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Great Organizations | Great Leaders

Big Numbers. Big Insights.

The Global Leadership Forecast 2014 | 2015 draws on data from more than 13,000 leaders and 1,500 HR executives worldwide to reveal important insights on talent management.
Big Numbers. Big Insights.

Our recently released Global Leadership Forecast 2014 | 2015 is the seventh report since DDI began this research in 1999. This current report—a joint effort between DDI and The Conference Board—includes survey responses from 13,124 leaders; 1,528 global human resource executives; and 2,031 participating organizations.

The record-breaking size of the participant pool (Figure 1) gave us sufficient sample sizes so that we could look at our findings from many points of view. We were able to dissect findings based on diverse perspectives that cut across HR professionals and leaders, four levels of leadership, gender, 48 countries (all regions), 32 major industry categories, and multinationals versus local corporations.

There’s never been anything like it

This article highlights just some of the many insights we uncovered during our in-depth analysis of the global survey data. The questions we will examine here include those related to leader readiness for critical challenges, the skills leaders need to navigate an uncertain environment, the benefits of gender diversity, the changing role of HR, and the challenges of identifying and retaining high-potential leaders.

Figure 1: The Global Leadership Forecast 2014 | 2015 Demographics

Are leaders ready for critical challenges?

As part of our partnership with The Conference Board, we built questions into the Global Leadership Forecast surveys that tied to The Conference Board CEO Challenge®. In the most recent CEO Challenge more than 1,000 respondents indicated that human capital remains their top challenge. Additionally, when asked about the strategies to address the human capital challenge, four of the top 10 strategies CEOs selected are focused on leadership: improve leadership development programs, enhance the effectiveness of senior management teams, improve the effectiveness of frontline supervisors and managers, and improve succession planning.

The Global Leadership Forecast asked leaders to assess their own readiness to execute on tasks related to these challenges. Their self-assessments are sobering (Figure 2). For instance, never were more than 50 percent “very prepared” to address any of the challenges (see illustration below). In fact, in the human capital challenge, only 27 percent of leaders reported they were “very prepared” to be the kind of leader that creates an optimal workplace where employees deliver their very best. HR leaders’ appraisal was even more harsh: Only nine percent indicated their leaders were “very ready” to address the human capital challenge.

Are leaders aligned with the demands of a VUCA world?

We also looked at leader alignment with the challenging “VUCA” environment in which organizations today must operate. A VUCA world is one that is volatile, uncertain, complex, and ambiguous. The Global Leadership Forecast measured leader readiness in four key areas (from these we created an overall VUCA index):

  • Anticipating and reacting to the nature and speed of change.
  • Acting decisively without always having clear direction and certainty.
  • Navigating through complexity, chaos, and confusion.
  • Maintaining effectiveness despite constant surprises and a lack of predictability.

Less than two-thirds of leaders said they were either “highly confident” or “very confident” in their ability to meet the four VUCA challenges. This less-than-encouraging view (Figure 3) was echoed by about a third of HR professionals, who rated their leaders as incapable of meeting the challenges of volatility (40 percent), uncertainty (32 percent), complexity (36 percent), and ambiguity (31 percent). Only about 18 percent identified their leaders as “very capable.”

Our research also found that organizations whose leaders have high VUCA capability (those with higher indices) are 3.5 times more likely than organizations with low VUCA capability to have a strong leadership bench.

The results also showed that VUCA capability links to financial results. The top 20 percent of organizations performing well financially are three times more likely to have VUCA-capable leaders (as compared with the bottom 20 percent).

So which skills are most important for leader preparedness? The Global Leadership Forecast identified the top four skills that, when practiced effectively, had the greatest impact on leader preparedness and confidence for addressing the challenges of VUCA:

  • Managing and introducing change—As expected, this expertise was the strongest predictor of a leader’s confidence when faced with VUCA.
  • Building consensus and commitment—This killer combination is critical for eliminating discord and misunderstanding.
  • Inspiring others toward a challenging future vision—To induce others to act leaders must first be inspired themselves.
  • Leading across generations—This skill is key to forging a shared purpose despite diverse employee viewpoints and motivations.

Does gender diversity make good $ense? (Hint: yes!)

The numbers are in. Our study found that organizations with higher percentages of women leaders consistently perform better financially. When women account for 30 to 40 percent of leadership roles, gender diversity dividends really add up. Examining the difference between top and bottom financial performers, we found that organizations in the top 20 percent counted 37 percent of their leaders as women; among organizations in the bottom 20 percent, only 19 percent of leaders were women (Figure 4). The same trend emerges when we look at high-performing women: Organizations in the top 20 (vs. bottom 20) percent for financial performance had a statistically significantly higher percentage of high-potential women.

With respect to leadership skills or the ability to handle management and business challenges, we found no significant differences between the men and women in our study. However, where the sexes diverged was in their respective confidence levels as leaders. Men considered themselves more effective as leaders, as evidenced by how highly they rated their leadership skills and ability to tackle management and business challenges (Figure 5).

Women, on the other hand, were less likely to rate themselves as highly effective leaders (vs. their peers), to have international assignments under their belts, to lead across geographies or countries, and most significantly, to lead geographically dispersed teams (a big opportunity gap). Missing out on these key developmental opportunities makes a difference: Leaders who had access to these global and more visible leadership experiences were far more likely to be promoted and advance more rapidly.

Is HR ahead of the game?

Further change is afoot. Over the years, we’ve seen HR grow and transition from an administrative “reactor” to a business “partner.” The former is largely a tactical, compliance-related role; the latter a junior seat at the business table. Our data confirms this change: Today, 60 percent of our HR sample classified themselves as “partners” (Figure 6).

While this is quite an improvement from two decades ago, it’s time to raise the bar once more. Only one in four HR respondents reported participating early in strategic planning. The other three were either not involved, or asked to develop talent plans after the strategic planning process. With the role of human capital management expected to change more in the next five years than it’s morphed in the past 30, HR must evolve or become irrelevant. It’s time for “partners” to become “anticipators.”

Anticipators are always looking around the corner to see what is coming next. They work proactively with their business colleagues to predict future talent gaps and find ways to close them. According to the Global Leadership Forecast, fewer than two in 10 place themselves in the anticipator category.

What else is there to know?

The findings from the Global Leadership Forecast 2014|2015 that we have featured here are just the beginning. The full Ready-Now Leaders report offers the full range of findings and insights we uncovered and also presents a Leadership Development Roadmap that answers key questions on the path to organizational success.

Evan Sinar, Ph.D., is DDI’s chief scientist. Connect with @EvanSinar on Twitter.

Richard S. Wellins, Ph.D., is senior vice president at DDI and co-author of a forthcoming book on the challenges of transitioning into a leadership role. Connect with @RichWellins on Twitter.

Read More...

See all the findings in the Global Leadership Forecast 2014ǀ2015 and download the full report.

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