Trends in leader development and succession.

This article summarizes key findings from a global benchmarking study of more than 4,500 leaders from over 900 organizations. Those key findings include a review of the qualities (e.g., results orientation, interpersonal skills, and personal qualities) that affect leader success and failure. The article also evaluates the most frequently used leader development practices in terms of their impact on the individual as well as on organizational performance. The final section examines the use of succession management systems, their most important qualities, and their impact on the organization. Recommendations for change and implications of the study are discussed.

The Leadership Challenge

In a complex and changing world, highly skilled and experienced leaders at all levels--not just senior leaders--are becoming harder to find. Leaders at all levels are asked to play multiple roles, including strategist, coach, global thinker, change driver, and entrepreneur. Because decision making often occurs at lower levels, line managers "now need to be as informed as senior managers about strategic business issues, as well as cultural, human-resource, and marketing issues. And there is a growing requirement for managers to have a global mind-set and manage across regions" (Verespej, 2001, p. 35-36). No wonder when organization try to fill a vacant leadership position many candidates seems to come up short in some critical skill area. Furthermore, the rush to fill open positions means that many leaders are unprepared when they start their new jobs.

Sourcing leaders has always been a challenge, and the situation is only getting more difficult. The ability to find leaders capable of handling complex leadership roles will be heightened by the gradual drain of seasoned and experienced leaders. An aging workforce and the retirement of a large portion of the leadership population will create vacancies at high-level positions critical for the success of the organization. Thus, organizations will be faced with the task of finding qualified leaders for multiple levels. Although the increased strain on recruiting and staffing leaders is a concern, the real danger to the growth and stability of organizations worldwide is the loss of experienced leaders who have a significant body of knowledge about their organizations and their industries. A leader with 20 years of experience in an organization is uniquely familiar with the history, goals, and culture. The US General Accounting Office predicts that by 2015, the number of workers older than 55 will balloon by 73 percent (Rappaport, et al., 2003). Similar trends exist in most nations in Europe, Asia, and other parts of the world. For example, Access Economics (www.accesseconomics.com.au), Australia's leading economic consultancy, forecasts that Australia's working-age population will grow by just 125,000 for the decade of the 2020s, compared with about 170,000 people a year currently. Access Economics also predicts that the number of Australians aged 55 to 64 is expected to increase by more than 50 percent over the next two decades. The aging of the workforce and the comparative lack of younger replacement workers will put a strain on organizations' ability to staff leadership positions.

Benchmarking Leadership and Leader Development Practices

When faced with the challenge of finding qualified leaders, organizations have a number of options such as improving their process for identifying leaders, strengthening leader development programs, ramping up succession management systems. The process for making these changes is not always clear, and organizations often look to industry best practices for help. In particular, a recent study of 944 organizations in 42 countries by Development Dimensions International (Bernthal & Wellins, 2005) provides valuable insight into leadership-related HR practices.

The 2005-2006 Leadership Forecast study gathered data from HR professionals and over 4,500 leaders to evaluate leader strengths and capabilities and leader development practices. DDI leveraged its client base and nine co-sponsors from around the world (e.g., Human Resource Executive, Warwick Business School, Personalmagazin, and the Management Association of the Philippines) to gather responses from a broad range of leaders and HR professionals. Leaders participating in the study were in primarily mid-level (38%) or higher-level (34%) leadership positions. All functional areas were represented, but the areas most heavily represented were operations (13%) and accounting/finance (10%). Nearly half (43%) of the leaders were in the 36 to 45-year age range.

Organizations participating in the study were primarily multinationals (58%), and 34 percent had more than 5,000 employees. Health care (10%) and industrial manufacturing (7%) were the most heavily represented industries. The United States and Canada provided the most respondents (37%). Other regions, including Asia (23%), Europe (19%), Australia and New Zealand (12%), and Latin America (5%), provided significant portions of the sample.

The 2005-2006 Leadership Forecast study makes comparisons to three previous iterations (1999, 2001, 2003) of the study to monitor changes in practices over time. This article highlights some of the 31 key findings and identifies the best practices employed by the most successful organizations.

Drivers of Leader Success and Failure

With regard to excellence, it is not enough to know, but we must try to have and use it.

--Aristotle (384-322 B.C.E.), Nichomachean Ethics

History is filled with examples of great leaders who have changed world events, reshaped organizations, and mobilized legions of followers. Interestingly, the great leaders who immediately come to mind are not always positive models for leadership. The challenge is for organizations to find leaders who can get superior results without making sacrifices in terms of how those results are achieved.

I believe that for many leaders, it's easier to focus on the numbers. Many leaders lack the soft skills, and organizations reward employees based on numbers. It's much more difficult to measure the results of team building efforts, which may take months or even years. It is a long-term investment without a fast result.

--Roxanne Christenson, HR Leader, Owens Coming

Finding 1: Leaders Think "Ability to Bring in the Numbers" Is the Most Respected Leadership Behavior.

We asked leaders to select the one action that garnered the most respect for leaders in their organization. The winner was "ability to bring in the numbers" (see Exhibit 1). Clearly, leaders earn the most recognition for achieving their financial and organizational goals, and this is their top priority. Ranked second and third were "ability to take a stand and make tough decisions" and "ability to create a strategy or vision for success." The "people side" of leadership, including the use of interpersonal skills and the ability to mobilize a team, ranked lower in importance.

When asked to rate the same list, HR professionals gave their highest ranking to "ability to mobilize or motivate a team." They selected "ability to bring in the numbers" and "ability to take a stand and make tough decisions" as their second and third choices. This finding may reflect HR professionals' understanding of how leaders add value to the organization or, more likely, a built-in bias toward the importance of people skills. From the HR perspective, leaders should focus on engaging their employees--with a belief that performance will follow. In other words, HR appears to put a greater emphasis on how leaders leverage their organization's human capital to bring in the numbers. Leaders, on the other hand, know this is important, but they also recognize that, in the final analysis, it is the "whats" (i.e., meeting the numbers) that get the most respect.

Obviously, all of the actions rated have some value and it is a bit of a false distinction to say that one action is more important than another. All of the actions are interrelated, and leaders would likely not be able to get results if they did not mobilize their teams or create a strategy or vision for success. By forcing leaders to indicate what one action gets the most respect, we see that leaders may run the risk of letting other actions fall by the wayside in their quest for results.

Finding 2: About One-Third of Internally Sourced Leaders Fail, Usually Because of Poor People Skills or Interpersonal Skills.

What organizations respect in leaders does not appear to be the same as what causes their failure. HR professionals report that 65 percent of leaders selected internally stay in their positions and are successful. Of the 35 percent who are not successful, most fail because they have poor people skills or exhibit inappropriate personal qualities (see Exhibit 2). Daniel Goleman's seminal work in the area of emotional intelligence (1995) confirms that human competencies such as self-awareness, empathy, and social skills play a major role in determining leader success. In the current study, we find that bringing in the numbers and making tough decisions get respect, but the people and personal issues cause leaders to fail. These findings are consistent across geographic regions, with the same three to four reasons for failure appearing at the top of every list.