LEADERSHIP Looming Leadership Crisis – Planning for trouble

If top executives don’t have enough to keep them awake at night, recently published report by Pennsylvania-based leadership assessment and development specialists DDI (Development Dimensions International) could add to their pile of worrying reading.
For the past six years DDI has been scanning the globe in its work to capture and define current leadership practices. What, it wanted to know, are the competencies that define effective leadership? How are leaders’ roles evolving? Which practices characterise strong approaches to leadership development?
DDI has recently released the latest of its biannual global reports “Leadership forecast 2005-2006: Best practices for tomorrow’s global leaders” which pulls together the combined insights of just over 4500 leaders and 944 human resources representatives from 42 countries.
Even more interesting, for the first time ever DDI has drilled down further into practices in Australia and New Zealand. That report – “Leadership forecast 2005-2006: Best practices for tomorrow’s global leaders. Australia/New Zealand global comparison” – summarises the responses of 627 leaders and 116 HR representatives from our two countries.
Sheffield managing partner Christien Winter, whose company holds the licence for DDI in New Zealand, says the regional report provides snapshot of the current status of leadership within the Australasian business community as well as comparisons of our leaders’ potential, problems and promise with their peers worldwide.
While this report lumps New Zealand and Australian responses in together, Winter points out that, in Sheffield’s experience of working with trans-Tasman organisations, the thinking in both countries is “reasonably parallel”. Some organisations and some HR practice in New Zealand are clearly more advanced in their thinking. But, by and large, there is lot of common ground across Australasia.
“The forecast reflects DDI’s belief that all leaders eventually will work within world economy,” she writes in the introduction to the local report, “one in which lines between countries and cultures are blurred. The challenges leaders face now, and will increasingly face in the future, are captured in the urgent questions the forecast addresses: does the organisation have the right leaders? Do those leaders have the necessary skills?”
Winter says the regional study points to consistent trend. “We’re not doing enough to create the leadership pool that we need for the future. We’ve got significant leadership crisis looming. Baby boomers are retiring and people are looking for changed lifestyles and more work/life balance. People are no longer as wedded to their corporate careers as they used to be because of all the downsizing and restructuring that has gone on. Put all of that together with shortage of capability coming through and we’ve got huge leadership crisis.”
The study serves as wake-up call to New Zealand organisations to take long hard look at their leadership and succession issues.
Winter says that while some organisations are catching on to the seriousness of the situation and are doing some “very advanced work” around succession and leadership development issues, many still do not appear to recognise the severity of the problem.
She says the DDI report adds to growing and formidable block of evidence that organisations need to address these key issues.
Turning to specific findings, Winter notes that turnover rates in all levels of management are lot higher in Australasia than in other parts of the world. “I did wonder if that’s to do with New Zealanders and Australians looking internationally for their career development.”
Every year, close to one 10th of our top-tier leaders switch jobs. This compares with just under eight percent of global leaders (see “Leader turnover”).
“Despite relatively buoyant period for Australia and New Zealand,” says the report, “these results indicate that other factors, such as governance reforms and increased scrutiny, are indeed placing significant pressure on leaders.”
Winter also points to inconsistencies in Australasians’ reported attitudes towards work/life balance. “The study talks about people increasingly looking for opportunities to balance their work and non-work activities but on the other hand quite high proportion of people indicated they were prepared to sacrifice work/life balance to achieve their ambition,” says Winter. “To me, there are some very disconnected messages there.”
Only quarter of our leaders reckon they have control over their work/life balance. But worrying 57 percent are willing to give up even more personal time if that will help them reach higher levels of leadership.
Even so, this is notably lower than the global average where – perhaps pulled up by the traditionally strong work ethic of Asian respondents – 68 percent of people stated willingness to exchange more personal time for advancement at work.
The finding raises interesting questions for New Zealand as increasing numbers of Asian migrants join the Kiwi workforce.
The report also reveals that the average leader in Australia or New Zealand puts in 51-hour workweek: pretty much matching up to the 50-hour global average. And while most say they can manage the combined pressure of work and other commitments, 32 percent of local respondents say they are finding it much tougher now to strike happy balance.
Still, our leaders appear to be happy bunch. striking 95 percent of these Australasian high-flyers say they are satisfied with their jobs and proud of being leaders.
“Evidently, work/life balance – at least at the leadership level – seems of little concern to most organisations,” the report concludes. “In our experience it is far more usual to see culture that rewards imbalance instead of balance.”
When it comes to the critical area of how organisations develop their leaders, HR professionals and the leaders themselves appear to see the world through different lenses.
Winter says the report points to “large discrepancy” between leaders’ perceptions of the quality of courses provided and the views of their HR managers.
“Leaders are clearly signalling that they are not getting the kind of leadership development that they need,” she says.
“If you look at the things they value that develop their capability, it’s actually the special projects and the assignments that stretch them on their job that give leaders the best learning. That’s because they’re learning in situ rather than learning the theory and then trying to apply it.”
HR professionals, in contrast, view formal workshops, training and seminars as the most effective tools and use them most extensively.
“There is,” says Winter, “a lot of international research that shows mix of coaching, formal leadership-based workshops, and assignments to stretch job skills and organisational knowledge are really important.”
She lists the four critical areas for developing leaders: organisational knowledge; job-based skills; personal attributes such as enhancing critical thinking skills; and leadership competencies (the ‘softer stuff’ that enables leaders to coach, develop and lead others). “Unless you develop people in all four areas you’re not developing the complete package. I think, partly, that’s what these leaders are saying in this study,” says Winter. “Other stuff is needed: it’s not just about workshops. Leaders need assignments that will stretch them cross-functionally.”
Expatriate assignments, in particular, are highly prized by senior managers. So too is coaching. Just over half of our local leaders named external coaching as “very effective” tool in their development compared with only 40 percent of global managers. (See “Effectiveness of leadership development programmes.”)
“Down in this part of the world,” says Winter, “coaching is recognised as being very effective. Managers actively benefit from having external coaches who they can brainstorm with in quite safe environ