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Great Organizations | Great Leaders

Time for a Leadership Revolution?

The findings from DDI’s new Global Leadership Forecast are alarming—and puzzling.
Time for a Leadership Revolution?

After six iterations of examining the state of leadership worldwide via our Global Leadership Forecast, you’d think nothing would surprise us. You’d be wrong.

We’ve been conducting this research since 1999, and the latest batch of data, collected from more than 14,000 leaders and HR professionals from around the world, surprised us. It also alarmed, pleased, and puzzled us as far as what it revealed about how organizations identify, develop, and promote leaders. We saw how little has really changed about these practices and how far we still have to go.

Here, we highlight some of the findings in this year’s report, The Global Leadership Forecast 2011: Time for a Revolution

Business is Changing… Leadership is Not

If there’s one phrase that comes to mind when thinking about this year’s data, it’s “We are going nowhere. Fast.” The business priorities from just three years ago are different from the ones that are hot today. Yet, in the roughly three years that elapsed between now and the last time we did this Forecast, the approach to building a stronger leadership pipeline has changed very little. This year’s findings look a lot like the last round. And that last round wasn’t so stellar either. Take a look: •

  • Only 34% of HR respondents and 37% of leaders rated the quality of their leadership development efforts highly. The numbers in the previous Forecast (in 2007/2008) showed 41% of leaders were satisfied with leadership development offerings, down from a high of 53% in 2003.
  • 38% of leaders say leadership quality is very good or excellent, essentially the same as the 36% of leaders from the 2007/2008 data.
  • Only 18% of HR respondents and 31% of leaders say their organization’s bench strength is strong or very strong.

When we look at the data across the years, we’re not seeing the kind of changes you’d expect, given all the lip service paid to (and considerable investment in) leadership development, development plans, building bench strength, etc. If anything, we’re seeing increasing dissatisfaction with these practices. Granted, we’ve weathered a horrible economy, but this trend was in motion before the recession. It’s this backslide that prompted us to sound the alarm in the current report’s title, calling for nothing short of a Leadership Revolution.

The Data Says: The Importance of Quality Leadership is Timeless

We vehemently believe in the need for leadership development, and we saw that belief spelled out in the latest Forecast data. We compared the leaders who rated the quality of their organization’s leadership in the top third with those who had the weakest ratings for leadership, comprising the bottom third. Then, we looked at the disparity in their answers to questions about business success, retention, engagement, and passion. The difference is sizable, and as you can see, the payoff for leadership quality is sizable, too (Figure 1):

The Data Says: We Need to Innovate Around Innovation

What works today will not—REPEAT: WILL NOT!— work tomorrow. This year, we asked respondents to identify the most important skills for today and the most important skills for the future. Take a look at how the list plays out (Figure 2):

There is still a need for managing change—a need that seems to be accelerating. And execution stays on the topfive list. Even with some recovery in sight, resources are limited and getting it right is critical. When we ask what’s needed for the future, two new skills not only move up the list, but also displace two of the top three: Identifying/developing future talent, and Fostering creativity and innovation.

Why? It’s our opinion that the war for talent, which took a hiatus during the recession, is back on. Retaining and engaging talent, especially in emerging economies, is critical to address projected shortages. Organizations need the ability to develop organizational talent by identifying and coaching it to be successful.

Fostering creativity and innovation is another acute need. And it’s a tall order that, the data suggest, leaders might not live up to. Most organizations expect more focus on innovation—it has become the new mantra of competitive differentiation among economies and countries. Leaders will play a bigger role in driving a culture in which innovation thrives.

And while we found that fostering innovation, driving change, and developing talent are the most critical future skills, leaders are sorely lacking when it comes to their effectiveness in using these skills.

We also looked at another set of Forecast data where we asked what personality traits most commonly derail leaders. Fifty-eight percent of HR respondents said leaders in their organization are most hindered by being risk-averse, and 44% said the same about their leaders’ dependence on the approval of others. These were the two highest-rated derailers on a list of 11 and the ones that correlate most negatively with innovation.

In the comments that accompanied this data, one respondent told us this: “My CEO would rather us be 8-2 than 2-0 in terms of willingness to try out something new.” We couldn’t agree more.

The Data Says: Manage Your Management Culture

DDI partnered with influential business thinker, author, and professor Gary Hamel and his new Management Lab (www.managementlab.org) to identify eight key factors that either facilitate or hinder the way the work of management is carried out. To better understand how effective the management culture is in today’s organizations, leaders were asked to choose between two statements for each of the eight factors. Leaders were asked to choose which statement best described their organization. The less effective of the two statements is presented in Figure 3 below. The major pain points for organizations were opening up discussion, breaking down siloes, and moving away from bureaucracy.

Revelation Implications

So how can we get ahead of the curve? Develop leaders, evolve, and innovate? Here are just two high-level suggestions (see the report for more):

Create a culture that, in turn, creates innovation. We’ve uncovered behaviors we think are key for leaders to spark radical change including:

  • Inspire curiosity, and drive direct reports to embrace curiosity.
  • Challenge current perspectives, and drive direct reports to think differently.
  • Create an environment of freedom, and allow direct reports to experiment.

Innovate the way we manage.  We were inspired by Hamel’s book The Future of Management. In it he delves into aspects of culture that kill innovation and why management practices have to catch up with the speed of business. The revelation here is that to really move the needle on leadership quality we need to examine the very purpose and role of leadership in our organizations—a role that should prioritize principles over economy.

Jazmine Boatman is manager of DDI’s Center for Applied Behavioral Research.

Richard S. Wellins is a senior vice president at DDI.

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