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Technology Leaders

Global Leadership Forecast 2018

Why Technology Leaders Are Failing:

The High Cost of Low-Chance Development

Stephanie Neal

Technology companies are known for being leading-edge and driving innovative ways to meet customer demands. This venture can overtake—and overshadow—their focus on growing internal customers. As a result, technology organizations face unique leadership challenges, including lower engagement and retention, fueled by an accelerating competition for talent. Among the more than 2,400 organizations participating in Global Leadership Forecast 2018, tech companies reported the lowest success rates for their leaders (61 percent). This means that about two of every five technology leadership assignments are considered failures, a rate that is 20 percent higher than that of other industries. What’s causing such a high failure rate? According to data gathered from 1,086 technology leaders and 107 HR professionals, tech companies are falling behind in four key development practices that not only drive higher success rates, but also affect other leader outcomes, including higher engagement and retention.

Why Technology Leaders Are Failing

Four Practices that Leave Technology Behind

  1. Unclear Career Management
    Only 64 percent of leaders in technology said they understand their career path within their organization—14 percent fewer than those in other industries. This is a critical area for improvement, given that establishing clear career paths not only boosts leaders’ success rates, but also consistently drives their engagement and retention. In technology organizations the potential upside is great, as tech leaders show 17 percent lower engagement and are twice as likely to turn over as leaders in other industries.
  2. No Plan for Development
    In addition to lacking a clear career path, only one-third of tech leaders surveyed have an up-to-date development plan—32 percent fewer than other industries. Having a current plan in place guides leaders to track and measure their development progress. It also makes them accountable for their own development. Without this guidance and accountability, development is left to chance.
  3. Development Is Too DIY
    In tech organizations, leadership development is more DIY and out of alignment with what leaders want in other industries. The three types of learning sought most by technology leaders—external coaching (74 percent), formal development (60 percent), and short-term developmental assignments (50 percent)—are provided least often by their companies in comparison to those in other industries. Instead, tech companies reported a higher reliance on internal coaching and self-study, which only 34 percent of leaders said they wanted.
  4. Development Is Out of Discussion
    Thirty-two percent more tech leaders reported that they never meet with their manager to have performance discussions. For those who did meet, the discussions focused more on current performance than development. In fact, tech leaders spent the least time talking about personal development in their performance discussions overall—on average, 23 percent less than leaders in other industries.

According to technology HR professionals, they also are more likely to have eliminated performance ratings. Nearly twice as many technology companies than other industries (31 versus 17 percent) reported that they’ve stopped using performance management ratings. This might be leading them to abandon valuable development discussions altogether, to the detriment of overall quality. Tech leaders rated their performance management programs significantly lower than other industries, with only 27 percent of leaders identifying their performance management program as high quality. That figure contrasts to 36 percent of leaders in other industries.

Lower Investment, Higher Risk

In addition to lagging in these four practices, technology organizations are investing far less time and money on leadership development. On average, the companies spend 15 percent less on first-level leadership development than organizations in other industries. Spending is more equal for senior-level and high-potential leadership development, though it still runs 6 percent behind other industries. Even more critical than the gap in dollars spent is the shortage of hours invested in developing leaders. On average, technology leaders spend only 25 hours in structured development each year, 10 percent less than leaders in other industries.

Where to Start
  • Step up your focus on development. Communicate more frequently about it and seek feedback on your efforts. Once leaders start thinking and talking about it, the frequency of development discussions will increase.
  • Diagnose individual and group development needs. Assess leaders to identify their development needs, then center plans on improving in those areas. Leverage aggregate data to determine the greatest group gaps that can inform future leader selection and promotion.
  • Redefine the business of development plans. Given that development targets are business goals, hold leaders accountable for meeting them. Require leaders to complete and act on their development.
How to Excel + Differentiate
  • Invest in more blended learning. Establish an online library that supports what leaders are learning via more traditional, structured coaching and development initiatives. Providing a mix of methods enables a broader basis of development. Leverage, but don’t limit leaders to, on-demand external learning content.
  • Drive retention with clearer paths to advancement. Ensure that leaders have a clear understanding of how they’ll grow to increase their development focus and retention. Leaders who aren’t sure about their advancement path will be more likely to seek career growth elsewhere.
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