The forecast, from Global Talent Management Company DDI, paints a worrying picture for organisational leadership capacity.  Responses from more than 12,000 organisational leaders and 1,800 HR professionals, from over 2,600 organisations across 74 countries, indicate that leaders rate themselves poorly, do not possess the skills necessary for business in the future and do not have a sufficient pipeline of talent within their organisation.

Australia needs better prepared leaders to succeed
From the Forecast, only 38% of leaders globally, and 34% in Australia/New Zealand, rate their organisation’s leadership quality as high. Their HR peers rate leadership even more poorly with only 22% of HR professionals in Australia/New Zealand stating that their organisational leadership quality is high.

Organisations in Australia and New Zealand seem to be keeping pace with the rest of the world when it comes to their leadership development budgets and it appears that the current focus on leadership development will be maintained.  Still with the millions of dollars spent on leadership development initiatives annually, it’s unfortunate that only about one in three HR professionals and leaders in Australia and New Zealand rate their organisation’s leadership development efforts as highly effective.  Without effective leadership development, Australian and New Zealand organisations may find that their leaders will not be prepared to manage effectively in a constantly evolving and somewhat volatile business environment. 

Does Australia have the leadership bench strength it needs to meet future business challenges?  According to our survey only 9 percent of HR professionals rate their leadership bench strength as strong or very strong, exactly half the percentage in the global sample.  Therefore the need to strengthen bench strength is critical to ensure succession and competitive advantage.

Dr Bruce Watt, Managing Director at DDI Australia comments; “Research from our last two Global Leadership Forecasts shows that leadership quality hasn’t changed that much over the last six years despite the estimated AUD$22 billion spent globally each year on leadership development. If organisations are going to have in place the leadership they need, how they find, develop and promote new leaders is going to have to change”.

Effective leadership directly contributes to organisational effectiveness and the bottom line
According to DDI, leadership capability should be a major concern for organisations if they want to become more effective in today’s global marketplace and there is evidence to support this.  

Our research demonstrates that organisations with the highest quality leaders are 13 times more likely to outperform their competition in key bottom-line metrics such as financial performance, quality of products and services, employee engagement, and customer satisfaction.  Specifically, when leaders reported their organisation’s current leadership quality as poor, only 6 percent were in organisations that outperformed their competition.  Compare that with those who rated their organisation’s leadership quality as excellent, more than three quarters (78%) of leaders are in organisations that are outperforming their competition in those key bottom-line metrics. 

Skills required for today’s business environment
With the business world changing so fast the survey sought to understand whether the skillset leaders have are the same as those they expect to need in the next few years. Some of the key skills leaders expect remain important, such as driving and managing change; coaching and developing others and executing organisational strategy.  However, these vital skills have been joined by two new skills that are increasingly seen as critical:  identifying and developing future talent and fostering creativity and innovation. It’s interesting to note that while change management is seen as critical, fostering creativity and innovation is seen as less critical in Australia/New Zealand than the rest of the globe—and a skill that leaders in Australia/New Zealand believe they are less effective in.  This finding indicates a risk for Australian and New Zealand leaders.  The countries’ reliance on traditional industries, such as resources and agriculture, may be inhibiting other, potentially more innovative, growth opportunities.
 
Leaders are not well prepared for the future
Alarm bells should be ringing in organisations, because leaders themselves say they are not prepared for what they will need to accomplish.  In fact only between 50%-60% of leaders believe they are effective in the critical skills they identified.  In Australia and New Zealand, coaching and developing others is seen as relatively weak (52%) despite the fact that it will be a priority over the next three years.

Best in class use a mix of development techniques
It is interesting that the best results seem to be when a mix of development techniques is used.  Organisations with the most effective development programs use 32% more methods. When asked what were the most effective techniques, 73% (81% in Australia/New Zealand) of leaders rated formal classroom training as effective, followed by special projects and assignments (63% in Australia/New Zealand) and various types of coaching.

Watt comments: “On the face of it, the Forecast paints a worrying picture - leaders haven’t yet got the skills they need, only 1 in 3 organisations rate their leadership quality as high and a staggering 91% haven’t got the leaders they need coming through.  Yet, the picture isn’t as bleak as it may first appear. Organisations have bought into the fact that they need to develop leaders and it’s indisputable that leadership does matter.  Leaders are telling us the skills they need and they’re clear on what development methods are effective.  Put all of those elements together and, if we put our minds to it, we should be able to bring about a step change in leadership through effective, targeted development programs.”
DDI’s 6th Global Leadership Forecast is the largest leadership survey of its kind in the world and spans more than 12 years.  More than 1,800 HR professionals and 12,000 leaders from 2,600 organisations in 74 countries around the world took part in the survey. The survey is taken every two years.

Media enquiries:
Julie Hogan (Marketing Manager)
Tel:  02 9466 0325 / 0438 139 021
Email:  Julie.Hogan@ddiworld.com
To be included in future media material from DDI, connect to http://www.linkedin.com/in/juliehoganddi

DDI Spokesperson:
Bruce Watt, Ph.D
Managing Director
DDI Australia
Email: Bruce.Watt@ddiworld.com

About DDI
DDI is the leading, integrated global talent management consultancy, helping clients to build the leadership talent they need to successfully deliver their business strategy.  With more than 1000 associates in 42 offices in 26 countries, DDI advises over half of the Fortune 500 on areas such as succession management; high potential identification and assessment; accelerated development for managers and senior leadership; behavioural interviewing systems; performance management systems and competency models, linked to business strategy. 

For more information about DDI visit www.ddiworld.com