How to better prepare business leaders for today’s top challenges
Too many business leaders are ill-prepared to tackle today’s most pressing challenges, according to global research by talent management consultants Development Dimensions International and The Conference Board, a research association that aims to improve business performance.
Only 27% of more than 13,000 business leaders polled worldwide for the Global Leadership Forecast 2014/2015 said they felt very prepared to create a workplace where employees deliver their best. Human capital challenges topped the list of challenges for CEOs.
Customer relationships, innovation, and operational excellence also made the list of top CEO challenges. Forty-five per cent of business leaders surveyed said they felt very prepared to bring the customer voice into the organisation, 26% felt very ready to create an environment where innovation flourishes, and 33% to pursue operational excellence.
Leadership quality, which is linked to the bottom line and to employee retention and engagement, has improved, but not by much, since DDI polled business leaders and HR professionals four years ago. In 2014–15, 40% of business leaders rated the current leadership quality as high, up from 38% in 2011. But HR professionals reported no overall improvement from 2011, when one-quarter ranked leadership quality as high.
“Why is leader quality going nowhere fast?” DDI and The Conference Board asked in the 2014–15 forecast. “Apparently, because leadership development efforts have stalled, despite the fact that it is estimated that some $50 billion a year is being spent on developing leaders worldwide.”
Speed of change
Global competition, technological advances, and added regulation are rapidly changing the way business is done around the world. The speed at which the changes occur can easily create surprises, and regulations and technological advances give rise to new risks, such as cyber-attacks and enforcement of bribery and corruption laws.
But leadership development is not keeping pace with the changing business environment, according to the more than 1,500 HR professionals who were also polled for the 2014/2015 Global Leadership Forecast.
Mainly, that’s because companies’ leadership development programmes don’t focus enough on the two most critical skills: Only one-third of companies target their leaders’ ability to foster innovation, a skill with which just 56% of business leaders consider themselves highly effective. And one in five companies emphasises the development of global leadership skills, which received the lowest skill effectiveness ratings amongst business leaders: 45% consider themselves highly effective in integrating themselves into foreign environments, 39% consider themselves highly effective at intercultural communication, and 34% consider themselves highly effective at leading across countries and cultures.
According to the 2014–15 Global Leadership Forecast, countries with the least prepared business leaders include Brazil, Japan, China, and Malaysia. Pharmaceutical and IT companies have the most challenges and the fewest prepared leaders. Also, leadership preparedness declined in the past four years among health-care providers and in the manufacturing industry.
To recruit and develop better leaders, DDI and The Conference Board offer the following suggestions:
- Expand the pool of job candidates to attract leaders from industries that do a better job developing effective leaders, and provide new hires intense onboarding experiences such as coaching, mentors, and networking opportunities.
- Design development programmes around skills that leaders need to accomplish strategic objectives. Multinational companies, for example, should emphasise development that prepares their leaders to meet intercultural challenges and drive global growth.
- Look for leaders who encourage risk-taking, networking, and generating new ideas to tackle the innovation challenge.
- Offer business leaders opportunities to practise and use skills they learn in development programmes.
- Establish a strong leadership selection and succession management system.
- Ask HR professionals to get into a constant learning mode, especially to become more knowledgeable in using Big Data analytics that generate foresight about talent gaps and drive talent alignment with strategic goals.
- Revisit the process of identifying high-potential leaders to ensure the right people are in the pool.
- Hold all levels of managers accountable, in equal proportions, for their interpersonal skills and the results they accomplish.
- Bolster development programmes that allow leaders from diverse backgrounds, especially women, to build knowledge and skills.
Related CGMA Magazine content:
“Access to Talent a Rising Concern for CEOs Around the World”: Availability of key skills is the biggest threat to organisations’ growth, according to 63% of CEOs in a 2014 PwC survey. That’s an increase of 5 percentage points from the previous year. The report lists five priorities that can help CEOs and other stakeholders combat a lack of talent.
—Sabine Vollmer (email@example.com) is a CGMA Magazine senior editor.