There is much ado about talent and innovation in the media, in reports by thought leaders and in the findings of major studies. From McKinsey, IBM and Boston Consulting Group, to Human Resource research specialists such as Aberdeen and Bersin & Associates, we continue to be advised of the direct link between talent management practices and organisational performance. Despite all the evidence, the studies consistently find that we are failing to really get on top of the talent and leadership challenge.
The 2010 Enterprise Learning & Talent Management study by Bersin & Associates identifies innovation rising to the top as a key organisational strategy. It also demonstrates that superior talent management offers significant advantages in attracting and retaining the people the organisation needs both now, and for the future.
IBM’s 2010 study of 1500 chief executives on key issues identifies creativity as the most important leadership quality. This is particularly relevant in a marketplace that CEOs find more volatile, uncertain and complex.
The latest Global Leadership Forecast by Development Dimensions International (DDI) also reports leaders identifying creativity and innovation as critical skills going forward. The study also shows the impact of high-calibre leadership on organisational performance, but a continuing dissatisfaction with initiatives to improve leadership quality. More than 12,300 leaders and around 2000 HR professionals took part in the latest survey, from 74 countries including Australia and New Zealand. The survey has been conducted biennially since 1999, and its findings help us to understand the new Talent Management agenda, and its primary importance for the boardroom.
Quality matters
High-calibre leaders create new efficiencies and ideas, motivate and drive team performance, and provide better levels of customer service. However, leaders generally rate the quality of leadership in their organisations poorly. Only 38% globally and 34% of leaders in Australasia believe their organisations have the quality of leadership required. HR are even more pessimistic, with confidence having dropped (yet again) from 35% in 2009 to just 26% rating leadership quality as high in their organisations.
Top-performing leaders outperform average leaders significantly. Leader feedback on organisational performance and leadership quality shows that when leadership quality is rated high, organisations are 13 times more likely to outperform their competition in key metrics such as financial performance, quality of products and services, employee engagement, and customer satisfaction.
There’s a problem with the solution
Development is identified by leaders as the leading determinant of leadership quality. However, we have made little headway in this area in the last decade!
Leaders in organisations with more effective leadership development programmes are eight times more likely to rate the quality of their leaders as very good or excellent. However, only about one third of leaders and HR professionals rate the quality of their leadership development efforts as high, which is unchanged from earlier surveys.
In addition, not enough is being done to ensure succession management - building a pipeline of talent that is ready to progress and lead our futures. Leadership succession and senior-level leadership development are the least effective talent systems in Australia and New Zealand, according to the feedback in the study. Only 12% of HR professionals in Australasia report effective leadership succession and only 36% report effective performance management, which is also key to ensuring development initiatives hit the mark.
So, if we are not developing leaders effectively to build the capability needed, what of our hiring approaches? Not only do 72% of organisations fail to use validated selection tools to improve rigour of hiring decisions, but we accept almost 30% failure rates in leadership hiring decisions.
We need to shift gears
The talent equation requires innovation, flexibility and a dynamic approach to building culture, developing a strong leadership pipeline and ensuring your employment brand engages and attracts top talent. To have a real impact, talent management must be a business initiative, led from the boardroom, as a key strategic priority that is measured and tracked. Senior management, and every single leader, needs to treat it like any other strategic business priority.
Activity in the talent management area must be firmly focused on the future. Times have changed and so have the needs of leaders. A key focus for future sustainability and organisational growth rests on a commitment to growing future-ready leaders who have the ability to innovate and navigate waves of change, and who have a capacity for flexibility. Organisations that create a point of difference in this sphere will be the ones that not only attract but also develop and retain the innovative leaders who will make the difference.
The results of this survey and other studies give us a clear direction on how organisations can lift the bar effectively. What we need most is for boards to make it a priority.
Download the DDI Global Leadership Forecast 2011
Download the Australasian Report
By Christien Winter, Director of Sheffield
Sheffield is the exclusive New Zealand licensee for DDI (Development Dimensions International)