Cover Story : Leadership's Looming Crisis; World Enterprise Is Facing a Leadership Shortage of Crisis Proportions. the Problem, Increasingly Obvious over the Past Decade, Is Worsening More Rapidly Than Expected. It Is Acute in New Zealand and Looks Set to Become Even More So. Writer-at-Large Reg Birchfield Reports on the Implications of Alarming New Research Released to NZ Management for This Special Leadership Issue
Byline: Reg Birchfield
Business and organisation leaders are overwhelmed by the complexity and scale of the problems confronting their organisations. They are facing a perfect management storm which, like the changes playing merry hell with the globe's climate, is the outcome of a suite of simultaneous actions, inaction, policies, practices and life-changing technologies.
The increasing complexity of organisational life and leadership is the wave that threatens to become a tsunami of economic misadventure. Less certain is an exact understanding of the sequence and relative importance of the changes happening at the epicentre of global enterprise.
Pennsylvania-based talent management consultant Development Dimensions International (DDI) has just released its 2011 Global Leadership Forecast. The findings are, it says, so disturbing that it will take a "leadership revolution" to halt the slide in both the individual competency and the number of leaders equipped to cope with the pace and implications of change.
Christien Winter, director of Sheffield, an Auckland-based executive recruiter and DDI's New Zealand licensee, agrees that "leaders are overwhelmed" by complexity. "But whether it is their own lack of skill and capacity or the pace of change and the lack of people with the skills and experience to support them, is the more interesting question," she says.
The DDI forecast is the largest biennial study of its kind in the world. This year's is the sixth undertaken since 1999. It is based on interviews with 12,423 leaders and 2000 human resource professionals in 74 countries. Its findings mirror a similarly extensive global study of 1500 chief executives undertaken last year by IBM Global Business Services.
The studies show that leaders now make decisions in an increasingly unpredictable business environment. About 60 percent of the CEOs surveyed by IBM said their businesses were "more volatile, uncertain and complex" than they had ever been. They expected them to become even more so.
The complexities facing leaders include the pace of change, increasingly competitive markets, political and financial instability, increasingly scarce talent resources, the Global Financial Crisis (GFC) which strafed the ranks of middle managers, poor governance, short-sighted or non-existent leadership development strategies, demographic changes, outdated organisation structures and changing management cultures.
Does leadership quality matter? Yes, apparently. A growing volume of research suggests the quality of leadership can make or break an organisation's sustainability.
The DDI study found that top performing leaders have 50 percent more positive impact on their organisations than do average leaders. Organisations with the highest quality leaders were 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. Only six percent of those in organisations with "poor" quality leaders outperformed their competition.
Passion versus pay
On the other hand, 78 percent of those who rated their organisation's leadership "excellent" were in organisations that outperformed their competition in bottom-line metrics. According to the study, quality leaders also retain good employees and keep them engaged. And "passionate" leaders, rather than those who simply take promotion for the "greater compensation", are even more effective.
Leaders are not keeping up with the speed of business in today's increasingly competitive world. According to the DDI Forecast, only 38 percent of the leaders in their study rated their organisation's leadership either very good or excellent. The HR respondents were even more critical. Only one in four rated their organisation's leadership highly.
These outcomes echo those found in DDI's 2009 Forecast which suggests that, "despite the billions of dollars spent on an array of talent management initiatives over the past two years, organisations have made little progress". …