qualtrics confirms this, noting that employees with high confidence in senior leadership are five times as likely to remain with their employer more than two years. Gallup’s research corroborates that good managers are key to employee satisfaction and productivity.

Predictions abound that the “war for talent” is heating up. According to Compensation Force, voluntary employee turnover rates are now higher than they were before the global recession. Complicating the employment scenario is the exodus of retiring baby boomers who are taking organizational knowledge and expertise with them.

Developing leaders and managers who can handle unprecedented change while inspiring and motivating employees is a must-do for organizations that want to succeed. So, what works?

Experiential learning

Experiential learning happens through problem solving, on the job assignments, and using simulations and serious games. Examples include group activities where participants attack real-world business problems, job rotation and shadowing programs, and virtual or live simulations. These experiences allow leaders to gain new knowledge and skills through hands-on practice in low-risk environments.

The Association for Talent Development’s research reveals that high-performing organizations are about three times more likely than lower performers to use experiential learning for both frontline and executive-level leaders. Not only that, high-performance firms invest in designing and managing robust experiential opportunities. According to the report, “Companies that achieve the most powerful results … develop leaders by having them generate potential solutions to business challenges and then follow through by implementing those strategies to drive better enterprise performance.” The research also notes the most benefit is gained by allowing senior leaders and managers to work on real-world business problems. Most organizations don’t do this, but the practice offers valuable insights which can lead to competitive advantages and accelerate leadership development.