Bridging the Leadership-Skills Gap

Competing business priorities have taken some focus away from leadership development at many organizations, just at a time when effective leadership is more crucial than ever.

Wednesday, February 19, 2014
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While nearly 80 percent of participants in a new survey say today's business climate requires a different leadership style, only 21 percent say their organization's leadership practices are very effective. On top of that, nearly half (46 percent) of respondents say their organization places "little or no priority" on leadership development, according to a recent report by the Houston-based American Productivity and Quality Center, a benchmarking and best-practices research nonprofit organization.

The research finds what Elissa Tucker, APQC's human capital management research program manager, calls "statistically significant gaps" in leadership skills for modern companies in all areas except one: authoritativeness.

"We're calling it a skills or competency gap," says Tucker. "It's the difference between the leadership organizations need to succeed and what they currently have."

The most critical shortfalls identified in the study involved strategic planning, change management, knowledge sharing, listening and emotional intelligence.

The study, co-sponsored by Washington-based THEaster Consulting, surveyed 547 professionals in manager and director-level positions.

"Certain business [challenges] appear to be changing the type of leadership skills organizations need to succeed," Tucker says. "We were able to isolate the ones that had the biggest impacts: [unpredictable] events, [talent churn] and an aging workforce. These business trends were associated with having a larger leadership-skills gap." surprising, she says, is that the newly emerging skill sets were identified as "important" regardless of the industry.

"We thought more mature organizations in slower-paced industries would benefit from traditional command-and-control leadership style, and less-mature industries would need more dynamic leaders," she says. "[But] we really found that all organizations need this more dynamic style of leadership."

As one means of addressing the gap, Tucker says, HR leaders should review and revise their hiring and rewards practices, especially if their organization's selection, development and reward practices are encouraging outdated leadership skills.

"HR needs to be rewarding people who display these softer skills -- almost like doing an audit of these practices and policies to determine whether there are legacy practices that are having some unintended consequences," she says.

APQC research specialist Sue Lam notes that another, unconventional step the research suggests is for organizations to develop leadership capabilities in all employees, not just those labeled "high performers."

Such efforts do not necessarily have to be expensive or overly formalized, she adds.

"For those employees who are not in a formal leadership program, managers can mentor them on the job and allow them to lead smaller projects," Lam says. "They can provide guidance along the way. Then, work is getting done and these employees are also developing their leadership skills."

Terri Hartwell Easter, principal of THEaster Consulting, says competing business priorities, such as mergers and acquisitions, have taken some focus away from leadership development.

"[Consolidation has] resulted in greater shareholder value and impressive operational efficiencies," she says. "In many cases, however, true integration of cultures has not been attempted -- much less achieved -- leaving shell-shocked employees, disparate teams, variances in management styles, lack of clarity in communication and a broken link between company goals and each individual's role in achieving those goals."

The impact of these results on the business' bottom line can be significant, she adds.

"Forget innovation and growth," Hartwell Easter says. "Organizations that underestimate the value of their people in maintaining a competitive edge will continue to experience deteriorating market and mind share. Organizations that underinvest in leadership development -- those that continue to do things the way they always have -- simply cannot thrive."

The most damaging fallout occurs, she says, when leaders fail to understand their organization's revenue drivers, lack a working knowledge of the interdisciplinary functions of the business and, "most importantly, are unable to inspire people to achieve the business' goals by leveraging and supporting each individual's vision for personal success."

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"This results in a vicious cycle of burnout and plummeting morale, lack of innovation, the inability to attract or retain top talent, and, ultimately, lower financial performance," she says.

The study is not the first to acknowledge the value of softer skills in leadership, such as listening and emotional intellegence.

Aon Hewitt's Top Companies for Leaders research from 2011 included interviews with CEOs that uncovered an increasing focus on the importance of emotional intelligence of leaders, such as being self-aware and demonstrating humility, says Shelli Greenslade, a Chicago-based senior consultant at the global HR consulting firm and global lead for the cited research.

"These are not skills that are taught in business school, and organizations are grappling with how best to spot talent with these skills and what interventions they can use with leaders who have gaps in these areas," she says. "Not surprisingly, we have seen that today's leaders must flex with the demands of a fast-changing world. What distinguishes great leadership today is not only the ability to craft and execute competitive strategies, manage risk and build a sustainable pipeline of talent who can drive innovation and implement change, but doing this with humility and self-awareness that translates into how talent and business is managed."

Deficits arise throughout the leadership pipeline at many organizations, Greenslade says, and companies should develop skills along that pipeline -- a concept similar to APQC's suggestion to nurture leadership in all employees.

"It helps to have developmental programs and experiences early in one's career," she says. "Those programs that are designed well will provide the foundational skills and knowledge for each turn in the leadership pipeline, preparing managers to not only 'manage' but to lead." 

Greenslade recalls the succinct summation of one executive from Aon Hewitt's best-in-class leadership research: "Invest in the best, and focus on the rest."

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