DDI Risk Analysis: Leaders Pose Greatest Hazard for Corporate Recovery

Meet the corporate executives guiding us through uncertain economic times—they’re downbeat, change resistant, emotionally unpredictable or fail at operational control
 
February 05, 2009

Leaders are posing high risks to their organizations because of deficiencies in the skills needed to see them through the economic crisis, according to data collected by Development Dimensions International (DDI) from leadership simulations conducted with executives around the world.

“Given the disappointing performance of leaders in ordinary times, what can we expect of them in challenging periods like right now?” Rich Wellins, senior vice president at DDI said. “We learned by examining the behaviors of individuals in the stress of an executive assessment that many are not just lacking skills to survive—but have traits that could contribute to an organizational crisis.”

To develop the analysis “Leaders Without Sea Legs: Threats to Staying Afloat During Tough Times,” DDI analyzed information about the performance of 3,623 executives who participated in DDI assessment centers around the world, examining their behavior during realistic simulations of executive roles and their traits identified from two personality questionnaires. The executives came from 49 countries, with two-thirds from the United States.

“This isn’t just speculation on how leaders could perform when facing a crisis, but startling information gained from leaders’ performance in ‘day-in-the-life of an executive’ simulations, replicating what senior leaders face in their daily job,” Wellins said.

The candidate in the assessment center faces situations that include decision-making, communicating in a crisis and developing a strategy. The study’s conclusions focused on the skills and personal characteristics that were most important to executives during turbulent times—and the corresponding derailers (negative traits that in times of crisis would take a leader off-course).

Threats of dysfunctional leadership ran from moderate to very high on six key leadership challenges posed by a crisis. Four of the most dramatic at-risk areas were lack of operational control, the tendency to squash innovation, emotional unpredictability and downbeat attitudes.

Almost half of leaders won’t take operational control
Nearly three of ten executives (29 percent) were deficient in their ability to drive execution and another 20 percent were strong or moderately strong candidates for derailing due to a lack of discipline.

Executives threaten innovation
Three in ten executives were weak in change leadership, while 41 percent were at high or moderately high risk of resisting change under stress. If these derailing tendencies are activated, more than half of executives could pose a very high threat to organizational innovation.

Leaders as loose cannons
Nearly 20 percent of executives were at a high or moderately high risk for being emotionally unpredictable under pressure—representing a risk that that an executive will disturb organizational equilibrium. 

Downbeat executives don’t inspire hope
One quarter of executives lacked the temperament to communicate in a way that builds trust, or were so emotionally detached that they have trouble relating to others. These ‘downbeat’ leaders can’t share a sense of optimism about the organization’s future.