Investors highlight leadership capability gaps (and what HR can do about it)

What investors really want from leadership

There is a significant gap between the leadership traits that investors are looking for and what current leaders are delivering, according to a recent research report.

It found that investors believe that less than 15 per cent of corporate leadership in Australia have the skills required to take their companies forward in a rapidly changing business landscape.

More specifically, investors are looking for leaders with the ability to accelerate their businesses – 66 per cent of Australian respondents said that to shape the future of companies, leaders will need to proactively drive change.

The ability to build partnerships is a ‘high-performing’ trait among Australian leaders, however, the ability to act with agility to move ideas forward quickly is a quality that is weakest in the current stock of leaders.

“In Australia, we found that the biggest leadership gap is a quality that we call ‘acceleration’,” said Nick Avery, senior client partner at Korn Ferry, which conducted the research report.

“To become self-disruptors, Australian leaders need to find new ways to mobilise people and enable them to rapidly commercialise new ideas.”

In the past, Avery said Australian companies have not been confident in identifying high-performing individuals that break away from the mould of the ‘traditional leader’, while leaders themselves have also been hesitant to drive change in their own organisations.

“It’s clear there is now a critical demand for leaders willing to break the mould,” he said.

The research report, which took in nearly 800 investors globally (including 50 in Australia) plus a detailed worldwide analysis of more than 150,000 leaders, found that disruptive forces in technology, globalisation, demographics and consumer behaviour are also exposing the limitations of traditional leadership styles worldwide and creating urgent demand for future-ready leaders.

Investors predict future leadership talent will come from unconventional board positions (74 per cent) and the digitally savvy Millennial generation (68 per cent) – skipping the Generation X altogether.

“Tomorrow’s leaders must recognise that a combined and collaborative approach to problem-solving and fostering diverse skillsets is going to be the best way to succeed,” Avery said.

“Trusting people to perform also helps cultivate a healthy and positive culture.”

“It’s clear there is now a critical demand for leaders willing to break the mould”

Time to shake up leadership development
The Self-Disruptive Leader study found that only 15 per cent of today’s leaders can be labelled as self-disruptors with the ability to affect major change in their businesses.

This is an attribute largely found in the DNA of millennials and start-up organisations that are unshackled by incumbent processes and procedures that can exist in larger enterprises.

A new model of future-ready leadership is required, according to the study, which said that building on existing concepts of agile, digital and inclusive leadership, self-disruptive leaders possess a strong portfolio of future-oriented skills.

These are framed as the “ADAPT” dimensions which encompass the ability to Anticipate, Drive, Accelerate, Partner and Trust.

“Leadership has traditionally been about consistency, control and closure, supported by rigid decision-making frameworks,” Avery said.

“However, successful organisations today have embraced a different paradigm for leadership, where next-generation leaders operate with a sense of purpose, are more risk-tolerant and are comfortable with far less structure.”

What can HR do?
HR processes need to be redesigned to accommodate the changing face of managing talent and identifying leaders,” Avery said.

“The importance of securing and retaining the best talent will only increase, and HR leaders need to be able to provide true insight, objectivity and value to their organisations,” he said.

“HR plays a pioneering role when it comes to shaping the culture of an organisation and driving the necessary changes to allow future leaders to flourish.”

“Many chief HR officers don’t get face-to-face time with the board, and merely prepare notes for others to present”

This comes down to finding and promoting potential leaders who have the right mindset and a self-disruptive approach to their own leadership.

He added that individuals with leadership ambitions and the right skillset should be given the chance to thrive in an encouraging and talented environment, otherwise they will quickly look at alternative organisations that fit their approach.

One of the crucial qualities uncovered by the study which HR leaders need is the ability to anticipate. “HR leaders need to have the curiosity to look outside of their own industry and learn from sectors which may be experiencing disruption – this will allow them to apply alternative methods to their own organisations, which may otherwise be overlooked,” said Avery.

As a result, he recommended that HR divisions partner with the board and CEOs of their organisations and become a trusted adviser, to create a culture that encourages disruptive mindsets.

“We have conducted previous research looking at the ‘World’s Most Admired Companies’ and a consistent thread between them is that the boards of these organisations are regularly provided with information and metrics related to human capital managers,” he said.

“The CEOs and senior management teams are then able to draw upon these findings to help shape human capital strategy in a more informed manner.”

“However, a major challenge that we see across organisations is that many chief HR officers don’t get face-to-face time with the board, and merely prepare notes for others to present.

“Naturally, this means that strategies and proposed implementations are unlikely to gain much support if the passion and vigour of the architect behind such plans are not present,” he said.

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