October 10, 2011 6 Comments
If global competition and business processes are changing so quickly, why aren’t our leadership practices changing at the same rate to keep up with business needs?
A recent study carried out by Development Dimensions International (DDI), a US based Talent Management organisation, showed that whilst business needs and the business environment have all changed dramatically, business leadership practices have hardly changed in the last decades to keep pace.
The DDI study showed that:
“The leadership practices in most organizations received a resounding thumbs-down, with only a quarter of the HR professionals questioned for the report rating the quality of leadership in their organization as very good or excellent, and just a third of leaders giving themselves and their peers high marks.”
A worrying finding of the study is that despite the emphasis that is being given to all aspects of leadership today, and despite the fact that corporate leaders are under global and public powerful scrutiny at all times, the results of the survey show that the quality of business leadership has not improved, and may have actually been declining for a long time in relative values against new and confusing market environments.
Of even greater concern is that there was little confidence that companies are building the next generation of high quality leaders. Only 18% of those surveyed felt that “… the leadership pipeline will produce the individuals needed for the future … “ (only 14% in the US), yet less than half of the companies surveyed had a process for identifying high potential talent and even fewer had a process for growing and developing these individuals once identified, despite the fact that this was seen as one of the key skills expected in business leaders. This becomes even more critically important in an environment where the baby boomers are all in the process of moving out of their corner offices and into their retirement condos in Florida and Nice.
Supporting the DDI findings, the American Management Association found that fewer than one in ten Fortune 1000 organisations actually had made any attempt to integrate recruitment, or management development and succession planning, with strategic business objectives, and found that only 1 in 5 companies even have any succession plans in place to cover the sudden loss of a key executive, and a quarter of them had no succession plans in place at all.
Even when companies do have Hi-Potential programmes and succession plans in place, these are often just window dressing and thus disregarded, as in many cases they are done to be seen to be doing the right thing rather than representing any real plans to identify, develop and build future leaders. Most Hi-Potential programmes are based more on a manager’s propensity to identify and salute those that are acting in his image, and most succession plans are based more on what those above expect to see rather than a true reflection of who should be the right person to take a step up. When it comes to promotions, over 70% of senior executive appointments tend to come from outside the organisation anyway, and of the less than 30% that are internally filled, about 70% will be totally different to that shown in the succession plan, meaning that generally less than 10% of promotions are based on any real planning at all.
This may be the one major reason that so few companies bother to do any real succession planning in the first place.
Quite a vicious circle !
If management in an organisation is not good enough to start with, how will they know what initiatives are needed, and how they should be implemented to drive the changes that are needed to improve the situation?
This is also not helped by today’s business schools.
For example, many of the case studies used in helping to educate our future business leaders are even older than the MBA students, and whilst they may help students in the process of problem solving, and may even deliver some interesting lessons in business life, they do tend to suggest that not much has changed in the last 20+ years, for example, in the way that business is done, in the way that technology has become so pervasive, in how people are managed and motivated, in the changing expectations and definitions of work in successive generations or in the way that partnerships or co-opetitions are handled. Most importantly these case studies do not take into consideration how social media are changing the entire world, including business, and not just personal, communication. I understand that some of these topics may be covered separately but this does not seem to be enough.
One problem with most business schools is that many of their academic theories don’t actually work well in business practice, while conversely the things that good managers do to succeed in practice don’t actually work well in the business school theories.
So we keep seeing once great companies going into decline, and we excuse this as just being a result of some global economic downturn, new competitors or changing markets, rather than on inadequate management skills that have had little real chance of being able to adjust and adapt quickly enough.
Charles Darwin said “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is that is the most adaptable to change”.
To this I would add … “At some time in the life cycle of every organisation, its ability to succeed in spite of itself runs out.”