‘Lack of leadership talent holding back large businesses’

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Leadership instability is blighting many top businesses, with a large minority of HR chiefs reporting difficulties in developing effective senior leaders.

The rapidly changing environment for businesses and sluggish performance when it comes to implementing cultural change are among the reasons for organisations’ issues in the leadership area.

These are among findings published today (16 January) by research and advisory giant Gartner. It found that businesses were struggling to develop leadership talent with only half of leaders feeling suitably equipped to lead their organisation to meet short-term future challenges. The study also pointed to a continuing lack of diversity among leaders, which was holding organisations back.

A third of HR heads said developing effective leaders was problematic and a huge proportion (81%) cited lack of readiness as the main reason why high-potential candidates were unable to fill leadership roles.

Only 15% of executives rated their HR team as effective in developing future leaders.

The research was drawn from a number of analyses conducted by Gartner over the past few months, with insight from Sari Wilde, managing vice president in the Gartner HR practice, who said: “Chief human resources officers are facing a number of emerging challenges, including unparalleled transparency and public pressure, increasing automation and digitalisation changing the skills and competencies that are required for success, and new generations entering or leaving the workforce. In order to succeed, organisations must have a quality bench of leaders to continue driving business outcomes while leading the organisation into the future.”

A lack of visible diversity remained a major issue for many organisation’s leadership teams with women holding only 27% of senior management roles and ethnically diverse employees accounting for only 13%. A large majority of leaders (88%) identified promotions/succession as one of the talent processes most susceptible to bias. The findings showed that businesses were increasingly convinced of the need for a more diverse leadership team to improve culture and performance and that a “homogeneous succession pipeline poses significant risks to the bottom line”.

In order to succeed, organisations must have a quality bench of leaders to continue driving business outcomes while leading the organisation into the future” – Sari Wilde, Gartner HR practice

Researchers also found that most employees (71%) feel that their bosses should increase transparency. The findings suggest on the back of this that “organisations that have responded and created a culture that allows for open conversations, awareness and psychological safety see manifold benefits – more customer brand loyalty, more profits and a superior employee experience.”

In terms of addressing leadership succession risks, Gartner proposed that businesses should deploy “complementary leadership” to avoid the risk of vacancies causing leadership paralysis. This entailed partnerships between leaders to share responsibilities based on complementary skillsets. Analysis had revealed that businesses who used such an approach saw a 60% increase in team performance and a 40% increase in leaders’ own performance.

Gartner recognised that ensuring successors’ preparedness was more difficult today than ever before because of increasingly shorter tenures at organisations, the rise of the gig economy, generational shifts in the workforce, and leadership roles that are constantly changing. Businesses needed to avoid basing succession plans on existing business needs and should be focusing more on anticipating the “leadership demands of evolving priorities”.

The importance of this was underlined by the finding that “planning for future leadership roles has almost double the impact on leadership bench strength as planning for existing leadership roles, however, only 15% of executives rate their HR team as effective in doing so.”

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One Response to ‘Lack of leadership talent holding back large businesses’

  1. Avatar
    Franklin White 9 Apr 2020 at 8:47 pm #

    I like how you pointed out that a lot of businesses struggle to develop leadership talent because half of their leaders feel suitable for the job. I think a lot of people underestimate how important it is to have leaders that feel suitable to the job. I believe that they won’t be able to develop their talent if they don’t think they have it or if no one helps them recognize that they do have it.

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