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Leadership Capability

Global Leadership Forecast 2018

Leader Capability Stalled Again:

It's Time to Close the Gaps

Richard Wellins

“Everything is different from today on.” So, supposedly, said Austrian composer Joseph Haydn after hearing Beethoven’s Symphony Number 3, the Eroica, more than two centuries ago. While many who first heard it were shocked, it changed the very essence of classical music and went on to be one of the world’s most beloved symphonies. The quote aptly reflects today’s leadership landscape. Never in the nearly 20 years we’ve been collecting data for the Global Leadership Forecast have we seen the array of forces that are disrupting the essence of great leadership. “Competitive pressure to innovate and shake up established markets is too powerful for companies and the people who lead them to ignore.”* And, never has the quality of our leaders to guide us into uncertain futures been more critical.

Leader Capability Stalled Again

Leaders Ready for Today? And What About Tomorrow?

We’ve followed perceptions of leadership capability over the years that indicate organizations’ progress in building stronger leadership capability. Are they improving? Despite billions spent on leadership development annually, the answer, yet again, is no!

As shown in the figure above, little has improved in overall organizational leadership quality as rated by more than 25,000 leaders. The percentage in the excellent/very good categories has hovered at around 40 percent since 2011. And when HR evaluates the quality of their organization’s leaders, the number has risen to only 30 percent (a slight boost from previous years). Overall quality varies widely by country, industry, and level. Leaders, for example, rated senior leadership quality considerably higher than the quality of those in first-level positions (47 versus 33 percent). While first-level leaders are less experienced in a leadership role, they’re likely to have the most profound impact on their teams’ engagement and productivity.

We also took a forward view by asking HR to rate the strength of their current pipeline to meet their business needs over the next three years. The results are equally discouraging. Just 18 percent considered their future bench to be very strong/strong in Global Leadership Forecast 2011. That number dropped to 14 percent in this survey. A full 65 percent of HR respondents rate their future leadership bench as slightly weak or worse. Again, these ratings vary considerably by industry.

Little has improved in overall organizational leadership qualityThe second figure lists some key countries/regions and industries in terms of leadership quality and the accompanying rating of future bench strength. One thing is very clear: The current quality of leadership earned higher marks than bench strength three years out. Given the seismic disruption in almost every industry, keeping ahead of the leader quality and quantity supply chain will be a considerable challenge.

Dearth of current quality and projected future bench strength can hinder your organization’s ability to fill critical positions with ready-now internal leaders. On average, respondents feel they can fill only 43 percent of their critical roles with strong internal leaders, leaving them to search outside for often-costlier, higher-risk external candidates.

At the end of the day, we need to ask ourselves if these numbers have any real impact. It turns out that companies in the top third of financial performers are twice as likely to have high-quality leaders than those in the bottom third. This is a difference that can easily translate into millions of dollars for any single company.

* Hoque, F. (2015, November), 5 Habits of Truly Disruptive Leaders, Fast Company. https://www.fastcompany.com/3052725/5-habits-of- truly-disruptive-leaders

Where to Start
  • Analyze the strengths and gaps in your leadership bench against your business goals. This will enable you to better target your limited resources while having the greatest impact on your business.
  • Keep your eye on disruptions to your business and how they affect your success profiles. The requirements for leadership excellence are changing constantly.
  • Become a champion at using predictive analytics to improve the quality of hiring and promotion decisions.
How to Excel + Differentiate
  • Consider a more systematic approach to developing a long-term leadership strategy connected to your business plan.
  • Integration of talent systems is key. For example, superior development will not compensate for poor hiring systems.
  • A majority of organizations still do a poor job of measuring the impact of their leadership development efforts. Improvements will never come unless you know what a worthwhile investment is and is not!
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