Leadership Development: Current Trends

November 15, 2007

Leadership Shortages

Of organizations recently surveyed, 53% face leadership shortages, most of which are at the mid-management and director level.
-(High-Impact Leadership Development: Best Practices, Industry Solutions, and Vendor Profiles, Bersin & Associates, 2007)

With this crisis in full swing, the survey reported the biggest business drivers for leadership development programs are to:

  • increase the pool of internal leadership candidates

  • reduce gaps in leadership skills

  • grow leaders more quickly

Additional research from the Hay Group reports talent and leadership shortages for many businesses around the world. Consequently, focusing on identifying and managing the talents of high potential candidates will rise to the top of corporate agendas.
-(Hay Group, “Best Practices for Leaders,” 2006)

Leadership Development Creates Significant Business Benefits

Enlightened companies, already working to address leadership shortages, have formalized leadership development programs in place. According to recent research, those with the most mature programs are realizing significant business benefits including:

  • 600% increase in overall business impact from leadership development

  • 640% improvement in leadership bench strength

  • 480% improvement in leader engagement and retention

  • 570% improvement in overall employee retention

-(High-Impact Leadership Development: Best Practices, Industry Solutions, and Vendor Profiles, Bersin & Associates, 2007)

Additional research links leadership development to shareholder return. The research found that top companies who identify and foster leadership talent perform better on the stock market. Their average 5 year total shareholder return beat the S&P 500 over the same period by 3.53%.
-(Hay Group, “Best Practices for Leaders,” 2006)

Competencies for Leadership Development

What is required for top leaders? A recent survey of 101 organizations reports the top 10 competencies chosen for leaders are:

  • 1. Leading Employees

  • 2. Building and Mending Relationships

  • 3. Risk-taking, Innovation

  • 4. Change Management

  • 5. Influencing, Leadership, Power

  • 6. Communicating Information, Ideas

  • 7. Brings Out the Best in People

  • 8. Taking Action, Making Decisions, Following Through

  • 9. Listening

  • 10. Flexibility

The competencies least chosen were:

  • 1. Sales

  • 2. Marketing

  • 3. Coping

  • 4. Innovator

  • 5. Decision Maker

  • 6. Business Knowledge

  • 7. International Business

  • 8. Perspective Taking

  • 9. Negotiator

  • 10. Cultural Adaptability

-(William Gentry and Jean Brittain Leslie, “Competencies for Leadership Development: What’s Hot and What’s Not When Assessing Leadership-Implications for Organizational Development,” Center for Creative Leadership, 2007)

A 2002 review of literature in the field of leadership development, found 53 competencies associated with “global leadership” (M. Mendenhall and J. Osland, 2002). They found that each of the 53 competencies could be categorized into one of six core dimensions:

  • 1. Relationship (competencies related to developing and maintaining interpersonal relationships in global/cross-cultural contexts)

  • 2. Traits (core personality or habitual behavioral tendencies)

  • 3. Business Expertise (expertise in global business knowledge)

  • 4. Organizing Expertise (skills relating to organizing and structuring human and administrative processes in global contexts)

  • 5. Cognitive (core internal information processing tendencies and world-view)

  • 6. Vision (the ability to discern where an organization should go and the capability to rally subordinates to strive to achieve the vision)

Relationship building clearly is one of the most critical competencies for leaders, as it appears in the #1 and #2 slots in the lists above.

Critical Success Factors for Leadership Development

Research shows that leadership practices at global top companies are an inherent part of the culture, and that developing future leaders is simply a way of operating that must be intertwined with running the business (Global Top Companies for Leaders, Hewitt Associates, 2007).

Hewitt identified five key areas that set the Global Top Companies apart from other companies around the world - 3 of those focus on leadership development:

A Strategic Business Commitment to Developing Leaders:

  • 85% ensure that the selection and development of leaders is aligned with their business strategies, compared with only 32% of all other companies.

  • 85% of Global Top Companies say leadership development is a high priority to senior management in the organization, compared with just 45% of other companies.

A Senior-Level Commitment to Developing Leaders:

  • 85% of senior management at Global Top Companies say they spend at least 20% of their time on leadership development initiatives, compared with only 52% of all other companies.

A Clear Expectation of Desired Leadership Behaviors:

  • 85% believe that the desired leadership behaviors are well understood at all levels of the organization, compared with just 37% of other companies.

Best Practices for Leadership Development

Best practices for corporate leadership development, as determined by a recent study from the Hay Group, include:

  • Having leaders at all levels who focus on creating a work climate that motivates employees to perform at their best.

  • Ensuring that the company and its senior management make leadership development a top priority.

  • Provide training and coaching to help intact leadership teams, as well as the individual leaders, work together and more effectively.

Also identified were best practices that need to start with mid-level managers:

  • Rotational job assignments for high potential.

  • External leadership development programs for mid-level managers.

  • Web-based self-study leadership modules for mid-level managers.

  • Executive MBA programs for mid-level managers.

-(Hay Group, “Best Practices for Leaders,” 2006)

Least Effective Practices for Leadership Development

The Hay Group’s research also discovered what doesn’t work for developing leaders. Below is their list:

  • Job Shadowing for senior managers

  • Outdoor activity-based programs

  • Paper-based self-study leadership modules

  • Executive MBAs and web-based self-study modules when implemented too late in an executive's career.

-(Hay Group, “Best Practices for Leaders,” 2006)

From this comprehensive review of literature on leadership development, it becomes clear that companies must make a commitment to the development of their leaders - their survival may depend upon it.

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