There are seven specific leadership best practices which are common to organisations which are among the top 20 per cent of financially performing companies worldwide, according to a recent research report.
It found that these top 20 per cent of organisations are three times more likely to have volatile, uncertain, complex and ambiguous (VUCA) capable leaders.
It also identified the top four skills that have the greatest impact on leader preparedness and confidence in addressing VUCA challenges: introducing and managing change; building consensus and commitment; inspiring others toward a challenging future vision and leading across generations.
The research report, which was conducted by DDI and The Conference Board, took in more than 13,100 global leaders and 1520 HR executives within 2031 organisations, operating across 48 countries and 32 major industries.
In the research, participating organisations that are publicly traded on global financial markets were divided into groups that included those in the top 20 per cent of financial performers and those in the bottom 20 per cent, based on a composite index of financial performance and external metrics on profitability, earnings per share, five-year rate of return to investors and stockholder equity.
“In highly competitive fields and in the midst of ongoing economic uncertainties, organisations need to leverage innovative and creative ways to develop their leaders’ required skills,” said Rich Wellins, DDI senior vice president and co-author of the report, Global Leadership Forecast (GLF) 2014 | 2015, Ready-Now Leaders: Meeting Tomorrow’s Business Challenges.
The following seven leadership best practices identify what organisations in the top 20 percent of financially performing companies are doing differently from the bottom performers and how much more likely they are to be successful compared to organisations that are not using the identified best practice.
1. They are three times more likely to have VUCA-capable leaders. The report identified the top four skills that have the greatest impact on leader preparedness and confidence in addressing VUCA challenges: introducing and managing change; building consensus and commitment; inspiring others toward a challenging future vision and leading across generations.
More than 33 percent of HR professionals surveyed view their organisation’s leaders as not capable of meeting each of these challenges. Only 18 percent identified their leaders as “very capable.”
2. They are more than three-and-a-half times more likely to have effective high-potential programs in place. Having a quality, highly supported program can mean the difference between retaining or losing a high-potential leader – participants are 50 per cent less likely to leave than those in weakly supported programs. Targeting the right-size pool is equally critical.
Organisations with a larger pool of high potentials (35+ per cent) risk lower levels of engagement and retention (33 per cent) than those with a smaller pool (15-30 per cent) since resources are spread too thin. Organisations with too few high-potential leaders (5-10 per cent) have an even greater risk.
3. They are two times more likely to place value on interacting over managing skills. The research also indicates organisations that value interacting are two times more likely to have highly engaged leaders, 3.5 times more likely to have strong current leaders and have 20 per cent more of their leaders ready to fill critical roles.
Leaders in companies prioritising interaction skills are more effective at coaching and developing others; communicating and interacting; developing strong networks and partnerships; fostering employee creativity and innovation; and identifying and developing future talent.
Conversely, organisations that focus heavily on managerial responsibilities report less job satisfaction, higher turnover and lower engagement among leaders.
4. They are three times more likely to incorporate an integrated learning journey versus a course-list approach when developing their leaders. The research revealed learning experiences are often considered in isolation only instead of as learning journeys that incorporate planned sequences, integrating on-the-job and formal learning opportunities.
By viewing on-the-job learning more like formal learning and vice versa, organisations can benefit from the strengths of both forms and generate strong development outcomes for leaders and greater business value.
5. They are six times more likely to use analytics to predict future leadership talent needs. The research focused on several forms of leadership analytics that ranged from basic to advanced to better understand the gap between HR analytics practices and recognised value to the business. The study found that 47 per cent of organisations do not do any kind of leadership analytics well. Worse yet, only one in 20 did all forms well.
An even larger issue: What organisations are doing rarely produces value for the business. Thirty per cent of organisations are using low-value analytics such as gathering efficiency and reactions metrics about leadership programs while only 21 per cent are effectively using analytics that reap greater financial gains such as gathering business impact metrics about leadership programs and targeting the gap between current leader readiness and long-term business objectives.
6. They are four times more likely to have built a strong pipeline of ready-now leaders to fill available critical roles. Across the entire sample, on average, only 46 per cent of available positions could be filled immediately by internal candidates. Organisations that don’t link leader performance expectations to organisational strategy have the greatest decrease in the percentage of ready-now leaders (11 per cent). The greatest increases occur when organisations incorporate high-quality, effective development plans (nine per cent).
7. They are twelve times more likely to have gender balance in their leadership ranks, with women in at least 30 per cent of leadership roles. Those in the bottom 20 per cent counted only 19 per cent of their leaders as women. This trend held for female high-potential leaders as well. For organisations in the top 20 per cent, 28 per cent of leaders were high-potential women. There are a number of strategies that HR leaders can employ to help create this gender balance.
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