The Future of Management Training Is Simulations

Transforming the way organizations nurture talent and identify potential leaders.

Overnight, after spinning off its research based drug business into AbbVie, Abbott Laboratories found itself a very different company. It didn’t just completely switch up what it sold. The parts of the world and people that mattered most changed, too.

Half of its profit, 70% of its sales, and a majority of employees now came from countries outside the United States. The average manager in the US is 46 and has been with the company for more than a decade. In Asia, the average manager is 34 with five years at the company.

In the US, the company had had the luxury of cycling managers through multiple jobs and levels of responsibility so it could tap a relatively deep bench of educated, experienced staff. Things were completely different in the rest of the world.

Its businesses outside the US were growing rapidly and management talent was scarce (something other companies have found, particularly in China (paywall)). Traditional brick and mortar training and job cycling simply didn’t cut it–they were prohibitively costly, in time and money.

Abbott, now mostly a nutrition, diagnostic, and medical technology business, had to transform the way it nurtures talent and identifies potential leaders. What resulted was a system of management training and evaluation that may look more and more familiar in the future. Managers are developed, not in the classroom, but on the job, online, and through advanced digital simulations.

“There’s a lot more focus on the issues that they’re dealing with, in live training,” says Stephen Fussell, Abbott’s head of HR. “We can be a lot more culturally astute.”

A simulation might present a group of managers with a real business problem, like a factory slowdown or product recall, and require both specific decisions and an explanation of the thought process behind them.

These simulations have higher stakes than a corporate retreat or lecture. Managers must make judgments on real company issues, under stress. The simulated tests are actively monitored and used to evaluate managers and candidates, in the interest of getting more data, more quickly, and they have an increasing level of sophistication.

“We will introduce a set of facts and see how people perform collaboratively,” Fussell says. “Then we will purposefully completely pull the rug out to change the facts and circumstances. We want to see them operate under stress. That’s hard to replicate in safe ways using traditional brick and mortar training tools.”

The evaluation piece might be discomfiting, but it’s an essential part of finding managers that demonstrate what the firm calls “proof points,” the skills or traits common to the most successful leaders in a market. Fussell doesn’t feel like he has the luxury of drawing a line between training and assessment.

“We use development a lot for assessment. For some, that can be controversial. They sort of think the two shouldn’t necessarily go together,” Fussell says. “If I were a university, I’d like to think that way, but we are a business that has a responsibility to the patient, to the customer, and to investors to sustain growth.”

The idea of having one’s career path determined, at least in part, by performance on simulations seems strange. But it’s all about a broader movement toward more data based evaluation and management that’s unlikely to slow down.

( Image via YanLev / Shutterstock.com )