Very few potential leaders in companies today: SHL Talent Report 2012
It is the impact of the complex work environment and the impending challenges, that talent management has become a strategic agenda
SHL Talent Report 2012 sheds light on the availability and supply of potential leadership talent across geography and sector.
Tectonic market shifts are transforming the business landscape across the globe. Unpredictable global economic forces, ubiquitous information, rapid technological changes, globalization of markets, changing demographic trends and increased competition are posing serious challenges to organizations whose performance over the last two decades or so have primarily been fueled by workforce efficiency and productivity. Perhaps, it is the impact of the complex work environment and the impending challenges, that ‘talent management’ has become an agenda of strategic importance for corporate boards and executive teams in industries across the world. The fight for the best and brightest talent in the world is heating up with an increasingly demanding workforce that has more choice and opportunities than ever before. There is no dearth of studies that reinforce the fact that organizations that are able to attract, retain, develop and engage the best talent are more likely to hit their business objectives and grow. At this juncture, organizations across the globe are faced with the question, “Where can I find the talent that I need?” In a globalized environment, organizations are interested to know about the supply of leadership potential by geography and by industry sector, which geographies are best placed in the global race for skills and more importantly, are the organization’s talent ready to perform in the new work environment?
An insightful report, “The SHL Talent Report: Big Data Insight and Analysis of the Global Workforce” generated from the work of more than 300 expert occupational psychologists and data from almost 4 million assessments in close to 200 countries, seeks to address these questions.
Where are the leaders?
Given the major economic shifts, swift social and political change, and accelerating technological and communications capabilities, there is an ever greater demand for effective leadership. However, the question remains as to where will the top leadership talent come from to meet the projected high demand? Are there effective leaders who can develop a compelling vision, articulate and communicate goals and, at the same time, influence people so that they share the vision and work towards its realization? The report highlights that finding individuals with this rounded repertoire of leadership talents is clearly a challenge; a fact recognized by both executives and the employees whom they lead. Citing survey reports, it states that as few as 25 percent of employees believe their organizations have the leaders to succeed in the future and only 33 percent identify their executives as being among the top leadership talent in their industry.
Supply of potential leaders
According to the report, analysis of the data shows that a very small number – just 6.7% or 1 in 15 managers, professionals or executives globally are fit to be qualified as potential leaders for today - who, with the right experience, are most likely to deliver in a leadership position. What are the qualities that these potential leaders for today have in them? The report describes them as ones who are stronger in the more transactional, managerial and operational behaviors that build effective relationships with people; can drill down to the essence of a problem and evaluate the data to identify a solution; can organize and mobilize resources; and can adapt to challenges and change effectively. They are also stronger in the transformational behaviors that can engage and influence others to get things done, can communicate effectively to gain support of others, can think laterally and bring new insights and have the drive to see things through and achieve their personal career objectives.
What about the demand and supply of these potential leaders? From a supply perspective, the report states that countries in North America (Canada and United States), Western Europe (notably Germany, United Kingdom, Switzerland, Sweden, France and Finland), and Australia and New Zealand emerge as the global hot spots. While Asia, as a region, does not emerge as strongly in the supply of this level of leadership talent, China (Hong Kong), Japan, Singapore, China (Taiwan) and Thailand are emerging as top hot spots in Asia.
As far as potential leaders for tomorrow, those who exhibit strengths in some of the key behaviors, but lack fully-rounded potential, is concerned, 1 in 3 managers and professionals have this level of leadership potential – six times the proportion in the leaders for today tier of leadership potential. These leaders may have strength in some of the transactional facets of leadership and can deliver programs to time, cost and quality, but lack strength in areas such as communication, influencing and lateral thinking. Or they may have strengths in these transformational areas but lack strengths in the areas that turn ideas into effective programmes of work. Given that these leaders have a longer personal journey to become effective and rounded leaders, it is expected that they could benefit from targeted learning and development. From an availability perspective, leadership potential for tomorrow is strongest among emerging economies, notably the BRICS countries with South Africa at 32.3 percent falling outside the Top 25. Additional strong geographies for leaders for tomorrow are found in the newly coined TIMS emerging economies: Turkey, Indonesia, Mexico, and South Korea. Latin America and the Middle East also feature strongly as hot spots for leaders for tomorrow. An analysis of the global distribution of potential leadership talent for today and tomorrow and its marked differences, makes it amply clear that organizations need to adapt their strategies to reflect different needs in different regions.
Sectoral distribution of leadership talent
Just as in the case of geographical distribution of potential leadership talent, the report categorically states that for industry sectors too, there are specific areas of strengths and weaknesses in the leadership talent pools for today and tomorrow. According to the report Banking, Insurance and Financial Services (BFSI) sectors have the advantage of strong supplies of leadership, both today and tomorrow across most geographies, with the exception of Western Europe. However, the Oil & Gas and utilities sectors face challenges in the supply of leaders for both today and tomorrow, particularly in Eastern Europe and North America, despite North America being one of the geographical hot spots for leadership talent. While mining, professional services and the public sector emerge as sectors attracting stronger talent for leadership today, they face likely succession risks in the future, with risk highest in Australia-New Zealand for mining; in the Middle East and Africa for professional services; and in Asia for the public sector. Interestingly, the report puts forth the view that sectors such as consumer goods, healthcare, telecom and general business services, need to adopt a two-pronged strategy of strengthening leadership attraction and acquisition programs, while also using people intelligence to meet development gaps.
Though there is an alignment in terms of supply of leadership potential, both for today and tomorrow, it should not be assumed that leadership potential is evenly spread geographically or that ‘traditional’ sources of leadership will be able to maintain that supply in the future too. The report candidly puts across the point that future leadership supply can be realized if organizations drive development initiatives that ensure leadership potential translates into leadership success.
Y. V. Lakshminarayan Pandit
Managing Director, SHL (India)
In India, leaders for today are less than 5%, whereas leaders for tomorrow are 41 percent. This indicates that compared to other countries, we have fewer leaders having the competencies to take on leadership roles today; however, we have a strong leadership pipeline. With development inputs and the right opportunities, we can expect to have strong leaders in the future. The key task before organizations today, is to identify such talent and provide them with the right development inputs. With specific reference to industry/sectors, we can surmise from the data on Asia, that insurance and financial services, and professional services have strong leadership for today. Banking, technology and healthcare sectors have a strong leadership pipeline.