Strong leaders grow revenues twice as fast

Good leaders grow revenue

Organisations with the strongest leaders have nearly double the revenue growth compared to those with weaker leaders, according to CEB.

However, most leaders lack the full complement of skills to thrive in today’s rapidly changing work environment, and CEB said organisations must adjust their approach to leadership and develop leaders who are able to build and enable powerful networks within the organisation, creating conditions for employees to work through and with others to increase productivity.

Shifts in workplace dynamics – from an overwhelming amount of information and accelerating globalisation to increased requirements for cross-company collaboration – mean that traditional approaches to leadership and the skills leaders possess are no longer enough to achieve desired business outcomes.

Leaders must take on a new role known as “network leadership,” in addition to the more traditional transactional and transformational roles, according to CEB. Network leadership is about helping employees collaborate across business silos in order to maximise productivity and strengthen the performance of the overall organisation.

“Network leadership is going to be critical for organisations to remain competitive in the new work environment,” said Conrad Schmidt, global research officer, CEB.

“In order for organisations to achieve higher growth, truly differentiate themselves from competitors and maintain an edge, they must set a higher bar for their leaders, requiring them to go beyond setting strategic direction and driving execution.”

Unfortunately, most leaders and organisations are not prepared to embrace such change. In fact, only 37 percent of executives believe their leadership bench has the skills required to achieve critical results today, according to CEB’s executive guidance for 2014.

To build capable network leaders, organisations need to encourage leaders to be more than just individual motivators and require them to take on a more collaborative and network-building role.

3 steps to developing network leaders
Organisations seeking to develop network leaders who consistently deliver strong profit and revenue growth should:

  1. Help leaders manage differently. Encourage leaders to guide employees on how to work more effectively in their networks instead of directing what employees do in their work.
  2. Build network leadership skills. Approach leadership development differently, by focusing on developing leaders’ agility, providing them with exposure to diverse work experiences and highlighting the benefits of – and tools for – building networks.
  3. Create succession plans for network leadership. Move away from predictable, linear succession plans and adopt a portfolio approach to managing the leadership bench including attention to the demand for network leaders as corporate assets.