Leadership: Not Getting Any Easier

Leadership continues to be a very high priority in modern organisations and promises to remain one into the foreseeable future.  The need to stay on top of the leadership challenge never stops – there is never a lull.

The American Management Association (AMA) in conjunction with The Human Resource Institute recently conducted a global study of leadership. The study explores the roles leaders now play in organisations, how the best-in-class organisations develop leaders and how leadership may well change over the next decade. It also looked into the future to see how leadership may change over the next decade or so.

Here is a quick review of the findings:

• Organisational leadership, which has always been a challenging task, has become even more stressful and difficult in recent years.
• Leadership has grown in importance due to the fast pace of change in combination with increased global competition and a growing focus on the customer.
• Today’s leaders are expected to be excellent strategists and communicators.
• Business ethics will become more – not less – important to leadership over the next ten years.
• If they don’t perform well, top leaders of major companies can expect to lose their jobs more quickly than ever before.
• Even while making sure their companies perform well, leaders are expected to develop other leaders.
• Technology and new organisational structures are changing the ways leaders do their jobs.
• Leaders must increasingly balance managerial control with the need to spark innovation in their organisations.
• The top barrier to leadership development is a lack of behaviour measures, followed by inadequate content in development programs.
• When it comes to leadership, most companies know what’s important but don’t always act on this knowledge.
• Best-in-class companies are committed and unremitting in their pursuit of leadership excellence.

Leaders have a tougher job today than they did even a few years ago. This is especially true at the top of large, publicly traded corporations. In this tougher environment, as we know companies are increasingly willing to fire top leaders who don’t perform well. Booz Allen Hamilton’s research shows that of the world’s 2,500 largest publicly traded corporations, performance-related CEO turnover rates were up by a whopping 300 percent in 2004 compared with 1995.

In order to get a better idea of what’s influencing leadership today, AMA/HRI’s Leadership Development Survey 2005 asked respondents about what they considered the most critical drivers of change that will present challenges to leaders over the next ten years. The following top 10 drivers of change need to thoughtful considered as you create or revise any of your leadership programs and processes.

1. Increased global competition: This is just one of the implications of a more integrated, global economy. The need to manage across various cultures, deal with greater employee diversity and cope with a hodgepodge of national laws and values is also having an impact on leaders.
2. Focus on the customer is in a virtual dead heat with global competition as the top-ranked driver of leadership challenges over the next 10 years. A survey conducted by British consulting firm Prosell found that poor leadership deteriorates the quality of customer service. Of more than 570 customer service employees polled, 60 percent said the way their supervisors treat them influences how well they do their jobs. In fact, Xerox credits its turnaround to customer-centricity. A new focus on listening to customers and placing them in a prominent role in the Xerox vision has led to customer connection at multiple levels in the organisation.
3. Operating efficiency: Quality initiatives such as Six Sigma help companies measure and reduce error rates. Such initiatives are, of course, one of the metrics for “operating efficiency,” which the Leadership Development Survey 2005 found was the third most important driver of challenges faced by leaders over the next decade. This can be interpreted as a bow to the fact that global competition is likely to drive all companies to become more efficient in coming years.
4. Accelerating pace of change: Seen as one of the top five factors influencing the challenges faced by leaders, the accelerating pace of change gives executives no rest. An organisation that is on top of the heap today can easily find itself on the bottom tomorrow if it doesn’t quickly and successfully adapt to change of all sorts.
5. Need for innovation: Globally speaking, spending on research and development has risen considerably over the last two decades even as the world’s labour force has become ever more highly educated and the number of science and engineering articles has been skyrocketing. Companies that don’t figure out how to generate more innovation in such an age are bound to be overrun by competitors who do. But generating innovation in any large company is an uphill battle. Leaders must increasingly influence their corporate cultures to make them less resistant to true innovation.
6. Increased government regulations: While civil liability for retaliation does not apply to private corporations, criminal liability is a factor for both private and public employers. Individuals as well as corporate defendants can face very stiff penalties and fines. Top managers have accountability for the accuracy of public information even if they played no role in its preparation.
7. Talent retention: Already, U.S. corporations are seeing a trend toward younger, less experienced leaders. A study of the top 10 executives in each of the Fortune 100 companies compared the executives of 1980 with those of 2001. It found that leaders of the more recent group are younger, are more educated and reached the top more quickly than those of two decades ago. This trend might be reducing the effectiveness of leaders. Reporting on its study of CEO turnover rates, Booz Allen Hamilton notes, “The younger the CEO when hired, the higher the likelihood of being fired”. And, of course, less experience at other management levels could also have a negative impact. Also, demographic shifts dictate that leaders must manage and inspire an increasingly diverse workforce in terms of gender, nationality, ethnicity, age, religion and other characteristics. Leaders must also develop and draw from this diverse workforce as never before. The days when major corporations were managed by a mostly white male workforce have begun receding into the past, a trend that will likely accelerate in today’s multicultural and multigenerational world.
8. Product/service quality: Leadership styles also can have an impact on the effectiveness of quality initiatives such as Total Quality Management (TQM) and ISO 9000. One study found that the four leadership dimensions – intellectual stimulation, charisma, empowerment and contingent reward, and active management-by-exception – were instrumental in successful ISO implementation.
9. Mergers/acquisitions: Business organisations will experience a growing interconnectedness that is driven by an expanded flow of information, technology, capital, goods, services and human resources throughout the world. This worldwide integration will require more contractors, partnerships, mergers, acquisitions, alliances, and even shared investments with competitors.
10. Information technology: Technology is one of the primary factors influencing the leadership paradigm and the pace of change. Not only do leaders need to master the art of using information technologies to lead people, they need to cope with the greater volatility technology brings to the business environment. Take, for example, the number of Internet hosts, international phone calls, mobile phones and people with Internet connections; they’ve all been growing at a fast rate. Many believe this connectivity leads to greater unpredictability – the movement of information is no longer linear.

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