Do leaders make history, or do they simply add on to it? While there is no one direct answer to the question, what cannot be contested is the fact that leaders, and the quality of leadership, are integral elements of the world we live in. In the corporate world, leadership is even more prized, for one’s ability to lead results in better opportunities, and the ability to lead well translates into making the best use of the said opportunities. To that effect, we need to keep the discourse on understanding global leadership alive and kicking, and frequently pause to look at how the leaders of today are functioning.
The Global Leadership Forecast 2018, three-way collaboration between Development Dimensions International (DDI), The Conference Board and EY, is one the most comprehensive leadership research projects of its kind. With responses from 25,812 leaders and 2,547 HR professionals across 2,488 organizations located in 54 countries and from 26 major industry sectors, the research analyzes the concept of leadership from multiple viewpoints and breaks down the challenges, perspectives, and strategies deployed by leaders all over the world. With the inclusion of over 1,000 C-Suite executives and 10,000 high-potential employees in this mix, the study also critically assesses the leadership capability and preparedness for both, today and tomorrow.
The Forecast lists 25 findings about the current and future state, context and capability of leadership. These have been classified into the six leadership megatrends, which make an attempt to comprehend the inter-disciplinary concept that leadership has evolved into today.
Leaders at the Core
Unsurprisingly, the biggest challenge that global leaders face today relates to talent and future leadership. Developing ‘Next Gen’ leaders (64 percent) and Failure to attract/retain top talent (60 percent) emerged as the two largest challenges that C-Suite executives identified. But, that’s not all: qualitatively, HR professionals consider the assessment of their company’s leadership development program lower than that of their leaders’. Just 35 percent of the HR professionals rated their organization’s bench strength (the supply to fill critical leadership positions over the next three years) at any level of strength, and over a third of them (37 percent) believe their succession management system and processes to effectively low or very low.
However, despite allocating high budgets towards building talent pipelines and leadership development, only 14 percent of the CEOs admit that they have the leadership talent to execute their strategy. HR is also not adequately consulted in the process, the findings show. “Only one in four HR professionals are involved in strategic planning from its inception. This diminishes the role they can, and should, play in connecting the business to required leadership capability.” Lastly, the Forecast reiterates that organizations having a purpose statement are better off than those without one, but, ‘purposeful organizations where leaders bring the state's purpose to life through behavior’ financially outperform all others (by 42 percent better precisely).
Digital & Data
Across the major competencies that comprise key digital-era leadership skills, on an average, only 22 percent of the leaders considered themselves to be effective in all. The research shows that digital pioneers not only outperform the average organization (by 50 percent), they are also better equipped to take on future business challenges than digital laggards. Organizations and leaders with a high state of digital maturity are more agile, have stronger cultures and experimental mindsets and are more future-focused. The report reveals that companies whose leaders are well prepared to use data to guide decisions are 8.7 times more likely to have closely integrated talent and business strategies, 7.4 times more likely to have a strong bench of future leaders, and 2.1 times more likely to have grown aggressively over the past three years, compared to organizations whose leaders are ill-prepared for a data-rich business context.”
Interestingly, the findings suggest that leaders of tech organizations are facing unique and more severe leadership challenges, as they reported the lowest success rates for their leaders. “According to data gathered from 1,086 technology leaders and 107 HR professionals, tech companies are falling behind in four key development practices that not only drive higher success rates but also affect other leader outcomes, including higher engagement and retention.”
Growth & Potential
Despite an increasing budget to develop high-potential employees, the research found that the results are severely underwhelming on the front. “Despite 65 percent of organizations having high-potential programs, 68 percent rated them as less than highly effective... (their) progress is nonexistent at best and retreating at worst.” Furthermore, the challenge is compounded by the simultaneous evolution of the concept of ‘learning at workplace’. “HR professionals face particularly difficult choices about synchronizing complementary modalities, appropriately blending technology-centric and high-touch (formal training, coaching) learning, and applying learning back in the workplace.” Catering to the needs of the modern learner, and balancing it with available resources in a rapidly evolving environment is a tough balancing act that not many are able to ace.
The movement towards making performance management systems fairer, focused on the development and frequent has also met with partial success, as only 34 percent of the organizations have achieved all three practices; in other words, almost two-thirds of the companies studied are yet to make their performance management more effective. Lastly, in a telling finding, the study says that most leaders had ambitions to lead early in their life or careers (76 percent), indicating that the motivation to lead and experience are the biggest factors that help leaders become who they are.
Millennials, now at the cusp of assuming leadership roles, and the often overlooked ‘Generation X’ workers have also been given their due in the research. “In general, Millennial leaders are likely to: rate their intellectual curiosity higher than other generations, are more likely to seek feedback and input from colleagues and mentors and, are more likely to want “stretch” assignments.” The study of style and functioning of Generation X leaders shows that they are poised to take more important leadership roles; although their average promotion (1.2) has been slower than that of millennials (1.6) and Baby Boomers (1.4) in the last five years, they’re less likely than millennials to change companies or leave in the near future.
