While almost one quarter of HR budgets are spent on leadership, only one third of HR leaders are confident that these investments in leadership are paying off, according to a CEB research report.
It also found there has been a 20 per cent jump in the number of HR leaders who would replace members of their senior leadership team (if they had the option) since 2003, while almost one third of HR leaders lack confidence in the ability of senior leaders’ to address leadership challenges and drive business outcomes.
The research report, Creating Enterprise Leaders, interviewed and surveyed more than 4000 employees and leaders, and nearly 200 heads of HR across the globe – 23 per cent of which were from Australia and New Zealand.
HR leaders also reported that executives increasingly struggle to work effectively across organisational silos.
While most leaders are achieving their individual performance objectives, significant revenue growth opportunities across companies are being missed by leaders failing to work together effectively.
“These leaders have tunnel-vision, they may be hitting their individual business goals but few companies are seeing this translate into a positive impact on company-wide numbers, said Aaron McEwan, advisory leader for CEB.
“This signals a detachment from the realities of their role and responsibilities.”
The research found that only 10 per cent of HR heads rate their leaders as effective at creating conditions that facilitate collaboration across teams, while just 13 per cent of HR leaders rate their leaders as effective at supporting the performance of other leaders.
“Leaders are responsible for greater numbers of staff dispersed across a wider geography, and they have less time to devote to managing these direct reports,” said McEwan.
“Much of their time is spent consulting with stakeholders in order to obtain approval or make a decision, which means their only option is to get comfortable with relinquishing control and enabling others.”
To be effective in the changing business environment, CEB said leaders not only need to lead their teams to high performance but also contribute to, and leverage, the performance and outcomes of other units and teams across the enterprise.
The report suggested that this type of leadership, referred to as “enterprise leadership”, can see individual business units boost revenue growth by up to 12 per cent and create a spillover effect of five percent on revenue growth in other parts of the company.
“To be successful, this new generation of leader is embracing the realities of the new work environment by shifting from directing employees on how to do their jobs to helping connect them and other find solutions and support in other parts of the organisation,” said McEwan.
As well as creating more innovative, adaptable and engaged teams, enterprise leaders also generate 20 per cent higher customer satisfaction, through greater collaboration and understanding of the wider-organisation’s goals and business objectives.
4 key steps to driving enterprise leadership
- Shifting job requirements. With 85 per cent of leaders reporting an increase in the number of jobs they are responsible for, their scope of responsibility is growing too large. Leaders must learn to rely more on the expertise of their team
- More stakeholders to consults. 61 per cent of leaders agree that the number of individuals who must be consulted with to confirm approval of decisions is on the rise. Leaders must work effectively with peers to ensure business decisions can be agreed to efficiently
- Widening spans of control. Leaders have 50 per cent more direct reports today than they did six years ago. With less time to devote to individuals, leaders must nurture an environment where peers can openly collaborate and work together to ensure work is completed
- Geographic dispersion of teams. Over the past three years, 58 per cent of leaders have reported an increase in the number of direct reports based in different locations to their own. As a result, leaders lack visibility into teams’ day-to-day activities and must find new ways of staying in the loop
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