February 20, 2018 – New data shows that what is most keeping C-level executives awake at night is their people strategies.
Only 14 percent of CEOs believe they have the leadership talent to execute their strategy, said the “Global Leadership Forecast 2018” report. Now in its eighth edition since the report was first published in 1999, this year’s study includes data from 25,812 leaders and 2,547 human resources professionals at 2,488 organizations across 26 industries worldwide.
“If you’re deeply concerned about your organization’s lack of leadership capability, you are in the clear majority,” said Evan Sinar, chief scientist and vice president of DDI, and lead author of the report. “The tremendous amount of data we collected in this study shows that as digital disruption continues to transform the workplace, we’re facing a massive leadership shortage worldwide.”
“The good news, however, is that the research also reveals a clear road map of how organizations can start changing their people strategies today to excel tomorrow,” said Mr. Sinar. “The report delivers deep insights about corporate leadership around the world.”
Among these insights, he said, six leadership mega-trends have emerged:
1. Digital is reshaping the workforce
Digital pioneers – defined as the top 25 percent of organizations with the strongest digital leadership capabilities – financially outperform other companies by 50 percent.
The impact of a digitally transforming workplace influenced nearly every aspect of the research, revealing that organizations that have digitally-savvy leaders are significantly outperforming the average, according to the report. In sync with the financial findings, the study showed that there are substantial differences in leaders’ skills at organizations considered “digital pioneers” compared with “digital laggards.”
Adam Canwell, partner, people advisory services, Ernst & Young Australia, said one cannot overestimate the value of leadership. “Leadership, particularly in the current digital era, is of critical importance to our clients,” he said “It is a top agenda item for chief executives and boards, who are looking for insights on how to embrace disruption to connect people and possibilities.”
2. Data is creating a more inclusive, agile and fair workplace
Organizations with more women in leadership are 1.4 times more likely to have sustained, profitable growth.
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Successful organizations continue to rely more heavily on big data to inform their business strategies, and their people strategies are no exception said the Global Leadership Report. “By tying people analytics to business results, organizations are seeing how greater diversity in leadership positively affects the bottom line, and how diverse leadership capabilities better prepare organizations to handle disruption,” said the report.
3. A diverse, purpose-driven culture defines success
Purpose-driven companies outperform the market by 42 percent. Culture also emerged as a major driver of leadership success in the study. The data showed that, for leadership strategies to succeed, organizations must build solid cultural cornerstones, such as a clearly communicated purpose, peer coaching, experimentation and psychological safety. Diversity also plays a major role in building a successful workplace, which includes embracing gender diversity, leveraging diverse mindsets, and understanding the relationship between Millennials, Generation X and Baby Boomer leaders.
“In this rapidly changing era of disruption, globalization and digitalization, leaders still need to deliver results and balance that with the need to insure performance, coach and develop people, be inspiring and engaging and nurture diverse talent….It’s a tall order,” said Rebecca L. Ray, executive vice president of the Knowledge Organization at the Conference Board, and a co-author of the report. “The insights featured in the report form the needed blueprint for developing and enhancing these critical abilities.”
4. Do it yourself doesn’t work
Fifty-five percent of organizations in the top third for financial performance have formalized mentoring, according to the report.
A “do it yourself” mentality leads to leadership failure. The Global Leadership Report data provided clear evidence that leaders are increasingly expected to work in shared leadership environments, and that leaders increasingly need to build relationships with mentors to find success. Additionally, organizations that rely on a self-directed, insular approach to learning are failing to engage leaders in meaningful development.
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5. Finding new sources of leadership potential is crucial
Organizations that extend development of high-potential talent below senior levels are 4.2 times more likely to financially outperform those that don’t, said the report.
In the past, organizations have often had a narrow definition of the “type” of person who has leadership potential, and have invested their resources into developing a very small group of people who meet that criteria. The report, however, showed that organizations that take a broader view of leadership potential prove to be more financially successful, feature stronger top leaders and have more women in leadership.
6. HR is losing its influence
On average, companies excelling at people analytics are 3.1 times more likely to outperform their peers financially. But as HR’s digital skills continue to lag, attempts to adopt people analytics are increasingly failing.
Over the past three years, HR’s reputation has gotten worse, with more leaders now believing that HR is simply a “reactor” that executes commands rather than an “anticipator” that develops a people strategy that enables the organization’s business strategy. One of the primary challenges is that HR is failing to develop digital skills on pace with technology advances, the report said, which undermines their ability and reputation to drive digital transformation across the workforce.
Related: Job Market Trends to Watch In 2018
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media