The study also shows that women currently inhabit less than one-third (29 percent) of all leadership roles, with the large majority being in first-level management positions. The findings suggest that companies that have reached an above-average level of gender diversity overall (at least 30 percent) and at the senior-level (more than 20 percent), outperform diversity laggards in key leadership and business outcomes. That’s not all, leaders from more gender-diverse organizations were 1.5 times more likely to work across organizational boundaries and create synergies in their efforts and organizations with greater gender-diversity were 1.4 times more likely to have sustained, profitable growth.
The study emphasizes and lists the many benefits of having a culture of learning from a variety of sources. “When everyone in the company can be a coach, everyone benefits.” However, only 36 percent of the organizations said they have a formal mentoring program for their leaders, and nearly 6 in 10 leaders who participated in the study had no mentor. This despite the fact that, “leaders from organizations with formal mentoring programs were 1.7 times more likely to feel well prepared for capturing organizational knowledge before it’s lost than were leaders from organizations without formal mentoring.”
Agility, a term that has been used regularly in the recent past, has also been broken down in a practical sense in the study. According to the research, more-agile organizations have leaders who are better prepared to understand and anticipate the changing market environment and adapt accordingly as “their leaders are 3.2 times more prepared to anticipate and react to the nature and speed of change, and 1.2 times more capable of responding to the competitive environment.”
The discourse on culture cannot be complete without engagement. The findings show that career development is the most ignored ingredient of engagement and that HR needs support leaders who are disengaged, and work to get the following mix: “concerted organizational effort, a motivated leader, and employees who take responsibility for their own engagement.”
The HR Opportunity
The last trend examines the role and opportunity that HR has in this changing leadership paradigm, and suggests ways to ensure that HR professionals work as a Reactor, Partner and an Anticipator to business and talent challenges. The findings show that while HR’s own perceptions as a Reactor, Partner, and Anticipator are roughly at the same levels as that of 2014, more leaders are viewing HR as a Partner than ever before (48 percent in 2017 as opposed to 37 percent in 2014); although this has come at the cost of HR being overlooked as an Anticipator (down from 20 percent in 2014 to 11 percent currently). The Forecast also makes another interesting claim: it states that this rapid evolution of work, and as a result, of HR, is not smooth. “While HR leadership should be in an enviable position, in reality, it’s losing the race. Their organizations are changing faster than they are, putting them even farther behind... The work world is experiencing considerable upheaval, yet only one in five HR leaders felt very prepared to handle the challenges.” About 70 percent of the HR professionals admitted the need to improve their application of HR Technology and analytic skills, and 56 percent felt the pressure to demonstrate the financial impact of the same. “One in four HR professionals is thinking more about bailing out of their organization. However, on a more positive note, two-thirds felt more engaged.”
The report also states that HR leaders who should be building a stable foundation for tomorrow’s leaders are actually way behind schedule, and in reality, are witnessing a decline in the success of analytic effectiveness. In other words, “the analytics bar is rising faster than HR can leap over it.” Despite 70 percent of the HR respondents attesting to an increase in their analytics skills and data-driven decision making, the progress and integration isn’t at a pace that can keep up with the contemporary requirements. This is particularly worrying because “Those succeeding with advanced analytics are 6.3 times more likely to have new advancement opportunities and are 3.6 times more likely to have a stronger reputation with senior business leaders.”
Unlike other research-intensive studies, the Global Leadership Forecast 2018 is not just about identifying and understanding leadership challenges, as it also enlists ‘where to start’ and ‘how to excel + differentiate’ checklists for each of the 25 trends. This provides the reader with an actionable strategy to chart a future course of plan, to “build, reinforce or remedy their foundation for evidence-based leadership practices and research... and draw on proven, high-impact leadership practices to gain a sustained competitive advantage by harnessing their leaders’ potential at all levels and from all backgrounds.” It also has an extensive ‘leadership scoreboard’, which shows the “in-place” frequency of 34 leadership practices and the links from each to three critical outcomes: Leadership Program Quality (in the eyes of the leaders/learners who are the “customers” for these programs), Leadership Bench Strength (supply of ready-now leaders to fill critical roles over the next three years), and Financial Outcomes (an externally gathered composite of operating margin, EBITDA, revenue growth, and return on equity). This section is particularly insightful in understanding how global leaders look at their own practices, how these manifest as measurable outcomes and leadership traits which need improvement universally.
The multitude of perspectives in the Global Leadership Forecast 2018, alongside the unshakable and fact-based evidence, gives an all-encompassing understanding of the challenges and trends underway in leadership today. The Forecast serves as an important source of information and knowledge for the HR community, and a timely reminder of the journey it is on, and the milestones ahead.
Source: Global Leadership Forecast 2018 - 25 Research Insights to Fuel Your People Strategy